The Organization Chart

What is an organization chart? Let’s define it as a formal system of relationships that exist within a business. My question to you is: Can a business survive without an organization chart or defined structure?

I am a firm believer that employees need to be aware of an organizations structure. This is necessary to allow employees to identify key stakeholders and their relationships. How do we relate to each other? What is my authority? What are my responsibilities? An organization chart will allow an organization to establish a clear chain of command, responsibilities and reporting relationships. In the absence of an organization chart to clarify relationships, illogical and confusing ones will develop.

James Gibson, John Ivancevich, and James Donnelly in Organizations: Behavior, Structure, Processes claim; "In many instances, small firms that do rather well in the early stages of their development begin to fail when the founders can no longer manage in their personal styles. The transition from successful small firm to successful large firm is impaired because the employees are doing jobs that fit their personality and unique skills rather than jobs necessary for organizational performance. Organization charts and supporting documents are necessary from the very beginning of a firm's existence, not just when it gets too big for one person to manage."

Let’s talk about a flat organization for just a moment. A “flat organization” is defined as one with few or no levels of intervening management between staff and managers. The theory is that a flat organization will encourage autonomy and self-direction and focus on empowering employees versus adhering to the chain of command. Less supervision = increased involvement in the decision making process.

Company D is a flat organization in the truest sense of the word with 50+ employees that report into a single individual. Oh, there may be one or two people here or there with titles indicating another level of management and related subordinates. But their ability to make decisions is seriously impeded. Any and all decisions are only final when viewed by the top of that rather flat pyramid.

With Company D I have observed an environment in complete confusion. Employees are taking instructions from multiple individuals and there is no clarity with respect to responsibility. Oftentimes directions are contradictory and deadlines are confusing, all causing a negative impact on productivity.

Actual feedback from employees:

Q: What would you improve to make our workplace better?
A: Have an actual organization chart.
A: Communication and a basic company structure.
A: No current structure to follow.
A: General structure needs to be revamped.
A: Defined roles.

Q: Do you have any ideas for improving communication in this company?
A: Having an actual supervisor. . . .

Q: What is your opinion of the opportunity of advancement?
A: There is no organizational structure that would facilitate upward movement or opportunity for advancement.

Clearly these employees have recognized a lack of organizational structure and are experiencing difficulties in their roles. As an employer, take the time to talk to your employees. They may provide you with some valuable insights into your organization!