The lowly organization chart doesn’t get enough credit. It doesn’t just denote who does what job; it’s the cornerstone of a system of responsibilities and accountability for performance.
The 2112 Group and Ingram Micro have teamed up to study SMB solution provider organizational structures and performance potential. We’re working with nearly 50 SMB-focused companies across the United States. And of the companies we’ve evaluated so far, 90% have organizational charts to define roles and responsibilities.
The organizational chart is a superior tool for ensuring that people know what they’re supposed to do and to whom they report. This is where that system of responsibility and accountability comes into play. If you sit in one of those boxes with people underneath you, you’re accountable for their performance. Conversely, they’re responsible for achieving the objectives you set.
The number of companies with an organizational chart should be 100%, and the lack of other governance instruments is stunning. Only 60% of the companies 2112 assessed have sales plans and goals. Meanwhile, 65% have business plans, but most are incomplete and out of date. And just barely more than one-half conduct employee performance reviews.
Some smaller solution providers mistakenly believe that such instruments are unnecessary for companies of their size. Given their small size, they believe they have a handle on their organizations and performance because they can reach out and contact people instantly. There are no huge divisions filled with anonymous employees, no complicated executive structure with layers of managers, no separate profit and loss statements. These are flat organization in which you can shout across the office as easily as sending an email.
No business is too small for an organizational chart or governance (except, perhaps, the sole proprietor). Facilitating strong and sustained sales, retaining customer relationships and building upon past successes require not just good people doing their jobs, but good people who know what their job is, what’s expected of them and that they’ll be rewarded for meeting objectives—or penalized if they fail to do so.
Governance is a reflection of disciplined companies. SMB-focused companies with strong managerial leadership will exercise governance to ensure all staff members are doing their jobs as defined and pushing the business forward in the same direction. Governance is often the difference between companies that grow and produce higher profits and those that underperform or stagnate.
Where do you start in exercising governance?
- Define and assign roles and responsibilities.
- Set organizational, departmental and individual objectives.
- Conduct regular reviews of organizational and individual performance.
- Counsel teams and staff on how to improve performance.
It’s really that simple, at least in concept. In practice, governance is harder, as many people think of it as confrontational and adversarial. It’s not. Governance is the communication of processes and practices, and through dialogue you give people the opportunity to reach higher performance goals.
The absence of governance is an invitation for disorganization and listless activities that rarely amount to anything positive.
Larry Walsh is the CEO and chief analyst of The 2112 Group. The 2112 Group is partnered with Ingram Micro on the development and maturation of its SMB and MTV partners through a unique Incubator program designed to provide strategic growth, sales and operational guidance for performance improvement. To learn more, contact us or your Ingram Micro representative.