How to Structure Your Management Team

As a small business owner, you hope your business grows to the point where you can’t do everything yourself. When that happens, it’s both a blessing and a curse: On one hand, you’ll have to learn to delegate to others, and on the other hand, you’ll bring on talented leaders who can help continue your successful trajectory.

Many merchants hire managers as the need arises. But being intentional about structuring your management team can help other employees adjust to new leaders and prevent some of the growing pains that come with expansion.

Here are some tips for structuring your management team effectively.

Decide which hierarchy works best for your organization

There are a few organizational structures that can help you outline what management positions you need and the corresponding reporting workflows. These structures include:

• Functional organizational structure: A hierarchy based on the roles of each employee. For instance, your sales team forms one group, customer service another and marketing a third.
• Divisional organizational structure: If your business serves different geographic regions, or sells uniquely different products, you could organize your team into divisions based on those decentralized characteristics. For instance, you could have U.S. North, South, East and West teams with specialists in each business function dedicated to each region.
• Matrix organizational structure: This type of structure is kind of a hybrid of both the functional and divisional options. “Instead of department heads, each team has a leader. Matrix organizational structures bring together employees who focus on a project, but fill different roles from across your business,” explained Small Business Chron.

[Read more: 6 Tips for Adapting Your Leadership Style in the Post-COVID World]

Once you know which type of organizational structure is best suited to your business, you can decide which roles are needed on your management team.

Executive team roles

There’s no rule for how many executives you must have at your business. Design your management team based on the size of your business (both in terms of sales and number of employees) as well as the expertise you need to bring to the table. For instance, you may be particularly skilled at crunching numbers, but not at designing a marketing strategy. It makes more sense for you to hire a Chief Marketing Officer (CMO) rather than a Chief Financial Officer (CFO).

[Read more: Executive Job Titles — What Do They Mean?]

Here are a few of the key management positions you could consider filling:

CEO

Yes, you can outsource the CEO function to someone else. Many founders and business owners automatically assume the role of CEO, but that might not be the best option, depending on your skillset.

“You know you need a professional CEO when you're mired in the details for way too long and can't pull yourself out,” wrote Entrepreneur. “CEOs think about where the organization is going, the people and processes needed to get there, and how they'll work in the current market. If you like details rather than strategy, either shift your thinking or hire a CEO to do the job for you.”

The CEO is generally in charge of hiring, firing and setting the business up for successful long-term growth. At smaller organizations, this key executive function can also be fulfilled by the business owner.

COO

The Chief Operating Officer oversees the day-to-day business operations. A smaller venture, such as a single-location brick-and-mortar retailer, would have a store manager in place who effectively serves as the COO. Ultimately, this person is in charge of making sure the organization is hitting its targets: someone who gets into the details to stay on-budget and keep the lights on.

CFO

A Chief Financial Officer handles the financial aspect of your business. Some small businesses outsource the CFO role to an accounting firm or CPA. Others hire an in-house accountant who effectively serves as a CFO. Most, if not all, businesses need someone in a CFO-type role to perform budget analysis, oversee taxes and reporting, improve bookkeeping and set pricing.

CMO

The Chief Marketing Officer helps you build your brand, position your product or service and reach customers who will buy from you again and again. Many small businesses outsource this function to a marketing agency or hire someone part-time to provide marketing elements (e.g., a logo or packaging design). Other companies will hire a marketing expert at the Vice President level to manage the relationship between the marketing agency and the business. If you’re working in a divisional organizational structure, it can be helpful to have a CMO to make sure your marketing is coordinated and consistent.

CTO

Finally, the Chief Technology Officer makes sure your technology is secure and up-to-date. This is one of the more critical functions, as it impacts all other areas of your business. If you’re running an e-commerce site or working in an office, have an IT consultant make sure your customer data is being stored safely.

Each of these “C-level” titles can be restructured slightly into managerial positions. For instance, if you’re trying to stick to a budget, you may hire an IT contractor to work part-time rather than find a formal CTO. Let your organizational structure, as well as any skills gaps you may have, guide your hiring decisions.

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