There are some things you can do to “tune up” your organization structure, even if you don’t completely overhaul it.
Design firms are complex organisms. They rise and fall based on the collective morale of the people who work in them. Organization structure has a big impact on that morale. Yet, my experience with many architects and engineers who are also firm owners is that the moment the topic of organization structure comes up, they are immediately turned off. So many think it is just some amorphous thing that really doesn’t matter and they have little interest in it.
But the fact is that it IS important. And there are some things you can do to “tune up” your organization structure, even if you don’t completely overhaul it. Here are some of those things that you should take a look at:
- Unity of command. Does each person have one direct supervisor and only one? This is a common problem in AEC firms because they are project-driven firms and there is often some sort of matrix or quasi-matrix organization structure. People don’t know who their boss is. Is it the department head of the department they work in? Is it the PM whose job they are working on? There must be absolute clarity about who can direct someone so that person can establish the priorities and the person is not pulled in different directions. I have also witnessed this same phenomenon in firms with two partners who are very close, or a husband and wife who both work there. It confuses the employees and leads to dissatisfaction and problems.
- Confusion over who is responsible for what. This is another frequent area that needs some help in AEC firms. Who is responsible for collection of AR? Is it the PM? Is it the principal in charge of that client? Is it the finance and accounting people? Is it someone else? This also applies to marketing and selling. Who is ultimately responsible for that? The BD people? The PM? The principal? This confusion results in certain steps not being followed and problems – morale and otherwise – as a result.
- No real BOD-CEO reporting relationship. In too many AEC firms with multiple partners there is confusion here. Beyond the decision of who gets to be CEO and how that is made (a common issue), there is also the issue of who the CEO is accountable to. Is he or she accountable to the other owners? Or the BOD? It should be the BOD. The BOD is accountable to the shareholders – they elect the BOD. This whole thing needs to be very clear. I can’t tell you how often I have encountered this problem.
- Support staff reporting relationships. While I hate to think of marketing people, for example, as support staff, the fact is that they are not part of the line (revenue-generating) functions, so we will consider them support for the purpose of this treatise. But who do they report to? The head of marketing, one would presume. Yet in some companies in this business, anyone who is a manager will act as if the marketing people can all be directed by anyone outside of marketing. That is a big problem and frequently leads to relationship problems between the marketing department and everyone else, and morale problems for the marketing people. The same situation exists for all managers of these “support” units. While each of them should have a single boss, many times anyone who is an owner of the firm thinks they work for them.
- Owner or principal reporting relationships. I have worked with a number of AEC firms where the individual owners didn’t understand that they reported to someone else – some ONE other person – and the company is not just a lawless federation where any owner can do what they want or cross over any organizational lines to direct people as they choose to. Principals, too, have functional roles and each of them needs someone to report to. That “someone” is not a group or some amorphous collection of more senior owners or principals.
I could undoubtedly go on here with more on this subject but hopefully I have stimulated your thinking such that you will be on the lookout for any of these issues in your firms and address them before they become more serious problems than they already are.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.
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