Company A’s tragedy caused by a lack of managers
This time, I would like to start by telling you about a tragedy that occurred at Company A, where my friend once worked.
Company A, a venture company, was in the process of preparing to go public. They needed to put in place an organizational structure that could withstand the screening process for going public, but the biggest bottleneck they faced was “Shortage of middle managers”It was.
As a remnant of the company’s early days when it was short on people and money, it was common for one manager to serve as the head of multiple departments at Company A. Thanks to active recruitment and increased staffing, the organization is expanding rapidly, but the number of managers has not increased in comparison.
However, if things continued like this, it would be difficult to go through the IPO review. Securing middle management was an urgent matter. With no other option, we promoted several members who lacked management skills to make up the numbers.
However, the results were disastrous. Managing someone who has not acquired management skills is like a doctor performing surgery without the skills to do so. Not only were members in various departments confused and exhausted, but some people left the company due to unsatisfactory personnel management, and others left because they were fed up with the tense workplace. Naturally, the company’s performance did not improve, and the IPO was postponed.
The example of Company A is a typical example of what happens in rapidly expanding organizations. I’m sure you’ve heard of similar stories around you, even if they’re not as extreme.
“If we need middle managers, we should just hire people with management experience who can hit the ground running.” That’s what many companies think. But that’s just an armchair theory.
To begin with, there are not many such people in the job market. In addition, even if they are all called middle managers, the management style and role required differs depending on the company.The chances that someone who has experience as a middle manager at another company can move to another company and immediately contribute are not as high as you might think.That is it.
So what should we do? This time, we will introduce some effective ways of thinking to solve this problem.
Once you know about it, you’ll be surprised at how simple and useful it is, but for some reason most people don’t realize it. It’s like the “egg of Columbus” kind of thinking. Please read on while thinking about your own organization.
The secret to keeping the organization afloat despite adding 400 people in three years
I previously served as president of a subsidiary of Recruit.
The company initially had 150 employees, but has grown to 550 in three years. Among the 400 employees, many had experience in various positions, such as directors and division managers of listed companies, but not a single one was hired with the title of “manager” (of course, we offered them compensation according to their role). The reason we hired people with managerial experience without a title is because, as mentioned above, different companies have different expectations of managers.
After joining the company, we confirmed that they had management skills, and then appointed them to managerial and executive positions that were appropriate to their abilities.The organization grew smoothly without any confusion, and the turnover rate at the time was in the low single digits.This subsidiary was an organization centered on engineers. If you think about it, don’t you think this turnover rate is quite low?
So how did they achieve this rapid growth? The secret is in their organizational chart. But it’s not just any organizational chart.Future Organization Chart” was utilized.
Your company probably has an organizational chart. A “future org chart” is exactly what the name suggests: a future version of that chart. It’s a chart of what it will look like in the near future, whether that be three months, six months, nine months, a year, etc.
Every company prepares a “recruitment plan” for the next fiscal year’s new hires and mid-career hires. In addition, I think many companies also prepare a “development plan” for their human resources.
But therein lies the problem.Most companies create separate recruitment and development plans.Especially in large organizations, the human resources department often has separate recruitment and training departments, and each department makes plans for “partial optimization.”
What is the problem if recruitment plans and training plans are not linked? To put it simply, tragedies like those in the case of Company A will occur. There are no qualified personnel in the company when they are needed. They rush to hire but are unable to find them right away. As a result of making promotions in a rush, the organization will no longer function properly… From what I can see, there are a surprising number of companies that have similar issues.
How can we avoid this tragedy?
As some readers may have noticed from the example of Company A,The bottleneck in creating a good organization is often the quantity and skills of middle managers.That is it.
That’s where the “future organizational chart” comes in. By comparing the current organizational chart with the organizational chart one year from now, you can see how many people will be added in each department, and how many middle managers and specialists you need to add. By implementing recruitment activities and managerial training in line with that, you can grow your organization without causing confusion.
The future organizational chart will tell you how many people to hire
Now let’s explain how to use it in practice.
Here is the future organizational chart 18 months from now: Let’s say that after comparing this future chart to the current chart, you realize that you need to add two senior managers and five middle managers.
Next, we tag our existing talent pool with people who are likely to fill those positions in one year, three years (not one and a half years, but a little further into the future).
Let’s say the tagging results are as follows:
《Can be promoted after one year》
Senior management: 1 person
Middle management: 2 people
《Can be promoted after 3 years》
Senior management: 1 person
Middle management: 2 people
From the above, even if you can train people tagged for three years from now and make them a part of the workforce in a year and a half, you will still be short one middle manager. In other words, at least for middle manager positions, you will need to start recruiting early, find new middle managerial candidates among your existing employees, or revise your personnel plan downward.
How to create the organizational chart of the future
Now that we understand the benefit of creating a future organizational chart in that it can clarify issues (surpluses or shortages of personnel), let’s explain how to create a future organizational chart.
Depending on the company, there are many cases where a medium-term management plan such as a three-year plan is created. Such plans usually show the trend of labor costs as well as personnel plans, so a future organizational chart is created based on this data.
If you don’t have documents such as a three-year plan, or if you have them but can’t get them to disclose to you, you can still make a rough estimate by following these steps. You’ll need three pieces of information: (1) next year’s sales plan, (2) this year’s sales plan, and (3) the current number of middle managers.
For example, if you need more middle managers in the same ratio to your current sales, here’s how you would calculate it:
When I was at Recruit, what I did was calculations based on personnel planning.
Let’s say an organization has a plan to “increase the number of employees by 150 in 18 months.” If the number of members per manager is 8 to 10, the number of managers needed is 15 (150 ÷ 10) to 19 (150 ÷ 8). In other words, 15 to 19 managers will be needed after 18 months. Since it is necessary to recruit a large number of people and train managers at the same time, it seems quite difficult.
When I talk about the organizational chart of the future,How long should the organizational chart be created for?” is a question that often comes up. In theory it is possible to create figures as far into the future as one wishes, but the further out you go the less accurate and realistic they become.
On the other hand, what is the minimum period for which an organizational chart should be created? The answer is,It depends on how long it takes for your company to hire and train you..
For example, let’s say an organization needs a manager. If it takes an average of six months to hire and six months to train, even if the organization starts recruiting now, it will take a year to actually add a manager. This means that the organization needs an organizational chart for at least one year into the future.
However, this should be considered a best-case scenario. Even if the recruitment process averages six months, it can still slip away, and the same goes for training.
Considering this, it is a good idea to set a buffer period of six months and create a future organizational chart one and a half years from now (six months for hiring, six months for training, six months for buffer). This is the reason why I used to create a future organizational chart one and a half years from now. I created an in-house management training school called Nakao Juku to develop managers, and we developed managers in six to nine months.
Helps employees advance their careers
The information that the future organizational chart provides is of course something that managers and human resources departments would want to know. However, it is also useful for organizational members. That is because:Looking at the future organizational chart will show you what new positions will be created, allowing team members to prepare for their own career advancement.That’s why.
When I introduced this idea of a future organizational chart at the management seminar (Nakao Juku) that I run, several managers immediately put it into practice. One of them posted a future organizational chart of his company one and a half years from now to all employees on Slack, and several employees who saw it expressed their desire to try out for each position.
The members who had stepped forward then began to think, “How would I make decisions if I were in that position?” and the content of their comments changed.
Of course, there will be some people who don’t necessarily want to advance in their careers, but if you understand what the future of the organization will look like, you will have more room to avoid a career that you don’t want.
It is beneficial for both the company and individuals to prepare each member for upcoming organizational changes. Sharing the future organizational chart within the company has a variety of benefits.
Why not try creating and using a future organizational chart at your company?
*This article was first published on April 8, 2022.
Ryuichiro Nakao:President and CEO of Nakao Management Research Institute. Graduated from the Graduate School of Engineering at Osaka University in 1989. Joined Recruit. Served as Executive Officer (Business Development) of Recruit Home Company, President of Recruit Technologies, Vice Director of Recruit Works Institute, etc., before assuming his current position in 2019. He also serves as an outside director of Tabikobo Co., Ltd., an outside director of LIFULL Co., Ltd., a part-time auditor of LiNKX Co., Ltd., a fellow at Hakuhodo DY Holdings Inc., and a member of the TEPCO Frontier Partners Investment Committee. His latest books include “Explosive Growth Management that Raised 1,000 Elites” and “The World’s Simplest Problem Solving.”
(Serial logo design: Mio Hoshino, Editing: Ayuko Tokiwa)
Source: BusinessInsider
Emma Warren is a well-known author and market analyst who writes for 24 news breaker. She is an expert in her field and her articles provide readers with insightful and informative analysis on the latest market trends and developments. With a keen understanding of the economy and a talent for explaining complex issues in an easy-to-understand manner, Emma’s writing is a must-read for anyone interested in staying up-to-date on the latest market news.