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Plan Before You Hire: Why Organizational Structure is the Key to Sustainable Growth

Nov 3, 2021| Reading time: 12min

BY Sharon Rusinowitz

Director of Content Marketing

A lot of companies are happy to hire first and figure out their organizational structure later — until they find out how much trouble that approach can cause. Businesses that hire too quickly risk high turnover, low morale, and poor customer satisfaction.

Organizational structure is vital for managing workloads and getting the best out of your employees. Getting yours in order before you grow your team will help you create a sustainable plan for hiring, onboarding, and training as the business scales.

How to Confidently Approach Your 2022 Headcount Planning

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A Roadmap for Your Organization Shows Who You Need to Hire

Having an organizational structure in place helps you hire who you need and build a payroll budget that’s supportable in the long term.

Too often, companies adopt a short-term approach to hiring. Instead of tying the hiring plan to long-term business goals, they add talent to the team to meet immediate needs. Maybe they’ve just raised a round of funding. Or perhaps they’re leading workforce planning at a high-growth startup and they’re under pressure to expand rapidly to meet targets. Unfortunately, this type of short-term hiring has become even more prevalent in the post-COVID workplace. A 2020 Korn Ferry survey of more than 600 talent acquisition professionals finds 68% are now focusing only on short-term hiring needs. Yet, taking a short-term view can damage your organization.

That’s because a near-term approach usually presents problems later down the line — employees can become redundant and over-tax payroll. For example, if companies hire without a plan, they’re more likely to overhire. Then, they find there’s not sufficient revenue to support employees. To avoid this scenario, Brian de Haaff, co-founder and CEO of Aha!, says companies should consider hitting pause on their hiring surge until they have a plan in place. “Staffing up quickly without a real plan is often a sign that your company is growing too fast. In order to make wise decisions as a founder, you must understand exactly what (and who) is needed for the business to thrive. And that takes time.”

A solid organizational structure supports a long-term hiring approach because it outlines critical roles and aligns them to business priorities. Inevitably, you’ll be better prepared for unexpected growth or turnover. From here, headcount planning becomes a proactive, rather than a reactive, exercise, says Samantha August Allen, fractional COO and growth consultant for early-stage startups and SMBs.

Having worked with numerous companies that needed to hire in haste to fill skills gaps, Allen advises that “you always want to have a hiring plan and stay ahead.” For example, if a business falls behind on recruiting tech talent and they must hire five software developers urgently to ship new features, HR is forced to scramble to fill the positions. In this rush, it’s easy to make hiring mistakes. However, if the company has a long-term hiring plan, they can anticipate this talent shortage and ensure the developers are hired and fully onboarded by the time the company requires their skills. “Try to stay six months ahead for each hire because it does take about six months for an employee to get acclimated into a role,” Allen shares.

A great way to get started with your organizational structure is to visualize it, recommends angel investor Paul Arnold: “Remember to make choices with future employees in mind. Where will they fit in? To drive this home, actually sketch out an org chart — or even several variations — filling in existing employees and leaving blanks to inform your hiring plans.” Of course, your industry or company will evolve, and Arnold says this org chart must change along with the business. Adjusting your org structure allows you to scale the team sustainably through all stages of growth.

ChartHop org chart visualize organizational structure

Clear Structure Improves Onboarding

Implementing an organizational structure also offers a clear, more inclusive onboarding experience. When an onboarding process is clear and inclusive, all new hires have adequate resources to understand the organization, its network of relationships, and where they fit in the business. To make this happen at your company, create and share a visualization of the org structure with each new team member.

Every HR leader knows the onboarding process is critical for keeping new hires happy and engaged. Ron Carucci, the co-founder of executive coaching company Navalent, writes that effective onboarding increases retention and productivity. Yet, a PwC survey of 1,200 U.S. remote workers finds 30% say onboarding is worse than pre-COVID.

A clear org structure addresses many of the questions employees bring to work on their first day. Where do I fit in? Who’s on my team? Who do I ask about the wellness stipend? It’s why Stacey A. Gordon, the CEO of DEI consultancy Rework Work, says onboarding is “how new hires learn the company.” And Gordon adds that sharing the organizational chart should form part of this process.

Anthony Rotoli, head of talent at Assurance, says an org chart is an especially valuable tool for fast-growing teams. “Our organization is always changing! People can’t keep up with who is who and who to go to for what. We needed an org chart to visualize the org, especially as we onboard new people.” While onboarding can be overwhelming, an org structure gives new team members a grasp of how the business works.

Visible Career Pathways Support Employee Development

An organizational structure doesn’t just put the right talent in the right place — it also allows you to plan development pathways and retain your talent. A development pathway is a map for employee growth, showing team members how to gain the skills and experience they need to advance their careers.

Employees are more likely to walk away from their jobs if there’s no room for advancement. However, LinkedIn’s 2020 Global Talent Trends report finds companies that prioritize employee training see 53% lower attrition than those that don’t invest in professional development.

With an organizational structure, your people see clear opportunities for growth — whether that’s moving into management or honing specialized skills. It shows the workforce they’re in an environment that prioritizes their development. Candidates understand what a future at the company might look like and how they can progress to those new roles. And this will be key for retaining your best employees. Anne Fulton, the author of The Career Engagement Game, says HR teams must make career paths visible to improve retention.

Once you’ve established the org structure, you’ll also have deeper insights into the skills and experience employees need to advance. Many HR teams use this insight to build training programs and succession plans that support the company through growth.

Structure Leads to Manageable Workloads

Particularly if you are running a young company, hiring without an organizational structure can lead to unpredictable workloads. This is where the business risks understaffing, which creates serious problems for the organization and its people, like poor customer service and employee burnout.

If you don’t have an organizational structure, you won’t have enough visibility into what people are working on. In turn, employees can easily become overwhelmed with too many assignments. Some of these assignments may even fall outside the scope of their core role. Likewise, when it comes to managers’ workloads, organizations should consider span of control as they expand their teams. Without a proper structure, managers end up taking the strain because they have too many direct reports. Managers feel overwhelmed — they can’t provide their team members with enough feedback or guidance. Employees, in turn, are unsupported. They disengage and eventually decide to move on.

ChartHop span of control organizational structure

An organization structure leads to manageable workloads because it clarifies responsibilities, roles, and reporting structures. This structure allows the organization to map out each employee’s tasks, providing a high-level overview of everyone’s workload. That’s why the org structure makes it easy to spot instances where people take on work outside of their core duties. Equipped with that kind of data, you can take steps to prevent burnout.

You’ll also minimize the risk of rapid hiring for the wrong roles as you scale because you can easily consult the org structure before growing the headcount. For example, if you add more product team members, you’ll probably need to grow engineering, too. Again, being intentional about the organizational structure allows you to identify these hiring needs proactively.

Failing to Plan Your Organizational Structure Limits Growth

If you feel like you’re hiring without a plan, it’s time to invest in developing a clear organizational structure. Otherwise you’ll end up having to divert resources to keep up with high employee turnover and low morale that hinder your company’s growth trajectory.

Instead, treat the organizational structure as a roadmap for hiring and a framework for development. That way, you’ll make strategic hiring decisions that set new hires up for success and see the business through long-term growth.

If your goal is to hire the best people at the right time, you’ll need to make hiring choices aligned with your company’s broader strategy. For best practices and tips, download our guide on how to confidently approach your 2022 headcount planning.

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