As the name suggests, organizational charts (or Organogram charts) display the internal structure or hierarchy within the organization. It is a graphical representation of different relationships amongst functions, departments, teams as well as individuals. In other words, a clear picture of the chain of command, flow of authority and communication from the top to bottom. This chart typically contains employee information such as contact details, photo, email id, designations, etc.
Whether it’s a startup with 20-50 employees or a large company with more than 3000 employees, organizational structure helps managers effectively manage the staff at all times. At the same time, this chart helps to increase visibility across the entire organization.
Importance of organizational chart in the workplace:
Having a visual representation of the organization’s structure also has an impact on a couple other factors:
Org charts help to demonstrate clear reporting structures for all the employees in the organization. It creates a road-map for how the work is to be done and the process required to ensure this information is shared throughout the company, to the right individuals. And the way to ensure this takes place efficiently is, to have one supervisor or manager and few employees directly reporting to one.
In larger organizations particularly, employees need to know who is their reporting head. So that whenever there are issues or they require guidance pertaining to complex problems, their superiors can provide help as and when needed. It is best to seek help at the earliest instead of waiting for the right time or in standard meetups. Clearly defined chain of communication helps efficiently spread the message & minimizes losses in translation.
Impact on long term planning:
Due to the visual nature of charts it gets easy to identify if any employee/team can become a bottleneck in the long run. If an employee or a team is shouldering more responsibility than they should, you can spot that in a minute in the org chart. This helps you in creating contingencies & backups in case of systemic breakdown. And that turns out to be a strategically important aspect as it also helps in business continuity planning.
For smaller companies or rising startups, growth is inevitable. As they enter new life cycles in their growth, restructuring is bound to happen. Employees can be shifted from one team to another or one department to another depending on their skills and expertise. And because the chart has detailed information about every employee’s abilities, it gets easy for the management to reshuffle and form a new team with the right balance of functional skills.
Alignment of goals:
For any company to succeed as a whole, everyone needs to be equally invested in its vision. They need to collectively work together to make sure efforts are taken in that direction. The OKR goal setting methodology, for example, talks about aligning goals at all the levels of the organisation to ensure company objectives are achieved. This is one of the most important factors that has been instrumental in the popularity of this goal setting framework.
Organizational flowcharts help streamline the process of aligning these efforts and goals in one direction. When there is a clear relation between two or more levels, goals should be aligned the way OKR methodology suggests. Every employee is made aware of their roles and responsibilities in the workplace.
New employees also benefit from the organizational charts. Even before they get a chance to interact with their colleagues, they can easily determine who they are going to work with. It helps them connect more effectively and with purpose.
Types of organizational charts:
There are various types of charts and structures but the following 3 are widely used:
Hierarchical organizational charts are the most common structures as well as the most popular one. In this model, the employees are grouped together in a team where each one has one clear manager to report to. Groups can be formed depending on various factors such as functions (Product Development, HR, Marketing, Sales, etc.), geographically as well as according to various products or services that these individuals are working on.
Hierarchical structures are commonly observed on larger companies where power and authority increases as it ascends to the very top level of management. For example, in Government organizations.
Unlike traditional hierarchy, the structure of reporting is set up in the form of a grid or matrix. Employees with similar skills or expertise are grouped together for common tasks. However they may report to more than one manager.
For example, the sales team of a company may report to their Sales manager or Sales Head. But they also have to report to the Marketing Manager or Marketing Head to share the information collected through their interactions with prospects and customers.
In traditional organizational charts, this concept was known as solid line and dotted line reports.
A flat structure or a horizontal structure is one where middle levels of management are eliminated to expedite the process of decision making in the workplace. This can be especially seen in startup cultures or smaller companies and is near impossible to use in larger organizations.
Flat organizational charts help to reduce bureaucracy and enable employees to take decisions independently. That is, without having to wait for their manager’s approval as crucial time may be lost. It further helps to improve their productivity while at the same time empowering them to be more accountable towards their work.
A popular misconception is that in flat hierarchies, employees do not have any managers or supervisors to report to. That is incorrect. They do have someone to report to but the power of decision making is shared which differentiates this structure from the previous ones mentioned.
Companies can select any of the options depending on their growth stage and management’s discretion. One way or the other, these structures will definitely help them manage their employees. Which one is most suited for your company?