Back-of-the-House

Despite quality products, courteous service, and a spotless reputation, the ultimate success or failure of a business often lies in how well its “Back-of-the-House” functions. The Back-of-the-House is not sexy. It’s not glamorous. It's what the public doesn't see.  But it is vital to the success (or lack of same) of any business, like a strong foundation is to any new structure being built.

The Back-of-the-House is where data becomes information, and information becomes an essential business tool for every part of your business. The accurate and timely gathering, processing, analyzing, and reporting of business information creates a solid foundation on which the rest of your company thrives. On the other hand, weak or non-existent Back-of-the-House functionality will leave your business flapping in the wind.


Allow me to share a story about a recent client engagement. A few weeks ago, I completed an assignment for a wonderful small company. The owner wanted to grow his company, but soon realized the “Back-of-the-House” was not functioning properly.

We identified five things that needed to be addressed immediately, in order to facilitate the kind of growth that the owner was envisioning.

1. Financial controls and reporting were extremely deficient. They did not have the financial information to determine gross margin and profitability. They did not have controls for reporting cost of work in progress in terms of Actual vs. Budget.
2. There was no Organization Chart. No one was sure to whom they reported, or who reported to them. Employees frequently “served many masters.”
3. There were no Job Descriptions. The breadth and scope of each employee’s job was based on what they've been doing, and how long they've been doing it.
4. Responsibility and accountability were not delegated; only tasks. Not only did this slow the pace of business, it also prevented many employees from developing their own business judgment and acumen because they were only doing part of the job.
5. Owner felt the need to make all business decisions. All the time. While he thought he was taking extra special care and responsibility for everything in his company, he was, in fact, causing delays in production, losses in profit, and more than a few angry customers. Not to mention, he was also stunting his management team’s growth.

With these issues identified, they were prioritized and addressed directly. The following actions took place in the subsequent six months, which resolved a great many organizational problem areas, and made for a clearer path to success:

• A well-qualified, experienced Chief Financial Officer was hired, to provide timely and reliable reports on the business’ numbers and finances. The company will benefit greatly by having both up-to-date and historical numbers that they can use to chart their growth.
• An Organization Chart, based on specific job functions more than individuals, was created and approved. This will bring planning and order to company’s organizational structure, as it continues to grow.
• Job Descriptions were created for every position within the company, and every employee now had a written description of their duties.
• A Mission Statement and Vision Statement were created and presented to employees and customers. The reason for the company’s existence, and the goals it strives to achieve, need to be articulated to everyone who interacts with the company. And the company needs to be held to the standard of these statements.
• The position of Chief Operating Officer was created and filled, to run all facets of the day-to-day operations. The company’s owner is well-known within the industry, but the company’s reputation, as well as his own, was in danger of being tarnished because of his insistence of running, as well as representing, his company. With a dedicated COO, projects will be delivered on time and within budget, and customers will receive the level of quality they have come to expect. And the owner gets to do what he loves to do the most, and is best at - being the face of his company.

Keep the Back-of-the-House in good working order, and your business will be in a much better position to achieve the level of growth you seek.