Why the Organization Chart is Not Obsolete

It's fashionable to view the traditional top-down org chart as about as relevant to today's growing businesses as the three-piece suit. Today we self-organize into ad-hoc teams that form and melt away again, or so the theory goes.

As someone who has built a business from one person to 40 (and growing fast) I think most entrepreneurs misunderstand org charts and their value even to the smallest business of just one person. Yes, I'm serious: A one person organization that aims to grow needs an org chart!

The root of all this is the common misconception that org charts show how your people are organized. Wrong! An org chart shows how the responsibilities in your organization are organized even if there is just one of you.

When I started SmartDraw I was the lone employee, responsible for

• Product Development
• Marketing
• Sales
• Finance
• Customer Support
• Operations
• IT
• Vision and its implementation (CEO stuff)

But my org chart looked like this:

Note that there are no people associated with this chart. It shows the organization of the positions (with their implied responsibilities) within the company and is still valid today. Back then when I added the occupant of these positions it would have looked like this:

A bit silly, you say? No, it shows the road map for me to grow my business. Part of my job has been to replace myself in each of these roles as SmartDraw has grown. Today the chart looks similar but most of these boxes have someone else's name as the occupant.

An org chart is an incredibly useful tool that forces you to think about the way your business should to be organized and points the direction to get there.

Let me walk you through the way I use the org chart as a management and planning tool and what I get out of it.

1. Start by defining the positions (jobs) in your company

Before you can draw an org chart you must define the positions within your company and their responsibilities. My favorite way to do this is with a job description: A short document that defines a job or position within the company. I structure them like this:

• Title of the position
• The goal of the position
• The measure of success
• List of responsibilities

Here's an example:

Director of Product Engineering and Services

Goal

The goal of this position is to ensure that SmartDraw releases occur on time, meet specifications and are of high quality and that customer support of the product is appreciated by our customers.

The Measure of Success

One year from now, the successful occupant of this position will have achieved the following:

1. The successful release of SmartDraw 2008 in early September 2007.
2. Developed and validated the authority and a quality of all content (templates and symbols).

Specific Responsibilities

• MANAGE DEVELOPMENT
• INSTALLS
• CONTENT DEVELOPMENT
• CONTENT MANAGEMENT
• QUALITY ASSURANCE
• CUSTOMER SUPPORT

2. Decide who reports to whom

Except for the CEO, each of these positions reports to one other. Ah ha! You say. This is not true in my organization we all talk to each other; Marianne for example does work for three different people. OK, but who sets her salary? Who hired her? Who will hire her replacement? That's who she reports to.

If you still can't answer this question, (perhaps you have equal co-managers or co-ceos), it's your organization that the problem, not the nature of org charts. Someone has to call the shots. If you can't make up your mind who this is, it's time you did.

3. Now draw your chart

Now you have a simple hierarchy and you can draw that org chart.

Lessons Learned

The most important step in this process is defining each position and its job description. This forces you to think about every step in your business and how it is organized. Write job descriptions as if you have no employees. Don't write one to fit what someone you have already does. If Marianne is tech support rep and shipping manager, don't write a joint job description. Write two and put her in as the current occupant of both. This gives you a much clearer picture of her role.

Once it is complete, show it to everyone. Ambiguity is removed. Clarity reigns!

Teams

OK, great but we all work in teams that don't follow the org chart, you say. So do we, but that has nothing to do with our org chart. Project teams live in a parallel universe to the org chart. Don't try to mix them up. Use your org chart to map out responsibilities and roles within the organization. Use a team chart to map out the responsibilities within a project. We cover this in another post.

Learn More About Creating & Drawing Organizational Charts

If you'd like to see how easy it is to map your business' roles and positions into an organizational structure then watch our screencast "How to Draw Organizational Charts and Team Charts with SmartDraw."