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Small Company Survey: 5 Signs of a Healthy Organization

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This post originally appeared on THEsmallCOMPANYBLOG.

Whether you are an employee, manager, or owner of a small company, the question ”How is my company REALLY doing?” is often asked, but rarely answered.  Sure, there are basic metrics like Total Revenue, Profit Margin and Employee Turnover which can paint at least part of the picture.  However, all of these measures have one inherent flaw: they measure things which have already happened.  So is there a way to measure the real-time ’health’ of a small company?  This five-question survey should provide you with a good start.

Question #1: Does Your Company Have a Diverse Product Line?

Most small companies get their start by offering a single product or service, and increasing the sales of that product or service over time.  Companies that have long-term success eventually branch out into related areas, while the rest stand pat and leave themselves exposed to things like climate changes, economic downturns, and attacks by aggressive competitors.  Why do bike shops sell skiing equipment, health clubs host their own triathlons, and Universities offer mini-MBAs for working adults?  Because if their primary business slows down, these organizations will have a revenue stream to fall back on.  Do you have a backup plan if demand for your company’s core product or service declines by 50% next year?

Question #2: Does Your Company Have a Diverse Customer Base?

Much like having a diverse product line, it is critical that small companies have a diverse customer base as well.  Are a significant portion of your company’s marketing dollars targeting the same customer demographic?  Healthy small companies market their products and services to a wide range of ages, races, income levels, job functions and geographic locations.  In the IT training area, I have seen first-hand the impact a change in demographics (a rapid influx of female customers into a traditionally male-dominated market) can have on an industry.  Companies who had previously ignored this demographic in their marketing are now years behind those who have been marketing directly to women since early in the decade.

Question #3: Are Your Middle Managers Happy?

I am in the minority of business writers that believes employees leave small companies not because of things like ownership or benefits or pay.  Rather, I believe employees leave small companies because of the effectiveness (or lack thereof) of the company’s middle managers.  Middle managers are the rarely-noticed ‘go to’ people within the organization that can always be counted on to make something happen when a quick decision needs to be made.  And good middle managers know EVERYTHING about their organization—the inter-personal relationships among staff, the information back-channels, the political ramifications of executive decisions, and the job satisfaction level of every employee in the building.  If your middle managers are not happy with their jobs, it is likely that no one is.

Question #4: Does Your Company Have Low ‘Drama’ Levels?

Well-run small companies are conspicuously void of petty bitching and moaning—employee in-fighting, constant complaining to HR, minor power struggles and various other items that can only be classified as office ‘drama.’  Employees working in healthy small companies are always willing to jump across a departmental line to help out, and are given freedom by their managers to work outside the chain of command when the best interest of the organization is behind served.  If your managers spend more than 15 minutes per day putting out employee-related fires, something needs to change.

Question #5: Do Your Employees Have a High Company IQ?

Unlike their big company counterparts, successful executives at small companies understand one key principle: the more employees know about your company, the more successful your company will be.   As I discussed at length in a previous post titled Small Company Mistake #3: Not Building a Shared Corporate Vision, employees need to know not only what they are doing, but WHY they are doing it.  If small company executives make the best decisions when they can determine the impact of their decisions on the organization as a whole, why can’t this same philosophy be applied to Shipping or Customer Service or at the Reception Desk?  The most progressive and successful small companies are willing to share strategy, performance, and financial-related information with any employee who will listen.

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November 3rd, 2010 at 7:34 am