Over the past week I’ve had the good fortune of working with a beverage distributor in my area. We’ve broken up the Two Day Rockefeller Habits Workshop into four half day sessions. In our first half day we defined their organizational structure to identify the key seats in their organization, where, if any, there are multiple people in key seats and where are their empty key seats. At the same time I’ve been reviewing Jim Collins’ How the Mighty Fall. It’s reminded me of Collins emphasis from the Dallas Growth Summit Your Company Key Indicator for People - Corrections.
Collins is quoted in How the Mighty Fall, “If I were to pick one marker above all others to use as a warning sign, it would be a declining proportion of key seats filled with the right people. Twenty-four hours a day, 365 days a year, you should be able to answer the following questions: What are the key seats in your organization? What percentage of those seats can you say with confidence are filled with the right people? What are your plans for increasing those percentages? What are your back-up plans in the event a right person leaves a key seat?”
When working on this specific exercise it was clear one of the reasons this company is successful is their clarity in their organizational structure. There was little disparity between the executive teams assessment for who belonged in which seat. It was possibly the best company I’ve worked with in having key seats identified and having no multiple people in these seats to confuse their organization. How well are your businesses key seats identified?
The biggest obstacle in many companies is the lack of clarity in who occupies a key seat, as well as people in key seats having too many responsibilities. As a company grows the owner and key people increase their accountabilities, stretches the limitations on what they can lead and manage.
In some cases there are multiple people occupying key seats. This raises the question of accountability. Who ultimately is responsible for the outcome then? Another common answer is “we all do that!” One of my clients had a name for the "we all do that" identifier – Popeye! When everyone is responsible we’ve discovered no one is!
Once your key seats are identified the next exercise is to identify leading and lagging indicators for accountability. This exercise is a bit more challenging, however most companies can identify lagging indicators, while it becomes more demanding to identify leading indicators. Look for more definition on leading indicators in my blog, Metrics: Leading & Lagging Indicators. Realize that leading indicators are most helpful because they are predictive. If you recall Verne’s message in Mastering the Rockefeller Habits is leaders are most effective when they are good at delegating and forecasting. Good leading indicators are a prerequisite to being able to predict in your business.
So here’s my final point on your organizational structure. Can every person in a key seat in your business respond to the following question: What do you do? This is not a job title, but rather a personal statement of responsibility. Collins answer is, “I’m the one person ultimately responsible for x and y. When I look to the left, to the right, in front, in back there is no one ultimately responsible but me. And I accept that responsibility.”
The question becomes how many of your key people would answer that question appropriately? How many of the seats in your business are occupied with people who are dedicated and committed to responding this way? Are there too many positions where you are the person who responds to this question?
Is this the one thing you need to be working on for your business to grow? We’ll explore One Thing again and a place where life and death decisions count on it being clear in my next blog.