Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

January 26, 2016

The importance of establishing a chain of command

By Achim Neumann

When a startup experiences growth, employees are hired and placed into roles in various departments. Soon, the task of coordinating them requires the recruitment of managers, which act as the go-between executive staff and employees.

As complexity increases, communication between the various players in a company needs coordination to avoid miscommunication and other mistakes.

Establishing a chain of command avoids these problems. Here a few reasons why establishing a hierarchy should be a vital part of any businesses’ strategic planning.

Employees will know who answers to who

In big and small organizations, confusion is created when employees are unaware to whom they are accountable.

When these relationships are put in writing, along with expectations between employees, management, and executives, clarity is created, resulting in communication that is more effective and efficient.

When bringing new talent into the business, make certain that a detailed copy of the chain of command is provided to them, along with the responsibilities they are expected to fulfill, and to whom they are expected to report to on a regular basis.

2) A chain of command simplifies communication

A properly designed chain of command ensures that relevant and important information gets to the correct people as efficiently as possible.

When there is a lack of understanding of who answers to who among staff, mistakes are made as a result of miscommunication that occurs in a poor command structure.

Make sure that all employees know who to talk to regarding urgent matters, ensuring serious issues arising from the chain of command will be rare occurrences.

3) A chain of command keeps information in the hands of those that need to know

In the course of operating a business, sensitive information will need to be communicated between certain key employees, managers, and executives on occasion.

If a set chain of command is not followed, the chances of revealing data ending up in the hands of unauthorized individuals within the company increases significantly.

By detailing which positions are allowed to handle specific types of information, and to whom they are allowed to disclose it, the odds of a serious breach can be greatly reduced.

4) A chain of command establishes strong leadership from the top down

Without a strong system of communication in an organization, those that work within it are left without a clear idea of what they are working for.

By establishing a well-designed chain of command, all managers and employees will know what they need to accomplish, and why it is vital that they do so.

By streamlining the process by which talent talks to each other, feedback from departments will also reach executives where it wasn’t before, improving the long term success of the organization.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or

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