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There is a 20-people workshop producing MDF kitchen cabinets and other home decorations. Employees can be grouped as:

  • Sales people
  • Workshop floor workers
  • Installation workers
  • One person who is owner and manager

I wonder what organizational hierarchies are suitable for such a business? Does anybody have helpful experiences? Currently, there is no hierarchy and the employee interactions are not designed.

  • From those 20 people, who are you? – Bogdan Dec 24 '19 at 15:33
  • @Bogdan The owner's cousin. – user3405291 Dec 24 '19 at 15:35
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    So are you trying to help your cousin's business? Is there something to improve? Something needs to be fixed? Are people ineficient? Something lacking on the processes they use? What I'm asking is why you think they need an organizational hierarchy? – Bogdan Dec 24 '19 at 15:46
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    I don't want to turn this into a discussion, but have you asked people's opinions on the matter? Get to the bottom issues. The actual issues. An organizational hierarchy might be a solution. But so might be "Lean for manufacturing". Or "Kanban for small businesses". Without knowing more, these migh apply in your situation just as well. So I'm worried that what we might have here is an xy problem... – Bogdan Dec 24 '19 at 16:42
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    Yes, employee's opinions. Also, did you have exit interviews with the people that left the company? Why did they leave? Low pay? Hard working conditions? To much chaos? They didn't like their jobs? They figured out they are in the wrong line of work? You really need to build an understanding of the whole picture otherwise you risk imposing some solution that will bother many more people. This is still a small company not a big corporation where the big boss decides then everyone else does, be it a good or bad solution, or if they like it or not. – Bogdan Dec 24 '19 at 17:40
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In order to know how to reach the place you want to be, you first need to know where you are now.

Structure

You don't necessarily need a hierarchy for people to work better. A 20 people company can function well with a flat structure. Introducing intermediate management layers might benefit the work or might harm it. So you really need to understand the whole picture and understand where a new hierarchical position can help and contribute to the goals you want to achieve, help manage people better, or improve communication by reducing and focusing communication channels, or by bringing structure to a chaotic process. Look at the differences between a flat and hierarchical structure and see if you get benefits beyond the structure you have now, otherwise you might just introduce a boss that does nothing more but be a boss (which people will resent).

Processes

An organizational hierarchy might be a solution, but so might be a better working process. Searching for terms like "Lean for manufacturing" or "Kanban for small businesses" might give you ideas in how to improve your processes, which you can often do without the need to introduce hierarchies. If you can visualize the work, you might identify points that need more attention, or interactions that need to be handled differently. People might like a better way of working more than getting a new boss.

People

You also need to bring a lot of attention to your hiring process. You need to bring in the right people. Of course this won't be easy. Building furniture involves a lot of repetitive hand work. It's hard to find people with an intrinsic motivation to do jobs like this. So things like salary start to weight in, or the working conditions, or the camaraderie between employees. If they don't like the work, salary is low, etc, then they will leave to another better paying job.

Having a deeper hierarchical structure might give people the option of advancing in the company, so they might be tempted to stay longer in the company because they can move to a higher position with a better status and better pay. But since you have a small company, you probably will only have one extra layer which doesn't offer much room for advancing. And again, if people don't like what they do, they won't bother much to get better at it and advance.

Don't assume

Don't make assumptions and don't jump to solutions before you fully understand what's happening. You have a small company so it shouldn't be hard to discuss it with all employees. Especially when they are leaving the company (by the way, I've never seen people leave companies because they didn't have enough hierarchy above them).

If you don't pay them enough then maybe you need to offer better salaries, or other benefits. If you can't afford to pay them more, then you most likely will have to accept a larger turnover. In both cases a hierarchy will probably not improve things if the issue is money. If for example the issue is to much chaos or unstructured processes, then maybe a hierarchy would help, or/and maybe better processes, etc. But make sure you first understand what's going on.

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