As a small business consultant, one of the main problem areas I found with small business clients involved problems in supervising. Family owned businesses in particular had a challenge here because family members often felt entitled, whether they owned stock in the company or not. For instance, a nephew or son who orders people around and harasses other employees can be really destructive to employee morale and even open you to lawsuits.
I ran into other companies where employees weren't sure whose orders took precedence because they could be told by one owner to do a certain task. A little while later the other owner would assign them to something else. This is where an organization chart can eliminate conflict, improve morale, and increase efficiency in your small business.
In a typical small business, there are a limited number of executives reporting to the president or chief executive officer or general manager, depending on the title the company wants to use. As the first two titles imply a formal corporation or legal structure, I'll use general manager here.
Top Tier on Organization Chart
Under the general manager will usually be at least three main headings:
- Administration and Accounting
- Sales and Marketing
This organization chart, when drawn out, looks like a tree trunk with roots branching off. The initial levels are executive management. Below that will usually be managers, supervisors, and/or individuals for a single position.
As you go down to the working positions, you may have positions on a simple organization chart that represent potentially many people, like "Outside Sales" on my Small Business Sample Organization Chart which you will find a link to under Supporting Links.
However, for best effect in a small business, make an organization chart large enough to include every person so he or she actually sees the reporting structure. As your small business grows, you will find it helpful to do organization charts for departments with a lot of employees, especially Operations.
Small business sample organization chart second tier structure Administration Manager
- Receptionist / Filing
Sales and Marketing
- Outside Sales
- Inside Sales
- Internet Marketing
- Advertising / Marketing
- Shipping & Receiving
Depending on what your small business does, replace the titles as needed. For instance, Production might be Service Manager, Construction Foreman, or Head Chef.
This organization chart not only helps your employees understand who their boss is and whom they supervise, if anyone, it shows everyone the main functions in your business. In a small business, you will initially have people wearing many hats.
Until you have people to fulfill each role (box on your chart), the position flows up to the person it reports to. For instance, the sales and marketing manager will often be an outside sales person and the advertising and marketing person.
Use the information in this article as a template of what to include on your organization chart. In Supporting Links, you will find a link to a simple small business sample organization chart image to help you see the structure. An organization chart for your small business will make it easier for you to manage and for your employees to understand how they fit which will reduce confusion and make them happier because they will be more secure.
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