Organization Charts as a Management Tool

Two businessmen talking in front of charts
Jon Feingersh/ Iconica/ Getty Images

Organization Charts, or Org Charts for short, are used to show people the intended structure of the organization. This "formal" organization is supposed to reflect the power structure of the company. Sometimes the Org Charts only serve to confuse people as to what the structure really is. This is usually not intentional, but rather REFLECTS the confusion of the people involved.

However, it is also possible to use an Org Chart as a management tool, to further the achievement of your organization's goals.

We will examine typical examples of "standard" Org Charts. We will look at confusing Org Charts. Finally, we will discuss the use of the Org Chart as a management tool.

"Standard" Organization Charts

Standard Org Charts typically are used to show people the intended structure of the organization. This "formal" organization is supposed to reflect the power structure of the company. Often, it only reflects the responsibility structure. The real power in the organization often follows lines of communications instead of lines in the Org Chart.

The charts typically are pyramidal in shape. They show the person in charge at the top. Below him or her are clustered subordinates, usually in progressively smaller boxes. Usually, individuals shown on the same horizontal level in the Org Chart are perceived to be "peers" within the organization.

This Org Chart of the Imperial College’s Department of Computing (DOC) is typical of the pyramid chart.

The Head of Department has five directors who report to him directly, plus a Deputy Head and a search committee. Each of the Directors has their direct reports shown in the green ovals below their committees.

Confusing Organization Charts

Sometimes the Org Charts can confuse people as to what the structure really is.

This is usually not intentional, but rather reflects the confusion of the people involved. If you are unsure of the group's functional relationships, or if they frequently change, it is virtually impossible to accurately diagram them.

Perhaps the most common place to find confusing Org Charts is in the US federal government. The Org Chart for the Oak Ridge National Laboratory’s Computer Science & Mathematics Division does not rapidly convey an understanding of the Organization’s structure. It seems to suggest that eleven functions report directly to the Director.

While the span of control (the number of direct reports that a manager can effectively supervise) does vary considerably, I find it hard to believe that this is an optimally functioning organization. I suspect some of the functions’ leaders are "more equal". If we were to chart the communications flow within this organization, and the amount of time each subordinate spent with the director, some of the direct reports would probably need to be reclassified as subordinates of other functions.

Organization Charts as a Management Tool

Org Charts are usually a reactive, rather than a proactive, device. We have created an organization or allowed one to evolve, and it has grown.

It is no longer clear to the people within the organization, or to the people with whom they interact, who is responsible for what. So we draw up a bunch of boxes and lines to show everybody who does what. Then we add dashed lines and similar artificial devices to show that what we drew first isn’t really always the case.

A better option, however, is to craft an Org Chart that reflects where you want the organization to go, rather than simply reflects how it is now. If you want a flat, horizontal organization, draw the Org Chart that way. Show that six or eight (or even eleven as we saw above) managers report to the VP. Show that all ten programmers report directly to the Project Manager.

If your organization relies on quality circles or production teams to accomplish its mission, you should show that in your Org Chart.

Don’t feel constrained to stick to horizontal groupings and vertical lines. If your employees will more clearly understand their roles by doing so, you can use circles, inverted triangles, or whatever else you need.

There are many software products on the market to help you show how you want your organization to function. OrgPlus is an example of the kinds of tools that can be used to clarify many aspects of the business, including Org Charts.

The Way It Should Be Done

The example below is a representation of an Org Chart, which impressed me greatly. It was released to usher in a new era for a company that required creative, new action from all its employees.

It clearly shows the flat, horizontal structure intended to foster communication and innovation. It clearly shows the team formed by the top two officers, indicative of what the employees are expected to do. Yet it retains the unequivocal lines of final responsibility. The President is clearly leading the company, but everyone else knows they have to do their part to succeed.

The Way an Org Chart Should Be

It is still too early to tell if this Org Chart will have the desired effect. It has been in place only a couple of weeks. However, the company officers have clearly used it as an effective management tool to help drive their organization toward its new goals.