2 minute read / Feb 25, 2020 / startups /strategy /management /
Why Your Startup's Org Chart is Limiting Your Growth
This is the theoretically ideal organizational chart of a startup. There’s a CEO at the top in red, VPs in orange, senior contributors in dark gray, team leads in green, and junior individual contributors in light gray.
This is the org chart of the typical startup. It’s a very different in reality. The departments are lopsided and scraggly. The span of control is out of control. Sometimes there are directors running teams that should be headed by VPs. Other times, departments are missing leaders and so another leader takes the helm. Is this so bad?
As a startup evolves from product market fit to scaling, organizational design becomes an executive imperative. To scale means hiring lots of people. Hiring a large team is necessary, but insufficient. That team needs the right structure to thrive.
Span of control the number of people reporting to a manager. Most managers work well with 6-7 reports. Weekly one-on-ones, career planning, coaching, training and development consume a big chunk of manager’s time. Managers bear another major responsibility: building their teams.
In high growth companies, leaders may spend upwards of 30% of their time recruiting - about one to two days a week. First meetings, second meetings, references, hiring committee meetings - it adds up quickly.
If your span of control is sixteen, your Monday and Tuesday are consumed entirely by one-on-ones. Combine that with recruiting and you have one day a week for the day job. That won’t work.
Many startups go through the first transition from founding team to a few VPs and then don’t think through the importance of middle management. The reason middle managers are key is they cut the span of control and defray the recruiting responsibility, freeing leaders to spend time running the company. In the transition from product market fit to scaling, this is a key step.
And it’s easy to overlook that necessity to scale.