People plan

Human Resources: Activities, systems, processes, tools required to track and document HR activities – selection, performance development, training, compensation system, and benefits.

The purpose of an organization structure diagram is to clarify areas of decision making responsibility, reporting lines, and assist communication throughout the company. It is intended to help all employees understand how they can best contribute to the overall company goals.

Each individual will typically have primary responsibilities in their area of expertise, however, it is important to be able to respond to changing priorities and contribute to other areas as needed.

For example, everyone in the company can be unofficial marketing and sales agents for the company, although that may not be their primary area of responsibility.

Similarly, all employees are responsible for ensuring you meet your customer service promises.

Most private sector companies are organized around four business areas:

Marketing, Sales, Operations/Customer Service, Finance and Administration.

Your organization structure may vary depending on the size and type of business.

In small companies, individuals may wear several hats, and need to jump from one role to another (President, to Sales Manager to Parts Delivery) all in the course of a day.

Your Organization diagram will help you be more aware of these changing roles and help you plan recruiting priorities as your company grows.

Note: Larger companies may need a consolidated corporate structure in addition to a detailed department/division diagram.

Human Resources: Activities, systems, processes, tools required to track and document HR activities – selection, performance development, training, compensation system, and benefits.

Today, I want talk about some of the things that keep business owners awake at night.

Let me start by relaying a story I heard a number of years ago from Peter Schutz, the former CEO of Porsche, the German car manufacturer. He told this story to me and a group of CEO’s a number of years ago.

The allies were flying supplies into war torn German airports immediately after the WWII. The weather was abysmal, near zero visibility. The ground crew was able to guide the pilots onto the runway through their crude radar equipment. It required constant communication from the tower to the pilots. Coincidentally they were part of a study and were being monitored for heart rates. As long as the ground crew kept constant and steady contact with the pilots, about the plane’s coordinates, every 10 seconds or so, the pilots remained perfectly calm.

However, if the radio went silent for even the smallest extra delay, the heart rates rose rapidly to extreme levels; a clear indication that when communication stops, or is ineffective and sporadic, trust plummets and stress increases.

How effective are you at communicating the company coordinates to your staff so they can safely land your plane, while remaining calm and under control?

For many CEO’s , the relentless challenge of communicating effectively with employees, business partners, and financial investors is high on their list of stress factors.

How can you improve the communication and trust in your company without spending unproductive time in meetings?

A good place to start is your business plan.

Your narrative business plan is the foundation for effective communication. It provides context and a reference point that allows you to be clear and consistent so others understand your business and how they can contribute to its success.

When your business plan is fully written down and shared, it touches all parts of the organization- marketing, sales, customer service, and finance and helps all employees understand where they fit in and how they can contribute

Revenue without profit is a dangerous thing.

Every business plan has financial targets in the Goals section. How do you feel about sharing financial information? Many business owners are concerned about sharing their financial goals with their employees.  A common refrain we hear – “If my employees know how much money the company makes they will expect more. I’ll have a line up at my door of staff looking for a raise.”

My view is that withholding relevant parts of a business plan from employees blocks the communication, and adds to the mistrust.

Lower trust affects the company culture in a negative way, which can be seen in employee behaviour such as absenteeism, higher turnover, dissatisfaction with compensation, and overall lower performance.

Employees want to work for a profitable company. Companies that consistently make money offer job security. Employees can plan their future, buy a house, a car, save for children’s education.

So employees like to know how the company is doing, and equally importantly, they want to know how they can contribute to that success, and therefore, their own future success.

Sharing financial information with employees brings with it a responsibility to educate employees about business fundamentals. For example, employees may not understand what happens to company profits – the need to pay down debt, for capital investment in growth, dividends for shareholder investors, and increased benefits for them. (If we do really well bonus money for the employees.)

This isn’t difficult to do, and only takes a few minutes at a meeting or even in a memo

Let’s talk a bit more about trust.

Trust in a company can be a very powerful force. When I think of trust, I am reminded of a high school physics lesson. Newton’s 3rd Law of Motion: “For every action there is an equal and opposite reaction”. This holds true for trust. In order to get trust we need to give trust, to be trusting.

If you find that sharing financial information with employees is well out of your comfort zone, and preventing you from openly sharing your business plans, you can present your company goals in other terms, such as, increasing our market share from x to y, or expanding our customer base, number of units sold, or any other metric that reflects financial success in your business

The challenge with this approach is that it can be more difficult to connect the relationship between the top line revenue goal and bottom line profit goals. Employees who are striving to reach the revenue goals without the counterbalance of profitability will not have as strong a commitment to cost control

If revenue and profits are clearly connected in their minds,  their contribution to creative, cost effective,  action plans and other day- to-day problem solving goes way up.

I encourage you to see your business plan as your most important and useful communication tool in engaging your employees and your business partners. Update it regularly and share it frequently and openly with anyone who has a stake in your company’s success.

You will sleep better.

Thanks for listening.