Most companies restructure reactively – maybe there’s too much work, or someone has left. But it’s far better to get strategic and restructure before you hit an emergency.
When do you think about restructuring your team? Typically there are three triggers that drive organisations to reevaluate their team structures. Unfortunately, they’re all reactive triggers, essentially putting out fires..
Too Much Work
Having a lot of work can be a great problem, but it means you often don’t have enough people to deliver your products or services. This is normally when a business decides to expand. You might hire a virtual assistant or other administrative support. Then you start to find that you can’t actually deliver what you need for your clients or customers, so you bring on more staff, which restructures your business.
Someone leaves and you take the opportunity to restructure. Often you just can’t find a replacement in the market, which forces you to rethink the structure and whether you need to change it. If an employee has gained skills, experiences and knowledge it can be difficult to replace them in the market, or the salary expectation for someone with the same skills might be much higher.
You might restructure because a team member complains about having too much to do. So you decide to hire someone else to help.
The examples above are all valid reasons to review your structure, but they’re also very reactive. Most people restructure reactively, but it’s also possible to take a more strategic approach. Let’s look at five other indicators, which could prompt you to look at your structure. These are about moving proactively, asking, how do we grow our business? What are the roles that we need? And when do we need to review?
Most people restructure reactively, but it’s also possible to take a more strategic approach.
Bottlenecks & Lack of Collaboration
The first indicator is a real red flag that there’s something going wrong in your structure. Bottlenecks come up when people feel:
- they aren’t able to get on with their jobs
- they can’t get things approved
- they don’t get the information they need
For example, the sales team may be promoting one thing, but the marketing team is promoting something else. These situations can be really frustrating for the people in those teams and it also means that the business isn’t performing the way that it should be.
When this has happened with my clients, we’ve taken a look at the issue, asking where are the bottlenecks? Why aren’t the teams collaborating? Very often the knee-jerk response is ‘well, it’s this person or it’s that person, for example, coming up with window displays that are not in line with the marketing plan. But a lot of the time, it’s actually not one person, it is the structure. And that’s the best place to start.
So take a look at your team structure. Is there anything in this structure that is preventing collaboration, or preventing a person from getting the information they need to do their job? It can be as easy as looking at the reporting lines, for example someone may be reporting to the sales manager, but actually, they should be reporting to the marketing manager.
It may not be that we need to hire a new person but we definitely need to look at the bottlenecks and barriers to collaboration.
Lack of Ideas & Innovation
If you don’t have ideas and innovation coming through to the senior management of the organisation, it may be another signal that you need to restructure. This usually happens for one of two reasons:
- No time People don’t have time to think about the future. They’re so busy, they don’t have time to think about better ways to do things, or better products or services to offer customers.
- Communication People don’t have the ability to get their ideas and their innovations up to the right levels within the business.
Both of those things are indicators that something is wrong with your structure. A lack of ideas and innovation can stem from other things as well, such as poor leadership or ad hoc, reactive communication. But it’s often an indicator of a need to restructure.
How do you address this? Put it on the agenda for your regular strategy meetings – get your team to discuss what’s coming down the pipeline from your business.
Succession Planning & Talent Matrix
A lot of small businesses think that they are far too small for succession planning. Even in really large businesses it is not an exact science. This is why I advocate for a talent-matrix approach.
The easiest way to do a talent matrix is to draw a square on a piece of paper, and then draw two vertical lines or two horizontal lines, so you end up with nine boxes. On one axis, you write ‘Potential’, and on the other you write ‘Performance’.
Next you write in the names of everyone on your team. When someone is high on leadership potential and high on performance, they go in the top right box. When they’re low on performance and low on leadership potential, they go in the bottom left box.
This gives you a really good idea of the people in your business and can prompt some close analysis:
- High in potential and high performance people Find ways to develop and retain them. For example, maybe they don’t have any direct reports, so you may decide to make them a team lead to give them leadership experience. Or you may decide to give them exposure in another area that interests them, possibly a temporary secondment, to keep them motivated.
- Low potential and low performance people Where do they fit in your structure? Is there another role more suited to them? Or do you need to performance manage that person?
- Everyone in between You could have people that are low in leadership potential, but medium or high in performance, and they’re really good contributors. You may decide they’re in the right spot in the structure and that works.
This is a great process to do at least once a year, no matter the size of your business, and reexamine quarterly to recheck and reframe.
Span of Control
Keep an eye on how many people you’re asking your team members to manage. In most cases they should have no more than seven direct reports, or where there are multiple people in the same role, no more than 15. For example, a warehouse manager might supervise 15 people working in the warehouse that are all doing basically the same role.
Once you get past seven (or 15), it becomes really difficult to manage. As your business grows, it’s easy to let this slide, particularly if you have a really high-performing staff member. It’s easy to give them everything – everyone is reporting through them and they’re managing all the projects. But of course your star performer will then become really overloaded. They’ll start drowning, become disengaged, and their high performance will evaporate because they have too much to do.
So when the span of control gets to more than seven (or 15), it’s time to look at your structure.
You probably have a solid strategic plan in place that you revisit at least once a year, but do you consider your structure during this process? It’s important to examine your organisation’s triggers for new staff and put it into your strategic plan. For example do you hire when you reach a certain:
- percentage of revenue?
- number of clients?
- level of profit?
- number of widgets that you’re sending out the door?
Whatever it is, put it in your strategic plan and use it proactively. For example, if you have one FTE per $200,000 in revenue, when you reach $400,000 you’ll need two FTE. But you also need to plan ahead to staff up before you hit that $400,000. So your trigger point might actually be at $350,000, to give you time to get the staff in place.