Stay in Your Lane, Part 2: Creating Infrastructure

2. Forget the org chart.

Yep, the old organizational chart has to go, too. Or, at least, it has to go last. We find that org charts can be even more counterproductive than job titles. They are usually intended to communicate lines of reporting and management supervision, but most advisory firms aren't really big enough to require a lot of "management." More importantly, as you get people working in the areas of their strengths, you'll find they don't really need much supervision. Particularly in small businesses such as independent advisory firms, you generally want the best person at each job to be doing that job. Even owner-advisors, who hopefully know a lot about financial advice and client care, aren't the most knowledgeable about the back office, data entry and technology systems. The people doing those jobs may need some help with workload or a tough decision once in a while, but they usually don't need supervision. What's more, people who like to supervise other people are quite often the last people you want supervising anyone. Another benefit to keeping supervision to a minimum is that eliminating expensive middle management can really reduce operating overhead.

3. Focus on job descriptions.

Instead of starting with a pre-determined org chart or job titles, think about all the tasks that need to be done for your firm to be the firm you want and to deliver the services you want to deliver. Then, look at your team—their skills, strengths, weaknesses and preferences—and start thinking about who's best at doing each task that needs to be done.

From there, some general job descriptions will begin to form, as will the names of people who should be taking on those responsibilities. You may find that you don't really have the right person for one or more of those jobs, or that someone on staff doesn't fit in this way of looking at the business. Building a successful business can require some tough decisions. You might also find that one or more people (including yourself) may have to take on some responsibilities that they don't really like. Combining those duties with others that the person does like can help; so can making the assignment temporary, until the firm grows large enough to warrant a full-time employee for it.

4. Do it together.

In most firms (with 20 employees or less), we see creating a firm's infrastructure as a team event. Because the employees themselves are in much closer touch with some tasks, their input is important in determining who should do them. And to make the firm run well, their buy-in is essential. Plus, you'll probably need some people to compromise on what they prefer to do versus what needs to be done. Consequently, we find it's far better to include everyone in the firm in the writing of job descriptions—and in determining who's going to take responsibility for what. You can do this one-on-one, through written submissions or in group meetings. We like using all three: There's no downside to maximum input. The important thing is to make sure that you know what everyone wants to do and believe they should be doing.

By creating a firm infrastructure based on matching all the tasks that your ideal firm requires with the skills and preferences of firm employees and owners, you can put the right players in the right positions and virtually eliminate the confusion, friction and poor performance caused by people straying out of their lanes. The result is invariably a more successful firm. Next month, I'll tell you how to maintain this structure as your firm grows.