Your Company’s Organization Chart is Probably Obsolete: Time to Rethink, Realign, Rebalance… Keep an Eye on Future…

Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization. ~Harold S. Geneen

Most organization charts are old, out-of-date, inaccurate, non-aligned with company strategy, and just plain useless… An organizational structure is a formal outline of the managerial reporting relationships and information flows within a company. A company’s organizational structure is a core component of its culture, and serves as a backbone for all operational activities.

The organization chart is a manifestation of the organizational structure and provides a roadmap between people and departments, and provides the foundation for standard operating procedures and practices. It shows the key individuals that participate in the decision-making process, and the extent to which their views shape the organization’s actions.

 The early theorists of organizational structure, such as; Taylor, Fayol, and Weber ‘saw the importance of structure as a condition for an organization’s effectiveness and efficiency, and whatever structure was needed people would fashion it accordingly… Organizational structure was considered a matter of choice.’ 

In the 21st century, organizational theorists, such as; Lim, Griffiths, and Sambrook ‘say that organizational structure development is very much dependent on the expression of the strategies and behavior of management and workers, as constrained by the power distribution between them, and influenced by their environment and the desired outcomes.’  

While organizational structures are usually portrayed as sets of interconnected boxes, the reality is that the boxes are human beings with strengths, weaknesses, and personalities that often don’t fit with the logic of the organizational design. But, instead of directly dealing with the misfits, most managers make accommodations to the design of the organization that leads to structures that don’t quite work as they should.

It may not be possible to fully solve the dysfunctional design puzzle in your organization, but a good way to start is to ask these three questions: (1) Is the problem the structure, or the way we are managing it? (2) Does the structure match our strategy? (3) Has the organizational design been compromised by accommodating personalities? Starting a dialogue may not solve everything, but it might help you start shifting those organizational pieces into their correct place (or, if you wish, shifting boxes).

In the article “Your Organization Chart” by Erin Duckhorn writes: Most companies organize around personalities rather than around functions, i.e., people rather than accountability or responsibility. Keep in mind that your organization chart is an essential, central, and critical piece of documentation in your business. Perhaps, if it’s been awhile, now is the time to revisit your chart and take a strategic look at your organizational structure.

Your organization chart is like the grand schematic of your business, and it’s the means through which the crucial transitions can be made. Once you have a working organization chart, the next step is to figure out how that chart is going to serve the future of the business. That is, keeping in mind how the present is going to serve the future. As you build the business toward your strategic objective, think about how your organization chart needs to morph and evolve, in order to serve that vision.

In the article “Your Organizational Chart (and Why It’s Needed)” by Judith Lerner writes:  Tear-up your organizational chart: It’s not working and doesn’t show the positions that need to exist in your company in order to support your vision. It’s not revealing who really is responsible for what, and how they’re held accountable. Since it’s not serving you, then change it and create a picture of what is supposed to be happening every day in the business to assure consistency and growth. 

The organizational chart should be a schematic of the true workings in your business – not only as it exists now, but as it scales out to meet your strategic objective. As company grows, the organization chart is a road map for your plan to fill specific needs in your business. Once you have a clearly defined organization chart, you have the framework for understanding, structurally, what has to take place in every center of company to successfully accomplish your goals. In other words, you have created an organization chart that depicts the company structure as it must be, in order to meet your future expectation.

In the article “The Myth of the Organization Chart by Gerald McLeod writes: The organization chart is myth and should be done away, or at least hidden away, only produced and shown on demand. Most exiting charts deceive, and only include a small representation of a select few, the so-called, important people in an organization. Many charts appear to have been designed more for ego satisfaction rather than actual graphic representation of the business organization. If you were to ask a customer who is on the top of the organization chart, most likely, they wouldn’t have any idea.

Those who are on the front line are really the important people in an organization. They are the people who customers see and interact daily, and customers base their image of the organization according to these encounters. The organization chart is an archaic relic of by-gone days and should be put away. Today’s businesses and organizations are inter-dependent enterprises with constantly rotating head-honchos. No organization chart design can truly display the real organization.

In the article Why Organization Charts Can Get in Way of Change by Andrew writes: The most common maps of enterprises are hierarchical organizational charts. We see them everywhere. We depend on them to illustrate the structural elements of an organization and identify the people working within them. Their underlying organizing principle is top-down granting of authority. However, getting work done in organizations depends on relationships that traverse these artificial boundaries.

Collaboration and cross functional teams is a necessary feature of organizational life. However, if you think your organizational chart represents the relationships that get work done, you need to pull your head-out of the sand (or, the chart). It’s amazing how much attention is paid to the hierarchy documented in organizational charts. Most of us when asked, will freely admit that the relationships required to get work done are not illustrated by an organization chart.

The reality of the modern organization is that it’s a network. It’s the sum of social and working relationships that traverse both organizational silos and levels. The old boys’ club, grapevines, even the smoker’s huddle are the type of networks that uses informal paths of communication to share knowledge and support. Adopting a network view is much more useful when it comes to understanding connections between people in organizations.

The mesh of personal interaction isn’t revealed by an organizational chart, but exists, nonetheless. Working with key or central people within the networks can; amplify communication, accelerate change, and identify opportunities for promoting development; however, the key is to become fully engaged within the networks…

There is a  ‘new normal’ in doing business today. Think of it as a tidal wave of change that is relentless and moving at high-speed. According to Neil Ducoff; the pace is so fast that it has rendered many tried-and-true leadership approaches and systems grossly underpowered or totally ineffective. To survive and thrive in a change-on-steroids economy, leaders need to rethink everything quickly or drown in the wake of change.

It’s hard for a company to be fast, responsive and innovative when its organizational structure is complicated and, in many ways, designed to be territorial. This is exactly what happens when organization charts are built around titles and functions. In the new normal, organizational structures must be streamlined, simplified, and focused on what’s truly important; i.e., the outcomes. We need to rethink our reliance and devotion to organization charts. I don’t condemn them completely, but we need to ease-up on our reliance on titles and hierarchy. Supporters of organization charts claim that they are tools that can effectively delineate work responsibilities and reporting relationships.

Managers of different organizational units may not fully understand how their work fits into the work of other units. The early adoption of an organization chart can help to identify the areas in which a firm is lacking the supervisory role before this lack begins to have a serious impact on the organization… Detractors of organization charts point out that formal organization charts do not recognize informal lines of communication and influence that are quite vital in many business settings.

Organization charts are often seen as narrow and static in perspective, and they may exclude important relationship and reporting factors… Critics charge that the diagrams may paint a misleading picture of the importance and influence of various people within an organization. Since organization charts, out of necessity, are somewhat streamlined representations with limited detail; it’s important for businesses that do rely on them to continually examine and update those diagrams to ensure that they reflect current business realities.

In fact, the changes in organizational structures have spurred innovative changes in the format of many organizational charts; whereas, traditional models are formatted along general up-down lines, newer models sometimes utilize flattened or spoke frameworks. Also, the implementation of various kinds of team models are more common as modern businesses move towards a more organic organizational structure. For example; some organizations have established models using self-directed work teams, cross-functional teams, and other variations. 

These models are established, either as ad-hoc (e.g., for problem solving) or on permanent basis, as the regular means for conducting the organization’s work. Part of the impetus toward the organic model is the belief that this kind of structure, work-wise, is more effective and provides greater employee motivation. The first half of the twentieth century was dominated by the one-size-fits-all traditional organization structure. Whereas, now in the early twenty-first century, the dominate thinking is that changing organizational structures, while still a monumental managerial challenge, is a necessary condition for competitive success…

The WL Gore Company: There are no traditional organizational charts, no chains of command, nor predetermined channels of communication. Instead, we communicate directly with each other and are accountable to fellow members of our multi-disciplined teams. We encourage hands-on innovation, involving those closest to a project in decision-making. Teams organize around opportunities and leaders emerge.