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Creating a Structure of Governance that Works

Creating a Structure of Governance that Works

Again and again as I consult with remodeling companies, I recommend the same action to cure many of their ills. And again and again, they report major improvements when they follow this relatively simple advice. The problem is that many of the companies have outgrown their management structure and yet have staff on board – who if mobilized by the right structure – can help lead the company.

As companies grow they need a more formal governing system – one that is multilevel. It is no longer enough to run the company by chatting as you pass another person’s desk or to write them e-mails. You need more consistent and reliable ways to communicate information and make decisions, take on tasks and report back progress. You also begin to need high level strategic planning and monitoring that you may not have needed earlier in your company development. And you need to involve more of your staff in decision making and monitoring the results.

Author Michael Gerber (The E Myth) writes of the critical need to not only work IN your company, but to work ON the company as well. Gerber stresses that every company – no matter how small – needs both big picture and day-to-day governing. Most owners manage to get the day-to-day on the schedule but they often miss the critical big picture planning and monitoring. Most staff are never engaged in working ON the company.

Here are four levels of authority and accountability that make sense for companies over $1 million. If your company is smaller, simplify this structure to what will work for you.

— First establish a Board of Directors. Your board will be composed of yourself and any other partners as well as key management team members (head of sales, production, administration) and anyone else who will contribute effectively and with whom you feel comfortable sharing any information about the company – good or bad. The Board of Directors will meet quarterly or monthly and discuss only the highest level, big picture issues and planning. They approve the budget and business goals, make course corrections, approve any major business decisions.

— Next, develop your key management team as a management force on your behalf. Thus the head of sales, production, and administration will meet with you on a weekly basis for a meeting that is likely to last 90 minutes. There will be a formalized report from each attendee as well as a chance to get input on the challenges each is facing. One person will keep notes to be distributed to each attendee after the meeting. This is a “State of the Company” update and lets everyone in on just how the company is doing, what actions need to be taken, and who is to do what by when.

— On a weekly basis, each department head will meet with their staff to reiterate departmental objectives and find out how each job, or each sale or administrative task is going. Again goals are set and monitored, challenges addressed at his departmental level. As owner you will visit occasionally as an observer but the department head will run these meetings.

— Meet with the entire staff on an annual, semi-annual or quarterly basis. This is your chance as owner to communicate a uniform message about where the company is going, what your vision for the company is and where your major goals are taking you.

Set a schedule of meetings each week that is unvarying. They go on every week no matter what. There is no option to cancel them. These meetings are the first thing to be placed on each month’s schedule. And be sure to keep the meetings on time and on track.

This structure trains tomorrow’s leaders for your company and unifies the company direction and goals. It will save time from those informal communications and certainly enhances accountability. By setting your key goals and then getting every level of the company to attack them, you’ll be amazed by the momentum you achieve. You will be harnessing the true power of your company.

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