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Creating structure in the family business

Don Tyler for Progressive Cattle Published on 25 November 2020

A business cannot achieve its full potential without establishing a level of structure that provides clarity for each person’s areas of responsibility, standard procedures for tasks, levels and limits of authority for each family member and employee, and an agreement on how people will be held accountable.

Without structure, there will eventually be chaos. The business cannot achieve any level of operational excellence, nor will there be universal satisfaction and full engagement of the staff.

Some families feel that adding structure will create barriers to productivity and limit their flexibility. In reality, just the opposite is true. Structure enhances everyone’s effectiveness by establishing their main areas of focus in the operation, providing clear separation of responsibilities and authority, streamlining the decision-making process and allowing consistent tracking of performance to ensure that each area is meeting expectations.

Common elements of business structure

Any business (and the family business is no exception) benefits from some elements of structure including job descriptions, operating procedures, policies, an organizational chart, performance reviews and a system for accountability.

Job descriptions provide a simple outline of the duties the person in this position must perform, common expectations for following procedures and policies, the need to operate in a safe and efficient manner, and other duties that may be requested by leadership. They are written for the position, not the person, so if there is a change in personnel, we do not need to completely rewrite the document.

Structure in the family business

Having written standard operating procedures or “SOPs” provide clarity on exactly how a job should be performed. They can be simple checklists pulled from an operator’s manual or downloaded from the manufacturer’s website. These resources tend to also provide thorough instructions for using the equipment safely as well as regular maintenance procedures. We need SOPs for our own processes as well so anyone can review the document and complete the procedure, even if they have rarely done that job.

These also provide a reference for how we all agreed the duty should be performed, and we can track the effectiveness of our procedures by looking at the results achieved. When SOPs are in place, training other people to do the task is efficient, consistent and reliable.

Why do I need an employee handbook if everyone who works here is a family member? That’s a question I often hear from family business clients. Conversely, it is interesting the number of requests I get from family businesses to help them create an employee handbook because they have seen the problems that arise by not having one in place. Without clear policies on the amount and frequency of time off, behavioral expectations, disciplinary actions, the timing of paychecks, work schedules, use of equipment, social media guidelines, as well as a clear statement of your core values and company vision, fairness and accountability are very difficult to achieve.

Your organizational chart may be somewhat flat and narrow, but it provides the clarity of authority and chain of command that benefits everyone.

A consistent method for doing performance reviews, including every family member, is essential to maintaining your production and behavioral standards, as well as holding everyone accountable for their level of performance.

Without these structural elements, the best performers do the majority of the work, and the others are allowed to perform at a level of mediocrity that would be unacceptable in any other business.

Advantages of organizational structure

People who work in an organized environment appreciate knowing that decisions are made through a consistent process, the staff is treated fairly, performance is measured in an equitable manner, and the entire operation can focus on achieving the desired results.

A culture with this working environment attracts the best people available, has high levels of engagement and eliminates toxic attitudes swiftly and tactfully. They also attract the best opportunities from other highly productive businesses and entrepreneurs because successful people want to work with other successful people. Lenders know they are easier to work with and have more predictable financial outcomes. Their time is used efficiently, and they want to continue to work with these types of operations and their people from one generation to the next.

Getting started

If you do not have a structure in place, or you only have a few of these elements established, begin the new year with a plan to methodically create each one. In most situations, the job descriptions are a good place to start. Have each person write down what they normally do throughout one or two normal weeks, then organize those duties into appropriate categories. Discuss all the job descriptions in a group meeting, make necessary adjustments and finalize each one.

The job descriptions make it easy to create an organizational chart with each role in the operation and the person responsible for that role.

Next, begin to develop your employee handbook or at least a set of policies for managing staff. Create each policy separately, including the specific details of each area, then compile them into a completed document. One note of caution: Once you create a document that has the elements of an employee handbook or employment policies, there is a legal requirement to include specific statements on equal employment opportunity, non-discrimination and anti-harassment policies, employment-at-will notification and other “legally essential” statements. They are fairly standard statements, and some professional advice can be helpful. I’d be glad to provide some assistance.

Throughout the year, you can work on compiling your SOPs. They can be time-consuming, but if you make a commitment to create one or two each week, you’ll have them done within a few months.

The beginning of a new year is always a great time to implement new ideas, strategies, policies and initiatives. Don’t miss this opportunity to take your operation to the next level.  end mark

ILLUSTRATION: Illustration by Corey Lewis.

Don Tyler is owner of Tyler & Associates Executive and Management Coaching. For more information about this topic or as a trainer/speaker, he can be reached at (765) 490-0353 or through his website at Tyler & Associates.

For additional information on accountability in family businesses, read “Holding family members accountable”.

Don Tyler
  • Don Tyler

  • Founder
  • Tyler & Associates Executive and Management Coaching
  • Email Don Tyler

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