Baby boomers have a lot to answer for when it comes to creating flat organisation structures. Not sure what inspired the ‘flat structures are ace’ mantra of the 90’s, but it is an epidemic that is stripping millions from the value of baby boomer businesses across Australia. At the critical time when most are looking to exit and enjoy a life of luxury.

At wattsnext we interact with hundreds of businesses a year, but rarely encounter a small to medium business that is well structured. In fact most come to us broken, unsustainable and riddled with dysfunctional flaws that have developed over time. Whether to suit an individual employees skill base or to appease an old school micro-managing Director, most structures defy logic.

Flat structures equal communication disasters. Stressed owners and senior managers firefighting with leaky buckets. Too many direct reports and departmental responsibilities to possibly be effective, let alone support growth or add true multiples at sale time.

The only rational explanation I hear is the very tired theory that hierarchy is evil and something to be avoided at all cost or the culture of our business will dissolve. Owners’ spruiking that they have a flat structure and open door policy that underpins their culture and historical success…., but at what cost to their health and overall value of their business?

My top five organisational structure tips:

  1. Remove the emotion and embrace structure
  2. Limit your direct reports to 2 or 3 and develop the organisations management capability outside of you
  3. Create role descriptions and link them to each part of your organisational structure, clearly defining what each role entails and ignoring current personalities
  4. Plan for succession, identify and mentor your future leaders (of all levels) and talk to them about future opportunities in your organisation.
  5. Your culture is not dictated by your structure, culture can be built and more importantly sustained by implementing strong HR frameworks, living your Vision, Mission & Values and truly listening to your team

A well-designed organisational structure that matches the direction of your business guides your future HR and people strategy and ultimately leads to a more profitable, sustainable and valuable business. When is the last time you removed the emotion and truly assessed your organisational structure?

Does your structure look good on paper or is it the foundation to build your future?

Author: Ben Watts
Ben is a veteran in the HR space- a forward-thinking leader specialising in functional business structures and people performance techniques. With twenty years’ experience managing large ASX listed corporates across multiple industries, Ben adds depth and expertise to our clients' strategy solutions, genuinely providing a commercial result for their investment.