4 Common (But Fixable) Org Structure Problems That are Hurting Your Contracting Business

June 5, 2015
Category: Achieve Consistent Business Success,Build an Accountable, Self-Sufficient Team,Business Tips,Eliminate Problems and Fires,Management

You may not think about your business this way, but your business is a machine. It’s built to generate leads, sell business, deliver painting services and collect money. And like any machine, how you design your business will determine how well it performs.

Your org chart is the blueprint for your business machine. It describes the parts – the jobs, departments and divisions – and defines how all of the parts are organized and connected into the fully functioning machine that is your business.

I work with clients who have million-dollar and larger businesses, and the first thing that I do when I start working with them is have them sketch out their current organization chart. What I find, unfortunately, is that most owners don’t pay much attention to design of their org chart and many don’t have one at all. Do YOU? As a result, they end up with a disorganized business machine rather than one that’s intentionally designed to hit on all cylinders. And this disorganization is the source of many problems, fires, slowed growth, lower profit and higher stress that you might be facing in your business today.

If you want to improve business performance, it’s important that you look closely at your org chart to make sure you’ve designed your business machine to support your success today and into the future.

I’m going to discuss four of the most common and important problems that I see in the org charts of my clients. If you have an org chart, find it and print it out. If you don’t, take a quick break and sketch one out for yourself right now. As you read about these four problems, look at your own org chart to identify areas that you need to work on to improve the effectiveness of your business machine.

Problem 1: Unwinnable Jobs

Many of the jobs that I see on org charts set your people up to fail. I call them “unwinnable jobs.” Unwinnable jobs are too broad in scope, have too many responsibilities and too many people to manage, or are so unclear about what’s included in the job responsibilities that no human can possibly do the job well.

A great example of an unwinnable job in most organizations is your job as owner and CEO of your business. When I ask business owners of any size businesses what their job description is, the most common answer I get is “That’s simple…I do everything!” If “I do everything” is your job description too, you have an unwinnable job. These “everything” tasks eat up your day and keep you from doing the things that you, as the owner, need to do to grow your business – things like planning, marketing and sales, employee development and structuring the work, so that your business runs efficiently and consistently satisfies your customers.

Look at each job on your org chart and ask yourself these questions:

• Is the job clearly defined?
• Does it have clear goals and objectives?
• Is it manageable in scope?
• Are there clear distinctions between the responsibilities of this job and other jobs?

If not, you’re setting your people up to fail. Take some time to redesign the job to make it winnable. Check out my article in the September 4th, 2014 issue of American Painting Contractor e-news on Job Value Propositions for some additional job design help.

Problem 2: No Ownership of Important Goals and Priorities

My experience with most companies shows that if you want to achieve your goals or complete your important projects, someone needs to own them and be accountable for them. And when I say “own” and “accountable,” I mean that one person is ultimately responsible for ensuring that goals and objectives are achieved. They’re where the buck stops, no excuses.

But when I look at most org charts and ask “Who is responsible for (fill in the blank)?” (Getting enough leads, achieving our gross profit goal, controlling fixed expenses, growing our commercial business, etc.), very often there is no clear ownership and accountability. And because no one person owns a goal, or is accountable for driving an important project to completion, it usually doesn’t get accomplished.

Take a look at your org chart. Is there someone who owns responsibility and is accountable for making sure that your business gets enough leads? Achieving your sales goals? Delivering your services at a targeted gross profit? How about cross-selling, minimizing accidents, ensuring that your customers get great service, hitting your accounts receivables goals? If you can’t point to someone on your team who clearly owns responsibility for driving each of these, and other important things that you want to accomplish, then this is one of the major reasons why your business may be under-performing. P.S. You can’t make yourself the owner for everything! You’ve already got enough on your plate!

If you want your business machine to produce better results, assign clear ownership and accountability.

Problem 3: Weak Linkages Between Jobs

You can create winnable jobs with clear ownership and accountability, but if the linkages between the jobs aren’t tight, your business machine won’t run well. There are two types of linkages that are critical – the linkages between different functions and linkages between different levels of the organization.

Linkages between different functions are the linkages between marketing and sales, sales and operation and operations and the office. Linkage problems between functions are common and the source of inefficiency and problems in many businesses. For example, if sales doesn’t give enough information to your crews on the scope of jobs, then they might do more work than you were paid for or disappoint the customer because of some other misunderstanding. Or if your operations doesn’t tell the office when jobs are to be billed, this creates cash flow issues.

The linkages between each levels in the chain of command in your business also need to be tight and well-coordinated. Each employee in your company plays a key role in helping you grow and be profitable, so it’s important that they know what your vision and plans are and how they can contribute. The bigger your company gets, and the faster it’s growing, the harder it is to get and keep everyone aligned and working toward the same goals and objectives. You need to ensure that there is a clear chain of accountability and that you, your managers and crew leads and painters are all in sync and working together to achieve the goals and objective of your business.

Take a look at your org chart again and evaluate the linkages between functions and levels of your business. Are they tight and coordinated? If not, fix them. There’s significant money falling through these cracks!

Problem 4: Running Your Business With an Outdated Org Chart

When you’re a solo, or have one crew, you don’t need to worry too much about your org chart, because you are either doing every job in the business or managing them all. But as your business grows and becomes more complex (with more moving parts, people, leads and customers) you need to redesign your business machine regularly to handle the growth effectively.

When I see a business that is struggling to get to the next level, often it’s because their org chart hasn’t evolved to support their profitable growth. You can’t successfully run a $2.5 million dollar business with 45 people with the same organizational structure that you had when you had a $500,000 business with 7 people. Yet I’ve seen many owners try!

If you don’t have enough management and support people to manage all of the critical activities needed (like marketing, selling and delivery of services), there will be bottlenecks throughout the business that will make it impossible for you to grow profitably. I’ve seen businesses lose literally hundreds of thousands of dollars because they didn’t have enough people to handle all of the sales leads or to manage and do the work.

As your business grows and changes, you need to anticipate and evolve your org chart to support your continued profitable growth. To do this, estimate what you want your yearly revenue to be for the next five years. Yeah, I know that you don’t have a crystal ball, but do it anyway. It will help you anticipate what your org chart will need to look like to support your growth. With the 5-year projections, you can start to think through the implications of the growth for other parts of the business:

• How many people will you need each year? How many crews? What new management and support staff positions will you need? Where will you get those people (promote, hire, outsource)?
• How many customers you will need to reach your goals? What marketing and sales people will you need to have in place to support your growth?
• How will your role change over time?
• What should your org chart look like 5 years from now if you grow the way you expect to?

Many people believe that you need to grow first and then hire. I believe that hiring the right people in the right places at the right time eliminates bottlenecks and makes future growth possible. Creating a 5-year growth plan, estimating your manpower needs and how your org chart will evolve over time, gives you the information that you need to hire to grow and avoid the damaging bottlenecks that can hold your business back.

Get your business machine hitting on all cylinders!

In most companies, the org chart doesn’t get much attention. But when you use it consistently as the blueprint for your growing, evolving business, it can be a tool of enormous benefit.

So sketch out your current org chart and start fixing the four problem areas that I’ve described here. It can help you create a smooth-running, growing, profitable business machine that truly hits on all cylinders.

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