The way your company is structured determines who makes decisions, how quickly things get done, and whether you can scale without breaking. Yet, many startups treat organizational design as an afterthought—something to fix once things feel “off.”
Here’s the truth: The most successful companies align (and re-align) structure to strategy continuously.
What is Organizational Design?
Organizational design is the process of structuring your company’s people, processes, and workflows to maximize efficiency and enable growth. It involves decisions around hierarchy, team configurations, reporting relationships, and cultural norms so that the right people make the right decisions at the right time.
Revolve Around Your Center of Gravity
Your center of gravity is the most critical function or team that enables your business model to work, essentially acting as the focal point around which the organization revolves.
It varies by industry and stage:
- Early-stage SaaS? Likely engineering and product—shipping fast matters most.
- B2B enterprise sales? Probably sales or customer success—depending on if most of your growth is coming from new or existing customers.
- B2C or Product-Led Growth (PLG)? Likely product or growth—your product is worthless without users.
Once you’ve identified your center of gravity, your org structure should support—not hinder—it. That means putting resources, decision-making power, and leadership focus in the right places. If two departments are in conflict or you need to decide how to nest them (e.g., should Design report to Product?), defaulting in favor of the center of gravity often makes sense.
Layers and Managerial Span of Control
To be flat or not to be flat? That is the question. First, let’s ground ourselves in some data. Most organizations have 2-4 management levels (M3: Manager to M6: Senior Director), excluding executive positions (E7: Vice President to E9: C-Suite). The number of layers of management grows as an organization grows (see image below). That’s usually not super controversial.
But, what tends to be more so is: How many direct reports should a manager have? While there’s some variation, 4-6 is the most common and my personal recommendation.
- Too few direct reports and it’s not worth the overhead of training and maintaining a management position.
- Too many direct reports and a manager is stretched too thin to provide direction, offer individual coaching, and stay on top of performance management.
There are only a few situations where I’d endorse a “singleton” manager with 1 direct report.
- It’s a trial position, such as a high performer managing an intern for a summer because they are interested in applying to a Team Lead position.
- It’s a new function with a specialized skill set, such as an FP&A Analyst reporting into a CFO on a 2-person finance team.
Prep Individuals to Evolve with the Company
Organizational design isn’t static. As your company grows, your structure will evolve—and employees need to evolve with it. Here are some helpful norms to establish upfront:
- Generalist roles will become specialized over time. Your "Operations Lead" will turn into separate HR, Finance, and Legal roles. Some early employees may manage to keep growing and leading multiple functions over time, but it’s the exception, not the rule.
- Relationships with the Founder / CEO will move from individual 1:1s with all ICs to team meetings to video updates. That distance is natural and a result of their growing bandwidth constraints, not a reflection they care less about the team or your wellbeing.
- Employees must learn to scale themselves—documenting processes, training others, and handing off responsibilities. Giving up work you once owned feels unnatural, but it’s necessary. Molly Graham’s Give Away Your Legos is a must-read for anyone struggling with this shift.
