5 Steps to Implement Company Structure in the SMB Environment
by Hesam Lamei
Executing company structure with a limited number of employees is a challenge, and certainly a learning process in my experience. When creating an organizational structure at a small or midsize business, it can be helpful to model after larger organizations and other companies within your industry. At the same time, taking into consideration how your company is unique can also help ensure your organizational structure works best for your desired culture and business goals.
For our company, we knew we needed to adhere to best practices of larger organizations and industry competitors, but we also wanted to reach business goals quickly since many of our competitors had been around for many years. We took some unique approaches to our structure to accomplish this. Throughout the learning process of creating our company structure, in my experience it ultimately boils down to five significant steps.
1. Create Departments to Formulate a Structure
Company departments serve as the bones of an organizational structure, and prepare the company for future growth. Our company is comprised of some departments that follow suit of other corporations, some that are unique to help us achieve business goals, and one that is a continual learning process for us to try to ascertain its most appropriate place within our structure.
We formulated our Operations, Marketing, and Sales teams similarly to companies within our industry, small and large. Our Operations Department is akin to many industry competitors with teams assigned to build, test, inspect for quality assurance, and ship our products. Our Marketing Department is small, but has a structure modeled after larger organizations with team members owning specific marketing pillars to maximize lead generation and return on investment. Our Sales Department also has a structure modeled after larger companies with inbound and outbound sales representatives managing domestic and international regions.
Our Business Development Department is where we stand apart from industry competitors. While many companies integrate Business Development and Sales, we utilize our Business Development Department to increase company revenue through innovative efforts. Our Business Development team strategizes how to keep our company ahead of the industry, and sell our products in a variety of ways through a multichannel focus.
Our Customer Service Department also takes a unique approach in that CEOs are typically not as hands-on as I am with our Return Merchandise Authorizations (RMAs), customer satisfaction, and staff development. We continually adjust where our Customer Service Department lies within our structure, and it is an area for improvement. We have moved Customer Service around as an extension of Sales, an extension of Operations, and also as its own entity. It is important to realize that as you implement structure, department and business needs may require some changes.
2. Utilize Management to Instill the Structure
Once you have formulated business departments, the next step is to ensure your management team complements and instills the organizational structure for employees. At our company, our management team is very involved in the day-to-day department business. Regardless of titles, tactical focus is key for our management team. I expect strategic thinking and creative brainstorming from my top-level command, but I also want my managers and department directors to get “down in the trenches” with their teams. Additionally, I am active with all departments to ensure high-level involvement from leadership starts with me.
3. Create Communication Methods to Reinforce
The next important step to implement an organizational structure is to create communication methods that strengthen what you have in place. With the heavy involvement our upper level management has with their teams, we have determined an open doors policy is what works best for our company. We keep channels of communication open within department teams, but also between department directors and myself.
In addition to internal communication, initial employee training is a crucial element of company communication to further reinforce your structure and allow for consistent external messaging. At our company, all new hires go through a minimum Marketing Bootcamp in which they become familiar with our value propositions, key messages, and how we go to market. Additionally, our new hires go through a Product Bootcamp to understand key elements of all company offerings. Our thorough employee training is another factor that sets us apart from competitors, and without it, our Sales team would have a difficult time communicating our company differentiators to customers and prospects.
4. Decide How You Want to Grow
With an organizational structure in place, your next step is to decide how you want to build upon this structure as your company grows. Recruitment efforts can be determined based on need and filling out the organizational structure as necessary, but there are often budgetary constraints for small and midsize businesses that limit recruitment efforts. For our company, we take into account how much revenue a department produces, and compare it to the department’s costs to ascertain if we can recruit for additional staff. In our experience, this helps manage hiring costs and determine salaries that are reasonable in terms of what revenue the new positions will accrue.
5. Make Smart Hiring Decisions for Development
Once you determine your recruitment efforts to build onto your organizational structure, the final step is to develop a hiring process that enhances the structure you have put into practice. Your hiring process will likely be a learning experience in the beginning, as it has been for our company. After witnessing a high turnover rate during our first few years as a business, we decided to involve multiple stakeholder touchpoints throughout the interviewing process and hiring decisions. Our interview process begins with multiple phone screenings, followed by department interviews with potential supervisors and department directors, and finally an interview with myself if a candidate passes all initial steps. Our hiring decisions involve collaboration amongst stakeholders to ensure the team reaches an agreement and raises any potential concerns with candidates.
Creating an organizational structure that works for small and midsize businesses is no easy task, and it has important implications on company development and growth. In my experience, you should start from the ground up to ensure your company structure begins with a solid foundation of departments, is reinforced through complementary management and communication methods, contains a well thought out plan for growth and development, and most importantly, has flexibility to accommodate lessons learned throughout the implementation process.