25/10/2010

By John Rosling, UK CEO of Shirlaws

Smaller businesses operate in very competitive environments and being able to respond to market changes is vital in achieving profitable growth or perhaps even survival.

Yet how often do you find yourself spending your time handling day-to-day tasks and fire-fighting the myriad of issues that constantly arise in an SME (Small and Medium Enterprise) organisation? There just never seems to be any time to work on the stuff that will really grow the business (like refocusing the positioning or looking at new product or packaging opportunities) or to plan and communicate where the business is going (vision).

“So much of what we call management consists in making it difficult for people to work.”
Peter Drucker

It’s a classic situation. More often than not, in a company that has grown from the top down, owners structure their businesses without a real plan in mind. As the business expands, they simply hire staff. And the people they usually hire are for the department that screams the loudest. Businesses don’t grow in an orderly, methodical way. Growth turns up in lumpy chunks and the key to your success is how you manage those chunks. If you’re serious about growing your business beyond what you can personally and directly manage — or you want a less stressful life - resourcing your business should be a strategic function and not one that is dictated from the bottom up.

The starting point is to identify the best functional structure for your business, one that will enable you to step back from a fully operational role, maximise the talents of your employees, and operate at maximum profitability.

This means assessing which job functions and activities are really needed and then allocating roles to the people who are most appropriately skilled or experienced for that job. And you may well find that the most appropriate person is located in another part of the business, or you might have to bring in some training to develop a skill the business needs.

For us at Shirlaws, all activities within an organisation fall into one of three groups and we colour code them for simplicity as red, blue or black activities. By using colour-coding you can easily plot where time is currently spent across your business and then match that against what the business actually needs.
Red activities are those that support the infrastructure and are non-revenue generating, such as administration, finance, HR and IT.

Blue activities are all revenue generating functions and are customer-related so include anything to do with making, selling, delivering, and servicing whatever your customers buy from you — as well anyone involved in marketing, for example.

Black activities include any functions related to business growth and these include leadership functions such as the development and nurturing of culture and setting of the vision as well as other contextual areas that will create long term growth such as developing your market positioning, new product and packaging strategies, key external professional and referral relationships, as well as joint venture, licensing or merger activity.
Too often business owners and directors are busy handling red and blue activities instead of strategic black activities. Sorting out IT problems, organising for the offices to be decorated, handling a stock problem or even doing sales calls because you believe customers like to see the boss are not black or strategic functions — so you should not be spending time on them.

For most of us it’s a salutary exercise to systematically (and honestly!) colour-code a typical week in red, blue, and black. That simple exercise tells most CEOs why they feel so stressed and why there is never enough time to actually grow the business. Of course, there will always be the need for you and your key team to do some red and probably more blue. And the percentage of time spent on each will depend on where the business is on Stages — in its lifecycle. But the simple fact is most of us spend too much time stuck in the content of red and blue and far too little in black. And however great we are at it (after all we’ve been doing this since we started the business) it really isn’t where CEOs and owners add the most value.

The next stage is to look at the next tier down, and the one after that. What are your people really doing? And then to create an organisational structure and clear workflows in red, blue and black that suits your business at its current stage of development by assessing which job functions and activities are really needed, allocating roles to the people who are most appropriately skilled or experienced for that job and then empowering staff to take the responsibilities attached to each role. It is vital to understand that with each role comes responsibility and it will be necessary to rewrite every job description so that everyone knows their area of activity - and the responsibility they will have to solve problems that arise in that area.

The trick is to get each staff member to take real responsibility and for the owners and directors to genuinely delegate and trust staff to fulfill their responsibilities. Allied to a strong culture and a clear vision, this process creates enormous pride and exceptional performance amongst staff. This in turn creates a hugely productive business where every job is only done once instead of the traditional inefficient system of reporting lines and double checking every task.

Putting in place an efficient functionality structure can take some time and is challenging to achieve without outside help. There will be false starts along the way, but it can have considerable benefits for a business. As a guide we find an average increase in productivity of up to 30% in businesses which we support to implement a functionality strategy. It is a vital step in getting your business to work for you. But just as importantly getting this right will help in developing a culture where employees feel fully valued and fulfilled. And that would be something to feel proud of achieving.


CASE STUDY: Elle Events

Elle Events www.roselleevents.co.uk based in Edinburgh, plans, produces and manages conference, incentive and recognition events within the corporate sector. The company was set up eight years ago by Jo Daley and her business partner Val. For the first few years they managed to grow organically. However, a couple of years ago the business started to feel as though it was getting stuck. It was not growing as quickly as it had done and Jo recalls feeling that she didn’t have control of the business.

At the time, Elle employed five people but for a small team they were still surprisingly disorganised. Elle decided to address this with a strategic organisational project based on the principles of red, blue, black to create consistent processes and efficiency to the business. That project took six months to complete but had a huge impact on the culture of the business.

“People began taking responsibility,” says Jo. “It’s amazing because now I couldn’t imagine the business without the functional process and structure it has now. Every process is documented too, we have policies and procedures, structure charts and everyone knows what area of the business and which process they are responsible for. So it’s a bit like having a log book for a car with all its service history. Our processes are documented so that it actually becomes an asset in our business that increases the value of it. In the first 12-18 we grew by £1m - a 60-70% growth rate. And in the current year we’re going to turn over £3million.“

To find out more you can download my new book for free at www.shirlawscoaching.co.uk


TOP TIPS

• If you’re serious about growing your business structuring and resourcing must be a strategic function and not one that is dictated from the bottom up.

• Systematically colour-code your typical week in red, blue, and black.

• Create an organisational structure and workflow in red, blue and black.

• If you want real productivity you can’t give people responsibility — they have to take it.


Shirlaws is an international business performance and coaching company. We help business owners achieve their business and life objectives. Our programmes have changed the lives of thousands of business owners all over the world by removing barriers to growth and ensuring their business pays them richly in money and time. What Shirlaws brings is a language and system for growing businesses and building internal capability. A language and system that gives our clients three simple things: more time, more money, and less stress. Founded in 1999 Shirlaws has now grown to include operations in North America, UK, Europe, Middle East, Australia and New Zealand. Our coaches take the many complex issues involved in running a business and help make them simple and easier to manage. We work alongside clients to guide their businesses to achieve long-term, profitable and sustainable business growth.

To find out more you can download our new book for free at www.shirlawscoaching.co.uk

www.shirlawsonline.com
shirlawsuk@shirlawscoaching.com


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