Ayobami Esther Akinnagbe: Organisational Mistakes Start-up Founders Should Avoid

Two women engaged in a professional meeting, discussing business in a modern office setting. Image by RDNE Stock project for Pexels.

There is a lot that goes into establishing a successful business. It requires developing the business idea, securing clients, building a customer base and eventually bringing people on board. Starting a business and watching it grow can be an exciting experience.

However, one thing many start-up founders overlook is the importance of having the right organisational structure in place. It is one thing to have a great business idea and attract talented employees, but it is another thing to create an environment where everyone understands their responsibilities, knows who they report to and can work effectively towards achieving the company’s objectives.

I once worked with a client who needed a new set of employees for a business establishment that was reopening after a period of restructuring. As part of the recruitment process, the first thing I ensured was that a manager was hired before proceeding to fill the remaining vacancies.

The idea was simple. The manager would oversee the day-to-day running of the establishment, ensure that company policies were implemented and periodically train employees based on the requirements of their respective roles.

During the recruitment process, I clearly communicated each employee’s responsibilities and the person they would be reporting to. These details were also stated in their respective offer letters, so everyone understood their roles and the management structure they were expected to work within.

However, there was a challenge.

Before the manager was hired, an accountant who was personally known to both co-founders had also been in charge of the previous employees. Following the restructuring, the founders had communicated their desire for a new operational arrangement, and this was clearly reflected in the recruitment brief.

Although the new employees understood that they were expected to report to the newly hired manager, the existing employees still had their loyalty to the accountant, who had previously been in charge. The challenge was that the new management structure had not been properly implemented within the organisation.

Consequently, the manager was expected to take charge of the establishment without the necessary authority and cooperation from everyone involved. This created unnecessary friction, and I found myself having to mediate whenever issues arose, even though the service I had been engaged to provide was recruitment.

I eventually had a lengthy conversation with one of the founders, explaining that communicating reporting lines and responsibilities during recruitment was only one part of the process. The organisation also needed to formally implement the new structure, clarify authority and ensure that everyone understood and respected the changes.

Unfortunately, the founders believed they could figure things out themselves. Eventually, I had to distance myself from the recurring back-and-forth. Looking back, this experience reflects some of the mistakes many start-up founders make when trying to build and manage their businesses.

Here are five of them:

Recruitment is not all a business needs

Understandably, start-up founders want to manage expenses, especially when the business is still trying to establish itself. However, trying to save money on essential business processes can eventually become more expensive.

Some founders believe they can figure everything out themselves or that hiring the right people is all they need to get the business running smoothly. Unfortunately, recruitment is only one part of building an effective organisation.

Beyond hiring, businesses need proper onboarding processes, clearly defined roles and responsibilities, HR policies, performance management systems and standard operating procedures (SOPs).

Investing in the right professional services from the beginning can help prevent avoidable challenges and create a solid foundation for business growth.

Allowing personal relationships to influence business decisions

There is nothing wrong with employing relatives, friends or people personally known to the founders. However, personal relationships should not take precedence over professional responsibilities and organisational policies.

For instance, a founder might appoint a relative or close associate to oversee a department without properly defining their responsibilities, qualifications, reporting lines or accountability.

What happens when that person begins to exercise authority beyond their designated role? What happens when other employees are expected to report to someone whose position and responsibilities have not been properly communicated?

These situations can create unnecessary tension, undermine management authority and make it difficult to hold people accountable. Every employee, regardless of their relationship with the founder, should understand their role, work within established reporting structures and be held to the same professional standards.

Organisational structure is not only on paper

Having an organisational chart, clearly defined job descriptions or stating reporting lines in employees’ offer letters is not enough to ensure that a business runs smoothly. These structures must be properly implemented and communicated across the organisation.

For instance, hiring a new manager and communicating to every newly recruited employee that they are expected to report to this person. However, the existing employees are still accustomed to reporting to someone else who previously occupied a position of authority. If management does not formally communicate the changes, transfer the necessary authority and ensure that everyone understands the new arrangement, conflicts are likely to arise.

This is why restructuring goes beyond recruiting new employees or assigning responsibilities. It requires management to communicate the changes, establish clear reporting lines, delegate authority and ensure that everyone understands and respects the new structure.

Who makes decisions? Who supervises each department? Who approves expenses? Who handles employee grievances? Who is responsible for ensuring that company policies are implemented?

These are important questions that every founder should be able to answer and ensure that the appropriate people within the organisation understand. Without proper implementation, even the most carefully designed organisational structure may exist only on paper, leaving employees confused, managers struggling to exercise authority and founders constantly having to resolve avoidable operational issues.

Making the founder the centre of every business decision

If you are the person making every decision in your business, approving every request, resolving every employee disagreement and overseeing every little detail, you may have built a business that depends entirely on your presence rather than one that can operate effectively without you.

Think about it. Can you leave your business for two whole weeks without constantly worrying that everything will fall apart in your absence?

If the answer is no, then it may be time to reconsider how your business is structured.

Effective delegation is not simply about assigning tasks to employees. It involves putting the right people in leadership positions, establishing clear processes and giving employees the authority and resources they need to carry out their responsibilities.

When these systems are properly implemented, the founder can focus on business development, strategic partnerships, expansion and other important decisions instead of being involved in every operational activity.

Failing to invest in employee development and performance management

Hiring experienced employees does not mean they no longer need training or professional development. Every organisation has its own processes, expectations and standards. Employees need to understand these requirements and receive periodic training to ensure they can perform their responsibilities effectively.

Founders should also establish a performance management system that allows employees to receive regular feedback, understand their performance expectations and identify areas where improvement is necessary.

This could involve quarterly performance appraisals, one-on-one check-ins, skills-gap assessments and learning and development programmes. When employee development is treated as an ongoing process, businesses are better positioned to improve productivity, retain good employees and build internal capacity.

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