What separates a business that has employees from an organization? According to the source, orders. Without orders, plans and routines you have a few people working in the same place, and that group stays small and frustrated, even when every one of them works well.

What an order is actually for

The source starts with a question hardly anyone asks: why do we need orders at all? Its answer is coordination. An order exists so that the functioning and activity of several people line up, because without that you get disagreement and confusion.

That reframes the whole subject. An owner who sees an order as a show of force avoids giving it, so he won't look bossy. An owner who sees that an order saves people from confusion says it plainly and doesn't apologize.

The reason is simple. Several people work in a business, and each has a slightly different purpose. When they sit at the same level and there is no plan or order, they collide.

Suppose a small office where two employees order the same materials from two suppliers in the same week. Neither did anything wrong. Neither was given an order.

Or an owner who didn't want to throw her weight around, so she never said who is responsible for the shared van. The argument over the van ran for six months.

A group of individuals looks like an organization from outside

The sentence the chapter rests on says that without orders, plans and programs there is no organization. In its place, “one has a group of individuals.”

The difficulty is that from outside you can hardly see the difference. There is an office, there are customers, there is a payroll. The difference shows the moment something needs two people to act together. Then it turns out that nothing decides who does what.

The source goes on to a consequence: a group made only of individuals cannot expand and stays small. It states the ceiling and does not explain it. The explanation the booklet offers is simple. Each person who joins adds one more line of coordination that nobody is handling, so a point arrives where one more hire does more harm than good.

Suppose a business takes on three more people and its revenue stays exactly where it was. Nobody got lazy. Nobody knew what anyone else was doing.

Or a garage owner who hires a fourth mechanic and finds he spends two hours a day refereeing between the other three. He puts in writing who receives the car, who diagnoses it and who returns it to the customer, and the two hours come back to him.

Why people in a group like this are unhappy

Here the source adds a second consequence, the surprising one: “Oddly enough, such a group will also remain unhappy.”

Look at the order of cause and effect. Coordination comes first, and unhappiness follows from its absence. That moves the problem from the character of the people to the structure of the business, which matters in practice, because character cannot be fixed and structure can.

In a small business you see this up close. An employee who doesn't know what is expected of him stays tense through every compliment, and settles only when he learns what has to be finished today.

Suppose an owner gives a frustrated employee a raise. Within two months the frustration is back, because pay was never the source of it.

Or a team of four that keeps complaining about the atmosphere. Once it is settled who is responsible for what, nobody mentions the atmosphere again.

And there is the employee who got a bonus two years running and still resigned. In her exit conversation she said she never knew whether she was doing a good job.

Two good employees who cannot settle it

The source explains the mechanism with a small example of two people at the same rank, Bill and Joe. Neither can give the other an order, so there are no orders between them. A person senior to both can give them both an order, and that order becomes the basis of an agreement between them.

Many small-business owners know this frustration: two good employees, and a simple matter they cannot close between themselves. By the source's explanation, they cannot. Nobody between them decides, and in a small business the person who can decide is you. The missing decider is the cause, and stubbornness has little to do with it.

The point that is hardest to accept comes right after. According to the source, the order does not even have to be liked by the two. Once they carry it out, they have in effect agreed to it.

Suppose two partners who could not settle on a price list for four months, because neither outranks the other. Or a designer and a developer who argued about whose work goes first, until the owner decided in two minutes and both went back to work.

And the other direction: an owner who refused to decide between two employees because they are adults and will work it out. They did not, and one of them left.

What the booklet has on this

The chapter this article draws on includes two exercises: The test, and The ceiling. It also has a self-check, and it sits inside a full booklet about what the manager's job requires of someone who hired a first employee.

If two people on your team have been stuck on the same disagreement for a long time, they may be waiting for a decision that only you can give.

The booklet is general knowledge about managing people, not legal advice on employment law.