“How should I structure my agency?”
First, we’d like to be the first to congratulate you on asking the hard questions. This is one we at Teamwork hear a lot. Most recently it came up during our webinar with Refine Labs COO Megan Bowen on Mastering Agency Profitability.
Organizational design is inherently not fun to think about. But whether your agency is brand new or you have hundreds of employees, the way you structure your agency is important. How you map out roles and responsibilities in your company will impact everything from your communication – both internally and with clients – to your culture and scalability.
Getting it wrong can lead to huge issues like “competing priorities, unwanted turnover, inaccessible bosses, and cross-functional rivalry,” as Ron Carucci, author and leadership consultant, notes. He tells his own clients, “Your organization is perfectly designed to get the results you’re getting, even if they’re not the results you want.”
So, although it might seem fairly basic, there are a surprising number of nuances to keep in mind if you want to get your agency org chart right. In this article, we’ll walk you through some of the most common structures and how to find the one that works best for you.
What is an org chart?
An organizational chart groups employees together according to their roles and responsibilities and gives transparency into how roles are structured. With an org chart, employees are represented by boxes or other shapes depending on the chart type and are connected together with lines. This structure visually represents a hierarchy of roles and departments within an organization.
If you are in the 25% of agencies that are using the EOS operating system, you might be more familiar with an Accountability Chart which adds even more detail and transparency.
Accountability charts offer clarity on what the organization's major functions are along with who is accountable for each one. This clarity around the major functions and who owns them is an aspect that can often be missing from an org structure that mostly prioritizes who is reporting to who. If you would like more focus on the functions and responsibilities within your organization, an accountability chart might be a better option.
Why it’s important to define roles and responsibilities
If you struggle with the lines getting blurred between roles and responsibilities at your agency, you're not alone. Often, when you have deadlines to hit and clients to please, your team members may put on many hats to get the job done.
Here's why it's important to define roles and responsibilities at your agency:
Increases clarity & efficiency: If roles and responsibilities are clear from the onset, your team will know what is expected of them. According to research employees who have role clarity are 53% more efficient and 27% more effective at work than employees who have role ambiguity.
Creates accountability: When roles are clearly defined and your team is sure of their responsibilities, they are more likely to feel accountable for fulfilling their duties. When your team is unsure of their responsibilities, work can slip through the cracks.
Improved communication: When it's unclear who owns what at your agency, communication gets messy. Over- or under-communicating can cause confusion for your team and your clients.
Increased productivity: When people know exactly what they should be working on, they can more easily prioritize tasks and hit deadlines.
Visibility into hiring needs: When roles and responsibilities are clarified within your agency, you'll have insight into what resources you need and what roles to hire for.
Why your agency should have an org chart
Defining roles and responsibilities is just the beginning, however. As an agency leader, it’s up to you to document and formalize this information in an org chart. Doing this foundational work upfront will make your life easier down the road because it:
Aids productivity & performance: Without structure, your team could be wasting time and energy trying to locate information or trying to figure out who in the organization is responsible for what. Having a clearly defined org chart can help eliminate these inefficiencies, allowing your team to put their energy into what matters most.
Streamlines onboarding: Starting a new job is tough enough as it is. Add in starting a new job where the organization is lacking structure and doesn't have an org chart, it's going to take much longer for your new hires to find their way around. On top of this, you want to make the onboarding experience as comfortable and straightforward as possible, having an org chat will help new hires to find their feet and settle into the agency.
Paves the way for more effective communication: When you have an org chart that states who is responsible for each area within the organization, communication can be improved. You’ll no longer have confused employees hunting down information as it's all clearly documented for all to see.
Helps with workload and capacity planning: Having a clear org chart at your agency can make resource management easier. Particularly as your agency grows, having structure will allow you to identify where there may be any skill gaps on your team and accurately manage capacity.
Organizational structure: mechanistic vs. organic
There’s a spectrum on which org structures fall: at one end of that spectrum is mechanistic and the other end is organic. The mechanistic system includes more traditional hierarchical models whereas the organic structure allows for a more flexible approach where people can report into more than one group.
There are benefits to both structures – it all depends on your agency's particular needs and goals. Let's dig a little deeper and go through some common org structures for agencies, which vary on the spectrum of mechanistic and organic.
4 common organizational structures for agencies
Functional Organizational Structure
This is a very common structure that works by grouping teams together based on function. An organization using the functional structure would have a different team for each department, for example, an agency would have a design team, social team, SEO, and so on. Teams within this structure are created and divided based on expertise.
Suitable for larger agencies
Allows employees to focus on their expertise and have a clearly defined path for growth
Having teams organized around function and expertise can lead to working in silos
Can lead to poor communication between departments
Not beneficial to a highly collaborative agency
The Matrix structure
The Matrix Model allows for more flexibility and doesn't follow the traditional hierarchical structure. This model is commonly used in organizations that have more than one manager and where teams report to multiple managers. With this model, there are usually two chains of command meaning that your team will have two managers – a functional manager and a project manager. This structure works well for agencies that manage multiple projects.
Allows for collaboration and communication across different teams and functions
Employees will learn new skills and experience working on different projects with team members with different specializations
Having two managers to report to can become confusing for employees
This may lead to conflict as employees are reporting to more than one manager
Can be difficult to scale with this structure
The Flat Structure
This structure strays away from the more traditional approach by limiting the levels of management, meaning that all employees are in close proximity to leadership. Often, this structure requires employees to be jacks of all trades, taking on different responsibilities. For this reason, the flat structure might make sense for smaller agencies and start-ups.
Leads to more open lines of communication
Allows employees to build relationships with senior-level management as the middle layer is removed
Coordination and the decision-making processes are often quicker
Can create employees who are more generalists than specialists since they are usually required to wear multiple hats
This structure can cause confusion as employees do not have a clear reporting manager
Can be a complex structure to scale with
The Pod System
Within a pod structure, agencies arrange their employees and teams depending on the client type as opposed to the agency functions. A pod consists of a team with skills that differ and complement each other. In a pod system, traditional account managers are replaced with four project leads that clients can access.
Here's what a pod structure looks like:
There is a business or strategy lead: The business or strategy lead is in charge of understanding what is being asked of the business and why. They are the most knowledgeable when it comes to the business, competitive environment, and client operations.
There is a planning lead: The planning lead is responsible for planning how the team will accomplish the client's goals.
There is a creative lead: The creative lead is in charge of bringing the vision to life, coming up with ideas, and bringing them to fruition.
There is a project management lead: The project manager is responsible for resource management and keeping budgets and timelines on track.
Once ready, the leads delegate tasks to the right people across the team.
This structure is a favorite amongst agencies as each pod focuses on the client
Can be effective for agencies of all sizes
Allows employees within the Pods to become experts
If you’re taking on new clients but not investing in resources, employees may become burnt out and client satisfaction could decline
Visualize and build the organizational structure that fits your agency here for free.
Your org chart will change as your agency grows
“An organization is on the road to success when change is part of its nature.”
― Pearl Zhu, Digital Fit: Manifest Future of Business with Multidimensional Fit
As your agency scales, your org structure will most likely need to change with you. Often, smaller agencies have less defined roles and responsibilities but as your agency grows in size a structure that is too loose could end up holding you back.
Having a formal org structure makes it easier to know who to go to for help or information and eliminates extra work due to miscommunication.
So, what are some of the most common signs that your agency needs to update its org chart?
Your strategy has changed: Changing your overall strategy can be a big deal, it's important to reflect and find the org structure that best supports the new strategy.
Your client feedback: You might have received feedback from clients that shine a light on your org structure being a poor fit. If the way your agency is structured negatively impacts your clients in terms of quality of work or communication, you might want to start looking at a structure with a better fit.
There are internal signs: Perhaps a problem keeps appearing or mistakes are happening multiple times or you’re seeing high rates of employee turnover. This could be a sign that your org structure isn't working for your agency anymore.
Figuring out the right org structure for your agency is just one part of the puzzle, of course. Once you’ve mapped out roles and responsibilities and set goals for your organization/functional teams, consider using a tool to help keep everyone on track.