As start-ups rapidly scale and add on more talents to the team, there comes a point when the current organization structure is not as effective as it used to be. As a founder, you must decide on a new structure that befits the current stage of growth, and get the buy-in from the employees so that you don’t lose key talents in the process. The approach that many founders will take is to come up with a structure amongst the leadership team, get consensus from the Board, and communicate the change right before they implement it.
The problem with this approach is the potential resistance from the employees. I’ve asked a few friends working at early stage start-ups that are scaling on what is the first thing that comes to mind when they hear the words “implementing new organizational structure”. The responses I received were “large corporation”, “bureaucracy”, “hierarchy” and “control”. Although I cannot say the results from the small sample size I used represent a larger mass, the results were not surprising at all. Even though they are currently working at a company that does have some form of structure, there seems to be some inherent fear of losing the “cool start-up culture” associated with the founders trying to implement new organizational structure as the company grows.
If this is the case, what can a founder do?
1. Discuss openly the purpose: First and foremost, explain to employees why you are trying to implement a new structure by openly discussing the issues that the company is trying to address through the change. Explain what you think the issues are, and hear from employees their thoughts and also incremental issues that you as a founder might have missed. Everyone in the company should understand that the goal of the change is to make the company more effective and a better place to work. And yes, the company will still be able to maintain a cool start-up culture.
2. Prioritize issues: Prioritize the issues that need to be solved. Organizational change cannot solve all the problems that are present in the current structure, and trying to do so will lead to a structure where nothing is solved. Whether the issues are coordination among teams, accountability, timely decision making or anything else, you need to prioritize.
3. Share proposal: Share with the team the structure that you are considering to implement before going to the Board by explaining how it will work and laying out the benefits and potential drawbacks associated with it. Get feedback as they are the ones that will follow the process laid out in the new structure. Give feedback to alleviate any concerns.
4. Receive ongoing feedback from employees: After you receive the buy-in from the Board and employees, then implement it. Make sure you continue to receive feedback on what are good and what are bad about the new structure. The insights gained through observing from the top-down and receiving inputs from the bottom-up will be the basis for your next organizational structure change when the time comes.
Although the above approach may be more time consuming, taking these additional steps will ensure more transparency and alignment between you the founder and the team as their voices were heard in the process.