Over the last decade, I've had the privilege of working closely with small businesses, offering support in development, bridging gaps between various service providers like Tax Professionals, Insurance experts, Bankers, Attorneys and Salespeople. A recurring theme across our practice is the area of human resource management, particularly the concept of organizational reporting structures. The goal of these structures is not to micromanage, but to ensure that people are supported in their roles so they can effectively accomplish their tasks.
In previous discussions (like Expectations & Accountability and Recruitment Culture in Ag), we've explored the differences between leadership, mentorship, and perseverance. At times, we need to push our teams; other times, recognition and support are most important. These aspects are deeply intertwined with organizational structure. Today, I want to talk about the nuances of organizational reporting, especially in small to mid-sized businesses where resources and roles often overlap.
In many small businesses, managers have direct reports—individuals they are accountable to. However, the challenge arises when there isn't enough time or talent to hire dedicated managers for every function. Consequently, employees are often assigned roles and responsibilities for departments they may not be passionate about or fully qualified to oversee.
In one of our primary target markets, agriculture, this is particularly evident. Individuals may be responsible for payroll, HR, recruiting, safety, AP/AR and compliance. In larger firms, these roles might be divided among multiple people, but in smaller firms, one person might handle all paperwork-related tasks. The key challenge is ensuring that people with direct reports focus on their team's primary responsibilities every day.
Consider a Chief Financial Officer (CFO) who is focused on balance sheets, cash flow, financing, and debt service. If this CFO is also tasked with overseeing the company’s health insurance renewal, they are diverted from their core responsibilities. While there are financial implications to these additional tasks, they aren't where the CFO’s strengths lie. When they (the CFO) arrive on Monday morning, their thoughts are on financials, not on tasks like health insurance.
Similarly, having a CFO in charge of human resources might seem logical due to the financial aspects involved. However, the day-to-day support that HR staff need may not be adequately provided if their direct report is preoccupied with financial matters. This misalignment can hinder the efficiency and effectiveness of both departments.
So, what can be done? Here's a practical exercise:
- Map Your Organization: Draw your organizational structure on paper. Use boxes to represent roles, not names. First, outline the current structure, then create an ideal version.
- Assign Roles and Responsibilities: Define the roles and responsibilities within each box. Only then, fit the people from your organization into these roles.
- Analyze Overlaps: Identify if individuals are occupying multiple boxes or if multiple areas report to the same person. This analysis can highlight whether you need to recruit additional talent or reorganize reporting lines.
- Evaluate Focus: Assess whether those in managerial roles are truly focused on the priorities of their direct reports. If not, consider restructuring.
The objective is to create an environment where each team member is supported by a leader who is fully engaged and knowledgeable about their specific responsibilities. This doesn't necessarily mean hiring more people or spending more money. Often, it's about realigning current roles to match the strengths and focuses of your existing team.
Small businesses are the backbone of our economy. The entrepreneurs who take the risk to start, manage, and grow these enterprises are vital to our local, regional, and national economic health. Our goal is to support them in every way possible, ensuring their structures promote maximum efficiency and profitability.
There’s no one-size-fits-all solution but giving thought to your organizational reporting structure can shed light on inefficiencies. Ensuring that direct reports are aligned with their manager's focus can lead to better outcomes and a more harmonious work environment.
Mark J Modzeleski, CFS, CLTC, AIF
President, Legacy Wealth Advisors of NY