Many small business owners add employees as the company grows, reacting to perceived needs. This eventually can lead to a dysfunctional management team that wasn’t created to meet the long-term needs of the company. Planning ahead using positions and benchmarks to guide you will help ensure you don’t overstaff or understaff your business.
An organization chart is a drawing of your company’s positions, either by title or job. In addition to titles and jobs, an org chart shows who works for whom. Creating an organization chart by function helps you effectively create a long-term staffing plan because it identifies needs you have or will have and shows how each function fits into your company.
Even if you believe you are well-staffed, create an organization chart as if you were starting over, listing functions rather than names and titles of your current employees. This helps you determine if you are already set up to handle long-term growth or if you need to shift people or responsibilities now, rather than reactively plugging holes later. Basic business functions include marketing, sales, finance, information technology, production, human resources and administration. Above these functions are often a chief executive officer, or owner, and a chief operating officer, who works for the CEO or owner and oversees all of the other departments.
Common titles include staff, coordinator, manager and director, sometimes called a vice president. A staff member, such as a cashier, waiter, stock person or assembly line worker, holds no management authority. A director heads a function or department and is responsible for strategy, planning and management of one area of the company. As the company grows, a director is supported by a manager who executes the strategies and initiatives of the department head. When a manager has too much work for one person, he may be supported by a coordinator, who handles important but non-skilled tasks with direct supervision by the manager. As part of a long-term staffing plan, write job descriptions for each title you believe you may need eventually to help you better understand when it’s time to hire new staff.
To establish a long-term HR strategy, create benchmarks that tell you when it’s time to add staff or bring contracted work in house. These benchmarks can include specific sales volumes, a certain number of locations or employees or your profitability. For example, as you add employees, your bookkeeper might not be able to keep up with payroll and her other accounting duties. If your accounting department also manages human resources, it might become overwhelmed as you hire more workers. Knowing when you reach an employment threshold that requires a manager or coordinator in the accounting department and knowing when you need to split your accounting and HR functions are examples of setting benchmarks.