Organizational Design Principles
Even small organizations can’t function without hierarchies and specialized roles, groups, and divisions. Well-crafted rules and processes create predictability, reduce conflict, facilitate coordination, and reduce cognitive load… because people are armed with proven responses to routine situations - rather than having to reinvent the wheel each time. It’s impossible to grow an organization or spread excellence without such tried-and-true controls, constraints, and building block. Scaling Up Excellence, Robert Sutton + Huggy Rao
When choosing an organizational structure for your high-growth startup, focus on the next 6-12 months. Don’t try to find the “long term” solution…Once you hit 500 to 1,000 people, you should expect fewer company-level re-orgs... Elad Gil, High Growth Handbook
If we get the right people on the bus, the right people in the right seats, and the wrong people off the bus, then we'll figure out how to take it someplace great. Jim Collins, Good to Great
Principle #1: Organizational structure design should be driven by business goals, not by individuals.
Quick check: does your organizational design pass the “hit by the bus” test? It’s a morbid test, but think to yourself “If this person were to get hit by a bus, would we have designed this role and this job the same way?” If we had to hire again for this role, how many people exist out there who have these particular skills and talents? Have you designed the role to be so unique for an individual that it doesn’t make organizational sense?
Principle #2: Reporting chains are about decision-making. Think of organizational design as a way of answering the question: “Whose vote should count in a tie?”
Principle #3: Organizational design should reflect optimal communication patterns. How do you want information to flow throughout the company?
Principle #4: Organizational design must align with company culture and management practices.
[What we do] Goal setting, performance, job descriptions
[How we do it] Culture and values, communication norms
As you think about your organizational structure, try to think about how many direct reports each person should have. Ideally managers should have 1-10 direct reports. Five is a really great number as a maximum in an early stage Tough Tech startup. Keep in mind that wvery direct report requires one 30-minute 1:1 per week and that every direct report takes time away from individual contribution. Every person has sweet spot ratio of how their time is best spent: management vs individual work. It sometimes takes time to figure this out so start new managers off with only one or two to start and then learn, together, what is best for each person - and the organization’s goals.