Organizational Structure and Management Advice from Paul Arnold
Organizational Structure and Management Advice from Paul Arnold
By Collin West and Fernanda Orona
From our perspective, the CEO job boils down to these three functions:
Host the vision of the company
Recruit a top team to execute the vision.
Make sure there is money in the bank.
The hardest job among those is recruiting a top team to execute the vision because being good at recruiting requires a plan. And planning your team growth with so many unknowns at the early stage in the company is really tough.
We brought in our friend Paul Arnold, Founder and Partner at Switch Ventures, to ask about organizational structure. Here is our Q&A.
Question: At what point does it become imperative to have organizational structure?
Most startups have a pretty loose organizational structure in the early days. People fit into very broad groups, like “business” and “engineering”. This works as long as the team is around 10 people and you are still seeking product-market fit. You should look for broad functional skills, but not be quick to define job titles and descriptions.
At this stage of company, roles are fluid and can change every month. At some point between 10 and 20 people, you have to focus around areas like “sales”, “marketing”, “front-end engineering”, and “back-end engineering. After you have a few people working on each functional area, you start looking at layers and structures.
Organizational behavior is a continuum – you don’t want to define it all from the beginning.
Question: Why is it so difficult to organize teams at the early stage?
Founders fall on either extreme. Either they go for too much structure early and back themselves into a corner or they have 15 people with no clear process or hierarchy.
My advice is to not bake things in too early. Use titles like “Team Lead” so that you don’t have to give out Director, VP, or C-level titles too early. If you give someone a VP Engineering title, it’s very difficult to take it away from them. It’s a difficult conversation to have but, more than that, that person who is getting demoted loses credibility in the eyes of their peers.
Question: What are the types of organizational structures? Product led vs. function led? How do you know what is right for your organization?
Organizational design needs to follow your strategy. More than anything, product-market fit clarifies strategy. It will become obvious by talking to the founders whether you will be a product-led company or function-led company.
A great question to ask is: “Does everyone work on Product #2 when we build it? Or do you split the team up and have them focus on their respective domains?”
Question: How do you define who owns what responsibility?
The cleanest way is to have everyone report to the person above them. That seems obvious, but you will see deviations from this and that causes problems in the long run.
Moreover, you don’t want to have overlaps in the org chart – you don’t want two people owning the same thing or thinking that they make the final decision. My suggestion is to list every single responsibility out on a piece of paper and define which team will own which set of responsibilities.
From there, it’s the job of the manager to take all of the responsibilities given to their team and assign them to individual team members. This provides clarity for CEOs talking to team leads and for managers having 1:1s with their team.
Question: How to use the org chart for future recruiting?
It’s a little bit like getting product-market fit for this stuff. You start to have clarity for what the right ways to build the org are. By looking at it, you will clearly identify if you have a gap in sales, in marketing, or in engineering.
You can also use the org chart to show prospects of how the company will grow and adapt over the next few years. Paint a picture of how their contribution will fit into the bigger picture.
Question: How do you build processes into your organization?
You can be fancy about the process, but don’t do it. It doesn’t have to be complicated.
The key is listing all of the things that need to get done. You want to detail every task and provide as much detail as possible. From there, build a public calendar with check-ins. That’s good enough and gets 80-90% of the process done for you.
Yes, your company will have unique processes on top of that, but it’s a great way to get up-to-speed because you originally start with no process.
Question: How do you balance different personality types and communication styles within a team?
The biggest pitfall in the organizational world is under-communicating with people, individually and company-wide, about company changes. You need to communicate why the changes are being made, why they are good for everyone, what will happen and what will not happen.
Don’t leave it up to people’s imagination. Organizational charts get rushed out often and it causes problems. Many startup employees define their identity by “what I do for work”. And many ambitious people even tie their self worth to the accomplishments that come from their work.
If you roll out an under-communicated org change, for example, everyone will start sending very concerned text messages to each other and quickly spin out of control. If you think your team won’t talk about it, you’re wrong. They’re going to talk about it with or without you.
There is no such thing as over-communicating org changes. Your plan needs to be thorough and you should field questions from your team so there is clarity and transparency.