Since Organizational theory is a hot topic these days, I thought I’d poke a bit of fun at that old corporate tradition that is the Organization Chart. Over the years I’ve seen every type of org chart in existence. Some have come and gone only to come again. Every year or two the latest revolutionary thinking in corporate organizational theory spawns a new form of charting. The dynamics of corporate organization are so revered by B-school professors and management consultants that an entire generation of corporate management has drunk the org chart Kool-Aid. These managers often rush to adopt the latest thinking without any consideration for whether or not the new form of structure is even appropriate for their business. So powerful is this dynamic that entire companies and numerous products have been built to support these latest trends. In the time it has taken to author this musing it wouldn’t surprise me if Visio had a new product release.
So, is an org chart a corporate asset or a waste of time? The answer depends on the purpose behind its creation, the process used to create it, and the corporate purpose for the existence of the chart post creation. The following list contains my top 10 reasons not to create an organizational chart:
- To give the CEO an opportunity to view his name at the top
- Because you need to beef-up your management presentation and you have room for an extra PowerPoint slide
- Your management consultant told you to create one
- The business planning software you purchased has a template for one
- Your CFO just read a new article on corporate organizational theory
- You just attended an off-site where someone drew an off-the-cuff chart on a dry erase board and it looked good
- When reviewing your competitor’s website you noticed they had one, and well your website needed updating anyway
- There wasn’t anything better for the intern to do
- Someone got a promotion
- It just seems like you should have one
Putting the satire aside, a business should in fact have an organization chart. A sincerely motivated, properly constructed, and actively implemented organizational chart can in fact help refine the operational aspects of any business. The development of an org chart should be a serious initiative born out of solid underlying business logic, process and methodology. Culture and environment are considerations that are often times completely ignored in the design of and org chart while perhaps representing the most critical architectural elements.
The most common mistake made by corporate management is that the organization chart is created way too early in the process before business rules and logic are aligned. Much like the order of operation principles that apply to an algebraic formula, if you get the sequencing wrong you can’t solve the problem. An org chart is not where you start the process, but is rather the culmination of many processes helping to insure a certainty of execution and clarity of direction by creating a road-map to be followed.
There’s an old joke in business circles that says “every company has two org charts… the one that’s put into graphical form and incorporated in the business plan, and the one that never gets published but is actually representative of how things really work.” The process of corporate organization is most succinctly and easily understood by using the following order of operation which I developed more than two decades ago:
“Values should underpin Vision, which dictates Mission, which determines Strategy, which surfaces Goals, that frame Objectives, which in turn drives the Tactics that tell an organization what Resources, Infrastructure and Processes are needed to support a certainty of execution.” – (Mike Myatt 1988)
The org chart should enter the organizational construction cycle as deep into the cycle as possible to avoid the joke that led off the preceding paragraph. By waiting to create your organizational paradigm until there is at least some level of maturity in the business, a clear picture of who, what, when, where, why and how will begin to develop. It is only at this stage that you can properly align expectations, with process, culture and environment. It is then and only then, that you should address the need for, and deployment of, your human capital assets.
The bottom line is that I have observed all types of organizational structures (in vogue, antiquated and otherwise) succeed, and I have also seen them fail. It is not the “type” or the “style” of chart used that works or doesn’t, rather it is the process of design that was used in creating the org chart that will determine its usefulness, functionality and adoption. That said, my personal preference is to build a very flat organization, and where a hierarchical framework is necessary, to drive complex decisioning down as low as possible within the organization structure.
Mike Myatt, is a Top CEO Coach, author of “Leadership Matters…The CEO Survival Manual“, and Managing Director of N2Growth.