One of your most crucial responsibilities for any business owner is ensuring you have the right team in place. This means not only having the correct number of employees but also making sure they’re the right fit for your company culture and their specific roles.
There are a few simple steps in rightsizing your team:
Evaluate Team Size
Determining whether you have the rightsized team involves a multifaceted approach. Start by looking at industry benchmarks, such as the standard percentage of sales allocated to payroll in your sector. This provides a valuable baseline for comparison. Next, scrutinize your financial performance, particularly your profit and loss statement. If payroll costs are significantly impacting profitability, it may be time to reassess your team size. Operational efficiency is another key indicator. If tasks are consistently falling through the cracks or your team seems perpetually overwhelmed, you might be understaffed.
Also, don’t underestimate the value of regular manager assessments. Your team leaders are well-positioned to gauge whether team members are working at capacity or if there’s room for improvement. By considering all these factors together, you can gain a comprehensive understanding of whether your team size aligns with your business needs and financial realities.
Find the Right People
Jim Collins, in his legendary book “Good to Great,” emphasizes the importance of having the “right people on the bus.” This concept involves two key components:
Core Values Alignment: Ensure your team members exhibit behaviors that align with your company’s core values. This creates a positive, cohesive work environment.
Role Suitability: The right person should also be in the right “seat” on the bus, meaning they should be productive and effective in their specific role.
To rightsize your team, EOS offers tools like the “People Analyzer,” which helps evaluate core value fit and role performance to identify whether you have:
- Right person, wrong seat: Someone who fits the culture but might be better suited to a different role.
- Wrong person, right seat: A high performer who doesn’t align with your culture or is toxic to the team.
Rightsize Your Team
In challenging economic times, it’s crucial to maintain a lean, efficient team. A strategic approach to rightsizing begins with conducting a “What-If” analysis. Gather your leadership team and pose challenging questions: “What if our sales dropped by 20%, 30%, or even 40%? How would we adapt?” This exercise pushes you to think critically about your operations and prepares you for potential downturns.
As you work through this analysis, focus on identifying essential roles within your organization. Determine which positions are absolutely necessary to deliver on your promises to clients and maintain core operations. This process often reveals opportunities for streamlining processes or incorporating technology to increase efficiency. By proactively looking for these improvements, you can often do more with less, maintaining output while reducing costs.
Developing a contingency plan before reaching crisis mode is key to successful rightsizing. This proactive approach allows for more rational, less emotional decision-making when faced with real challenges. As you create this plan, always remember the big picture. When making tough decisions about team size and composition, consider the impact not just on your bottom line, but on your remaining team members, their families, and the broader community you serve. This holistic view ensures that your right-sizing efforts align with your company’s values and long-term goals, even as you navigate short-term economic pressures.
Assess, Adjust, Evolve
Team optimization isn’t a one-time event. Regularly assess your team’s size and composition through:
- Reviewing financial benchmarks quarterly
- Conducting annual (or more frequent) performance reviews
- Staying attuned to team morale and culture fit
- Reassessing roles and responsibilities as your business evolves
By consistently evaluating and optimizing your team, you’ll be better positioned to navigate both growth periods and challenging times. Remember, the goal is to create a lean, effective team that aligns with your company’s values and drives your business forward.
Building and maintaining the right team is a delicate balance of numbers, skills, and cultural fit. By regularly assessing these factors and making informed decisions, you’ll create a resilient, high-performing team that can adapt to whatever challenges your business may face.
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