Installing a Proper Management Structure

Stokehouse, St Kilda

Once your business reaches a certain size it must have an appropriate structure, capable of handling the demands of your business activity and flexible enough to react to rapid changes in market fashions or economic environment. The broad rules for business structure are:

• you must have a realistic business plan covering the next five years. Where do you want your business to go?
• your pyramid must be as flat as possible. The more layers you have in your business, the more you complicate communication and bind the line staff with bureaucracy.
• you must make a clear distinction between supervision and management.Supervisors run the day to day affairs of a business, i.e. they control the teams who do the work that the business derives it’s income from; a supervisor is concerned with today, tomorrow, next week and a few weeks into the future. A manager is responsible for the long term growth and development of the business, and is concerned with the time period from one month to five years ahead.These responsibilities are separate. Commonly, when a business is structured badly, managers and supervisors trip over each other trying to do the same job, while nobody is looking after the big picture and thinking ahead.
• everyone must only dance to one master. Reporting lines must be clear and everyone should have only one ‘boss’. For example, it is not acceptable for a manager to bypass a supervisor and direct the line staff; this creates divisiveness and confusion. The standard test to see if this has been achieved is to ask any member of staff: ‘Who do you work for?’. If the answer is unclear or the staff member nominates multiple ‘bosses’, you have a situation where productivity will be lost and staff turnover will be higher than necessary.
  (Note: This is a simplistic rendering of what can be a complicated issue. The finer points of reporting and structuring are outside the scope of this document).
• everyone must know exactly what their job is, and how they are judged. This issue is simple: How can you kick a goal if the goal posts are not stationary and visible? In a well structured business you should be able to walk up to any member of staff and ask: ‘What exactly is your job, and how does your superior judge if you are doing your job well or not?’, and get an accurate, consistent answer. In the absence of staff having this information, productivity will be lost, conflict will arise and performance assessment will have to be based on a subjective rather than an objective basis.
• Job Descriptions should be based on responsibilities, not tasks. An effective Job Description is not a task list or a duty statement — rather, it defines responsibilities and forces an employee to take control of their own performance.
• in order to make a manager or supervisor accountable, you must allow them to choose who comes into their team and who leaves their team. The responsibility for staff recruitment (and training) must go hand in hand with team leadership, otherwise team leaders have the perfect excuse for the non performance of staff: ‘I didn’t hire them,’ or ‘I didn’t train them.’
• the 8 to 1 rule must be adhered to. Each manager or supervisor should have no more than 10 people reporting to them. With any more, control and personal development becomes difficult to accomplish.
• regular, objective performance appraisal must be carried out on all personnel. Monthly informal performance appraisal should be the primary tool for the direction of a medium sized, or large business. Performance Appraisal should constantly refer back to the responsibilities defined in the person’s Job Description and should set clear, challenging goals for the future.

We can help you to structure your business in the most professional and appropriate manner — if you get your structure right, your staff will run your business.