From the Ask Tom mailbag –

Question:
I recently had a conversation with a leadership guru that stated that you don’t need formal structure in a small business, if you have good leadership. He indicated that you don’t need documentation, role descriptions, or even much for KPIs.

Response:
If life were only that simple. Let’s break this down over the next couple of days.

You don’t need a formal structure.

You have a structure. Every company has a structure. Structure, or organizational structure, is simply the way we define working relationships between people. Org structure is a mental configuration, usually starting with the mind of the founder (or current CEO). But, everyone else in the organization also has a mental configuration of those working relationships as well.

We translate that mental configuration to a piece of paper, with boxes, circle and arrows and call it an organizational chart. It’s a two dimensional representation of that picture we have in our heads. Important in that org chart is the way we define two things –

• Accountability
• Authority

In the working relationship between two roles in the organization, what is the accountability and what is the authority (to make decisions or solve problems the way we would have them solved)?

So, on the face of the statement made by your leadership guru, I would disagree. It is important to define the working relationships and to put them on a piece of paper so we can discuss them. The purpose for the discussion is to ensure that what the founder, or CEO, thinks is pretty close to what everyone else thinks. Without that agreement, friction occurs in the form of personality conflicts or communication breakdowns.