A business is successful to the extent that the employees make it successful. And to be productive, motivated and effective employees need a clear understanding of their role in the company.

Org charts most often describe the layers of hierarchy and management in large companies. In our practice we work with smaller entities with somewhere between 5 and 200 employees. In these companies there is a clear understanding of who reports to whom, but responsibilities are not often as black and white. Traditional org charts by themselves fail to convey the freedom employees have to use discretion, make decisions and take ownership. These are exactly the things that you want your employees to understand on a day-to-day basis.

To highlight the shortcomings of traditional org charts we'll review a case study based on one of our clients. In addition to the employees on the attached org chart there are an another 12 to 15 employees involved in production as line workers and drivers that report to the shift supers bringing total head count to around 30 people. We were first introduced to the company by Darin, the CFO who needed some assistance with capital budget modelling and tax planning. Later, the CEO wondered out loud whether we might have any suggestions for profit improvement. We asked for the org chart, which they had to sketch out since one did not exist before our request.

As we talked about the chart several things became clear. First, the chart hierarchy was used primarily for compensation and employee evaluation decisions. Second, the chart did not reflect the kind of communication the CEO wanted within the organization (if the A/R manager talked to a slow paying customer and found out they were having issues with product quality he told the CFO instead of going directly to the Quality manager). Third, employees used the 'direct report' structure as a crutch to pass information up the chain without having to take any direct action themselves.

To address these issues we recommended that each employee have their own 'org chart' to focus on opportunities to make decisions rather than defer decisions to their direct manager. Attached is the chart developed with Martin S., the receivables manager. When developing the chart we asked "how can your area of expertise in customer receivables be used by the rest of the company." The ENTIRE chart was developed by Martin with only occasional guidance by the facilitator.

We also implemented decision groups to get employees to take ownership of their actions. When in doubt, employees are authorized to take any action as long as it is O.K.'d by their decision group. Each group decides whether it will require unanimous consent or a simple majority. Members of the group do not 'out rank' other members in the hierarchical org chart so there is no opportunity to defer to someone more senior.

Org charts are not inherently bad, but they do tend to breakup the company into discrete units that appear to be more autonomous than they are. We recommend that you start with the traditional org chart and then develop additional tools that expand the employee's role rather than limit the scope of activities and responsibilities necessary to create a successfully business.

This one is short and sweet. In his 1966 classic, "The Effective Executive" Peter Drucker exhorts all knowledge workers to "Know thy time." If you feel like you are struggling for effectiveness follow Drucker's advice and get a handle on your time management. Here's how.

First, record your time. Take a yellow notepad and using every other line write the hours of your workday down the left hand margin. For instance, during tax season my workday starts at 7am and ends at 7pm taking up 24 lines. When finished each line represents 30 minutes of your workday. Now record what you spend your day on and do this for a week. You don't have to stop every 30 minutes and fill in a line. In fact what you should end up with is a graphical representation of your day that looks something like this.

Second, analyze your time. I do some of this as I record my time. Using a highlighter I note time that I spend in the office doing administrative tasks and time I spend out of the office when I'm not with a client. Basically the more white space on my schedule the better since it indicates that I am either meeting with a client or working on client projects. You may also want to perform more detailed analysis where you break down different types of activities such as "meeting with employees" or "returning phone calls." At a minimum you should decide which activities you should not be doing and count up the hours per week that you spend doing these activities. It will open your eyes and help you determine whether your expectations are reasonable or not.

Third, consolidate your time. Drucker's premise is that knowledge workers need chunks of time to be effective. The problem is that no one is going to create these chunks of time for you. You need to arrange your schedule in such a way as to consolidate blocks of time during which you can be most effective. For me this means trying to schedule all client appointments on two days of the week. This should leave three days for me to be in the office working on client projects and administrative tasks with large uninterrupted blocks of time at my disposal.

Very few people record every hour of their day religiously, but Drucker doesn't advocate becoming a time clock bean counter. This is an activity that you can enagage in when you feel yourself slipping into a slump and becoming ineffective. You might only need to log and analyze your time once a month or once a quarter to see the benefits of Drucker's method.

Technology has certainly made life simpler in some respects. Unfortunately it has also created the illusion that some problems are just too complex to understand. Income taxes, property taxes, insurance premiums, deferred compensation arrangements...all are areas where people too often defer to computer calculations without understanding the substance of the issue. When trying to plan for the future or make improvements what if analysis becomes critical and using the "same amount as last year" will not lead to very good decisions.

This is where your advisors come in to help. Before you sign another contract, pay another retainer, or approve another premium binder make sure your professional has the time and inclination to walk through the numbers with you. First, have your advisor summarize the key numbers on a blank sheet of paper, in real time. Don't just review the documents allowing someone to point out the more relevant numbers to you. Unless you are painstakingly familiar with all of the data it is going to be difficult to separate and remember the 2 or 3 salient figures from all of the clutter in the background.

Second, after you have identified and summarized the key figures have your advisor perform any math, formula or calculation necessary to arrive at the bottom line. For instance: how do you get from gross income to taxable income, and then from taxable income to the amount of total tax, and finally from total tax to the amount currently due. Some formulas and calculations really are too complex to do longhand (risk adjusted premium pricing on insurance for example) but that should not keep your advisor from informing you of the general rules of thumb and guidelines that affect the formula.

Last, ask your advisor if they can replicate their explanation in the form of a template that you can use to run various what if scenarios. Find out whether the template becomes invalid outside certain ranges. The rules of thumb for estimating tax liability are only good within certain income ranges before the tax rates change. Also find out whether certain activities might invalidate the model. Premium formulas for commercial liability insurance might not work if you start a new line of business.

Also keep in mind that a large part of the role of any professional on your team is to educate you and help you understand areas of your business outside your background. In the early years it is acceptable that you leave minor decisions up to advisors who have more experience. But as your business grows you should become proficient in the areas that require substantial expenditures. If you do not take the time to get educated it is usually because of laziness, either yours or your advisor's. Eventually your lack of knowledge will catch up to you and you will wish you had taken more time to work out the problems long hand.