Or, why you need to seek approval to get things done inside an organization.
Now, don’t get defensive and listen to Aretha and call it a “Chain of Fools!”
Really. It’s not about giving up anything. Actually, it is about maintaining order and ensuring that things get paid or processed and the left hand knows what the right hand is doing. Besides, having approvals for payments and spending authorizations ensures that money is going where management (that most likely is you) wants it to go. And according to some kind of strategic plan.
Here are some key reasons to have a chain of command, or hierarchy, within your company, particularly when it comes to all things financial. It:
- Sets expectations at every level.
- Helps employees understand who to turn to when they need help.
- Clarifies roles for every employee and defines what they can—and cannot—do.
- Makes clear who has the last word (who is ultimately in charge).
- Defines the shape of the organization both structurally and culturally.
When it comes to finance, having a clear path to approval for spending and budget allocation becomes even more critical. Having an organization structure ensures:
- Who sets budgets and authorizes spending.
- How much any given manager or employee can spend of the company’s money in the scope of their job.
- An audit trail for when, who and how much is spent.
Every organization, no matter how large or small, has a structure or should have a structure. Use what you have to ensure accountability and traceability. It will ensure you make money and get to keep more of it if everyone involved knows what they should be doing.
For more on how to manage your finances, call or write to us. TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.
*photos courtesy of Unsplash (Eyatsu Etsub, photographer; and Museums Victoria); Aretha Franklin courtesy Atlantic Records and the Detroit Free Press