How can I build my company’s hierarchy?

Comments

1. Randall Parker, MBA says:

   April 15, 2010 at 6:13 pm

   You have a few options, which will help you to accomplish this task. I think that the most important choice you need to make is how quickly all of this needs to be in place. If you have the capital to immediately put a 200+ member organization in place, then you will want to set-out all of your departments and hierarchy upfront.

   In most cases, growth is more viral and less dramatic. Even if you have the capital to immediately acquire a huge personnel structure, the need to rush into development is probably not as great as you may envision.

   Having said this, you mention that you are setting-up a holding company. Most holding companies are generally shells, with the active corporations below, simply occupying balance sheet space. The holding company probably does not have need for many personnel beyond its officers, who likely hold officer positions in the subsidiary organizations as well.

   Day-to-day bookkeeping functions can likely be performed by accounting staff in one of the subsidiary organizations. The only typical activities of the holding company would be cash transfers between entities and distribution of dividends. Most of the heavy lifting would be handled at the subsidiary level. These companies should have their own hierarchical structure already.

   Since the investments you list include private equity, real estate, and stocks, I imagine that each subsidiary has active management, while the holding company simply makes global decisions for the enterprise. Again, this obviates the need for a large structure within the holding corporation.

   In any organization, setting-up the hierarchy usually takes place on an as-needed basis. You might start with an office manager, who takes care of all bookkeeping and clerical functions. S/he may later hire an assistant, and then accounting personnel, secretaries, A/R and A/P clerks, etc. as the business grows.

   The same can take place in the sales department. You may start with a sales manager and one or more salespeople. As sales increase, you may add a customer service department, break sales into territories, add telemarketing or e-support services, etc. You may even outsource some of these tasks.

   Again, my point is that rather than setting-up a strict structure of where you see the business going, and then being trapped by a lack of flexibility, just let the business grow into itself virally. Once you hit $200 million or more in sales, you may have to restructure everything into a formal hierarchy, but focus more on building the business, than just simply putting a structure into place, and forcing the business to fit that structure.

   It is true that you really can’t think of everything upfront. Stay flexible, and just grow the business naturally.

   Good luck!

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