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HOW TO ORGANIZE YOUR CONSTRUCTION BUSINESS FOR SUCCESS
HOW TO ORGANIZE YOUR CONSTRUCTION BUSINESS FOR SUCCESS
As soon as you read the words ‘organizational chart,’ your brain conjures up an image of some complex flowchart in the back of an employee handbook.
You’ll think, “I don’t really need one of those for my construction business”, especially if you own a small construction business.
But you would be wrong.
YOUR ORGANIZATIONAL CHART SHOULD SHOW AND TELL
Most construction businesses, like many businesses in general, don’t have an organizational chart. If they do have an organizational chart, then their organizational charts only show the internal structure by detailing the roles, responsibilities, and relationships between individuals within an entity.” (source: Investopedia)
The problem with most organizational charts is that they only show the internal structure of the business.
They don’t tell the people within that structure how decisions are made.
Here’s my simple definition of an organizational chart:
a visual representation of how a business makes decisions.
Your organizational chart should be a decision-making machine for your business.
TIME, MONEY, EFFORT IS LOST WITHOUT AN ORGANIZATIONAL CHART
Owning and operating a construction business without this decision-making machine is like trying to build a project without a set of plans.
Sure it can be done, but it will come at a cost.
You’ll waste time by trying to solve problems on-the-fly. You’ll waste money because mistakes will be made, which in turn, will increase the inefficiencies of your production.
Think of the organizational chart for your construction business as the set of plans and the scope of work for your business.
THREE STEPS TO CREATING YOUR ORGANIZATIONAL CHART
The hardest part of designing your organizational chart is knowing where to start.
Use the sample ORG CHART TEMPLATE below to start laying out the visual representation of your business.
The X-axis represents the Divisions of your business, and the Y-Axis represents the Roles within your business.
STEP 1: DEFINE THE DIVISIONS OF YOUR CONSTRUCTION BUSINESS
If everything depends on you, the business owner, then you will remain the bottleneck of your organization.
If you want to remove yourself as the bottleneck, then step one of creating an organizational chart that works is to define the divisions of your business.
Most construction companies have at least three divisions: Operations, Administration, and Financial.
You may have more, and that’s fine.
If this is the first time you’ve ever attempted to create an organizational chart for your construction business, then keep it simple.
List the Divisions of your construction business along the X-axis and define them by how they serve your business.
Operations is HOW WE PRODUCE THE WORK/PRODUCT/SERVICE.
Administration is HOW WE COORDINATE COMMUNICATION BETWEEN THE OTHER DIVISIONS.
Financial is HOW WE MEASURE THE PROFITABILITY OF THE BUSINESS.
STEP 2: DETERMINE THE ROLES IN EACH DIVISION
Before you start stacking up all the current jobs in your construction business within your newly defined Divisions, you need to create one more layer of organization along the Y-axis of your chart.
Along the Y-axis, determine the Roles within your organization.
Roles for your organization might be executive, director, manager, leads, support, or entry levels. (see the sample org chart above).
PRO-TIP: Roles define the responsibilities of the individual Positions – which is the final step.
Executive Role – responsible for the successful execution of their respective division to achieve the desired outcome of the business owner(s).
Director Role – responsible for leading and supporting the managers within a division.
Manager Role – responsible for communication and coordination of the various teams for which they are responsible.
Lead Role – responsible for leading a team(s) to produce the work and training others on the team(s)
Support Role – assist the Leads, Managers, and other personnel to accomplish assigned tasks to achieve team goals
Entry Role – performed assigned tasks and contribute to the success of the team(s)
Each Role on your organizational chart is a level within your organization.
STEP 3: DESIGN THE POSITIONS
Now that you have defined the Division within the organization along the X-axis, determined the Roles (or Levels of Responsibilities) along the Y-axis.
The last step will be to design the individual Positions and give them a name.
Don’t make this hard.
The name of the executive, director, and managerial positions will most likely come from a combination of the name of the Division and Role.
The Chief Financial Officer (CFO) is the executive level position for the person responsible for the financial division of the company.
The Director of Operations (DOO) may report to the Chief Operations Officer (COO), and the Project Managers report to the Director of Operations.
The names for the executive and director positions are pretty standard across most businesses. You will have more specific position names for the Lead, Support, Entry, and even Assistant positions.
Don’t discount the power of the job title or position name. Check out this article where I discuss how having clearly designed job titles help create engaged employees for your construction business.
HIRE THE POSITION, NOT THE PERSON
A structured and well-designed organizational chart shows how each position supports the business’ operations at each level and within each division.
Do you know what you don’t need to show on the organizational chart?
Answer: your employees’ names
Names change as your company grows. The functional role of the position does not.
That’s the biggest mistake I see many construction business owners make when they attempt to create an organizational chart. They think about the people who currently do “that job”.
Instead, you need to think about what the job is, what it’s called, and how it serves the overall business.
If you design a position around a person, and that person leaves, then you are left with an impossible task. You have to find another person just like the one that left.
But if you design the position and list the duties and responsibilities and show how that position serves the overall business, then you can recruit people to fill that position based on competency and character you require. You won’t have to rely on personality and the previous person’s experience.
Positions won’t change, but the people will.
Forget the names. Focus on the position.
THE BENEFITS OF AN ORGANIZATIONAL CHART
An organized business is a more efficient business. You’ll experience fewer inefficiencies, increased communication, and you’ll have happier employees.
Your organizational chart should show and tell your employees their roles and responsibilities and how they serve the overall business.
In my previous article, I wrote that your employees want to know “What’s next?”
The best way to show your employees a path to success, or ‘what’s next’ is to create, display, and update your organizational chart.
Your organizational chart is a decision-making machine. “It is a tool that any employee can use to learn who to go to with questions, key information, and concerns.”
ORGANIZE YOUR CONSTRUCTION BUSINESS TO ATTRACT YOUR NEXT BEST EMPLOYEE
If you want a step-by-step Hiring system, including how to design an organizational chart that functions like a decision-making machine, then you need to enroll in the Built to Grow program in the Built to Built Academy™. Click here to apply for the Built to Grow program and secure your spot in our next cohort.