Knowing when to reorganize your business is crucial

When growing your business, reorganizations are periodically necessary. After all, an organizational chart for a start-up business can’t possibly be the same for an organization with 500 employees.

Though it can be a painful process for employees because reorganization often requires significant changes, a business simply cannot grow without it.

I often find that roles and responsibilities have morphed into what they are today rather than being planned that way. For example, positions might be assigned to a manager because they do not have many people who report to them, rather than because this is what’s best for the organization.

Believe it or not, I have seen the collections function being handled by the sales department rather than the accounting department because the sales manager wanted to control that task.

For this reason, every business must revisit its organizational chart every year, especially when doing strategic planning. One of the critical functions of strategic planning is ensuring the organizational chart aligns with the business and its goals.

When I help firms reorganize, I have them develop a new organization chart that is functional, leaving out names at first – specific employee names will be added later. Basically, we start with a blank slate and develop a structure that will serve the needs of its customers, staff and stakeholders.

Within this process, it is easier to develop the structure a business needs to be successful if its leaders are not worrying about who will occupy each position.

The process gets harder when trying to identify what people do best and how they will benefit the company. However, despite the difficulty, it’s important to know there is value in this process. Entrepreneurs frequently discover they have people in the wrong positions and often identify positions that are no longer needed. These revelations can lead to dramatic improvements in the business.

When I lead companies through this process, they often discover how blind they have been to necessary changes. They tend to come in reserved and hesitant about starting the reorganization process, but after going through it, they see so much value.

Reorganization is also important when adding another level of management, acquiring a new business or downsizing. You must consider reorganization any time you change the structure of the business.

Make sure you set aside time every year to evaluate your organizational chart and see where it might need to be revised.

The best time is when you are doing strategic planning.

This story was originally published December 29, 2016 at 11:28 AM with the headline "Knowing when to reorganize your business is crucial."