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Apr 20, 2012

Role Confusion: The Three Components to Clarity and Performance

Posted by: Joy Klitzke - 04/20/2012 4:25 PM (Articles, Farm Equipment Industry, Marine Industry, Powersports Industry, RV Industry, Trailer Industry)

NAEDA Equipment Dealer April 2012
By David Spader and John Spader

“Problems cannot be solved at the same level of awareness that created them.”

This quotation by Albert Einstein is particularly relevant in the equipment industry as growth has created a variety of new challenges. Among the most potentially destructive is the challenge faced by many dealers in determining the right organizational structure as well as clear roles and responsibilities, especially for those people in key positions. An effective organization structure and individual role clarity aren’t difficult once a dealership understands the key principles that help determine who should be wearing what hat and when. The sooner a dealership proactively manages this process, the better they will be able to grow from a position of strength and stability.

To create an effective structure with role clarity three interrelated components need to align: organizational structure, role clarity, and job fit.

Component #1: Organizational Structure

In our experience working with dealers, having an ineffective organizational structure is a very real danger area, and the consequences become more significant as the dealership grows.

For multi-store dealerships we have seen two types of organizational structures that consistently support higher performance over time. The first is the “store-driven” model in which a store manager has responsibility for the performance and all of the employees at that location. The other organizational structure is the “function-driven” model in which directors or corporate managers have departmental authority across locations. These directors typically have responsibility for hiring and firing within their departmental function, and they are primarily responsible for the performance of that department across all locations.

Either of these business models can be the basis for an effective organizational structure for a dealership. However, things quickly become more complex when leadership teams try to create a hybrid structure, as we see more often than either of the other two models in multi-location dealerships. We recently worked with a dealership that had a Sales Director for its five locations and also had separate Store Managers. Salespeople in this company sometimes went to the Sales Director, and sometimes went to their Store Manager. (Their choice seemed to depend on who they thought would give them the answer they wanted.) This type of hybrid model almost always leads to questions like: Who is really in charge of what areas? The lines of responsibility quickly become blurred and a disproportionate amount of energy is often required to manage within these hybrid structures – usually with significantly below-average results and high levels of frustration for all people in the dealership.

Component #2: Role Clarity

Once a dealership has determined the appropriate organizational structure, next it needs to be clear about each employee’s role within that structure. The key is clearly-defined job descriptions. A strong job description will typically include the key result areas for the job, annual goals, and a tie-in to the company values. We often see dealerships that create new organizational structures only to abandon them after a short amount of time. We believe that in many cases the reason organizational structure transitions fail is due to the incorrect selection of structure and/or problems with role definitions within that structure. In too many cases, we see organizations develop a structure based on the skills and preferences of the people currently in key positions (especially owners), rather than objectively identifying the correct structure to serve the needs of the business. A better approach is to identify the right structure, define clear job descriptions for the key roles in that structure, and then develop the people into their roles based on their capabilities and motivations and how those fit with the defined role.

We have identified at least six different types of roles (“hats”) a person could wear in a dealership: owner, board member, leader, manager, employee and family employee. Each of these roles has a different purpose, authority and responsibility. However, in larger dealerships, roles become more specialized and performance becomes more closely tied to role clarity and job fit.

Component #3: Job-Fit

Once the organizational structure and roles have been clearly defined, the dealership must “put the right people in the right seats on the bus.” This step is probably the most commonly overlooked part of the process because it requires a solid understanding of employee motivations and employee capabilities. Many managers lack training in this area; in fact, our research indicates that most managers use only two of the six key factors required to effectively create a good “fit” between a person and a job.
Some key questions to ask yourself:
1. Are you using a proven organizational structure, then fitting people into those roles? Or have you created an organizational structure around the skills and preferences of some of your key people?

2. Do you have a system for managing people that assesses their capabilities and motivations, and places them into jobs that fit well 70 to 80 percent of the time? Or are you more like the average dealer who tends to get it right 20 to 25 percent of the time?

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