The Value Behind an Organisational Structure
CEO, COO, CFO and the Kuli – do corporate structures matter when you’re a new business starting out?
By the Savey Fox
A lot of books and experts tell aspiring entrepreneurs that they have to wear a lot of hats especially when they’re going for a lean start-up. When I first heard of this, I imagined it literally: different coloured baseball caps and funky hats like cowboy hats and fedoras. After a while I realised this meant the work done in your start-up.
When planning to start a business, many people become fixated with 2 things: product and pricing. It’s true that these are what makes your business and eventually your bottom line but who’s going to get it to work?
If you’ve ever worked in any company or organisation, you would have come across what’s called an “Organisation Structure”. Within this structure, we break down roles and duties into departments. For example, the Finance department deals with accepting payments and paying off items due and Human Resources deal with hiring and staff issues.
Colourful Hats of your Organisation
There should be 4 main hats you will wear in the beginning although the title for it differs. I’ll use corporate terminology but the title doesn’t matter, just the responsibilities:
The Chief Executive Officer or CEO is the “Boss” of the business. All big changes, decisions and directives will come from this person. A majority of the decisions should come from analysing data provided by the COO and CFO. By right, if the business is big enough, the CEO will report to what is called the Board of Directors a.k.a. the Boss’ Boss.
Chief Operations Officer or COO is the mechanic and technician of your business. His tasks involve daily activities of the business, marketing, sales, production and personnel. Basically, his job is to make sure the company or business makes money.
Chief Financial Officer or CFO deals with everything to do with money. Tasks include analysing and reviewing financial data, reporting financial performance, preparing budgets, and monitoring expenditures and costs. Their aim is to make sure you have enough money to operate and grow.
This is the job that most business owners need to understand and experience. Often more politically correctly referred to as workers or team members, the term “Kuli” comes from many languages meaning “hired labourer” or “bitter use of strength”. While the term is not sugarcoated, it describes the job perfectly. This is the hat you’ll need to wear a lot to bring all the planning done by the other hats into action and therefore, reality.
This role does the “everything else” part of the organisation structure, usually under purview of the COO. Meeting clients, keeping the store clean, kitchen work, customer service and all the unglamorous tasks that are vital to the success of your business fall under this role.
Personally, I think this is the most important role in the structure. Without them, your business would be a brainstorming session and nothing more. Big businesses like Google and Facebook employ many and do their best to take care of them. High turnover and attrition are bad for businesses but this discussion is not within the scope of this post.
This is all well and good but why does your humble small venture need to have this kind of structure? What you’re trying to do is get out of this corporate system, aren’t you? Let’s imagine our hats; each hat is, by right, a department or operation of your business. If you were trying to scale and increase in size, you would have to delegate others to wear some hats too.
So without a proper structure in place, you end up with hiring someone that ends up not knowing what is expected of him or her. Having a defined set of duties not only improves efficiency, it also does away with clashing responsibilities of different positions.
Therefore, having a well written out position along with their roles and responsibilities will allow you to:
1. Break down complex tasks
You will be able to designate and alter job scopes more easily. Imagine if you saw an advertisement for Chief Operations Manager post and the job responsibilities listed is “Operations stuff”. There would be a big question mark as to what is expected by the hiring party, let alone the employee.
2. Know who to hire
If you need an accountant, the responsibilities should be preparing your statements and more along that line.
As a plus, a structure allows you to gauge how many workers you might need to hire. You may find that you need 2 to efficiently run a kitchen rather than 1 poor soul.
3. Targeted development and improve efficiency (automation)
If one day you begin to scale, you can target specific parts of your organisation that you want to improve in order to suit the needs. This could be automating your finance to streamline receivables and payables. Or it could be training frontend staff to improve service quality.
Having structure in your small, one-man venture will save you time and effort down the line when you start to scale and expand. Whilst focus is placed more on how the business makes money, it’s also an essential part of back office operations. Again, the title does not matter; you could call yourself the Grand Emperor of Cube Co. but unless you hustle, it’s unlikely you’ll grow your kingdom.
The Savey Fox is an online blogger from Brunei that covers personal finance, economics and business, and has a knack for breaking down corporate jargon into language understandable to the everyday person, with a dash of wit. You can visit his website saveyfox.com and follow @thesaveyfox on Instagram and @saveyfox on Facebook.