As I watched my custom home being built, it was interesting to observe the many sub-contractors working for the main builder and the reporting relationships established between the main contractor, the sub-contractors, and the vendors providing the various needed supplies. The intricate web of sub-contractors, suppliers, and the main builder highlighted the need for established reporting relationships to avoid confusion and delays. Being an organizational development consultant, I found this simply crazy that there was such a lack of communication and collaboration among the various sub-contractors and vendors. and can see why individuals who are on the purchasing end of these professional’s work, as I was as having a custom home built, would become frustrated and annoyed, I know I did many times.
In order to implement and achieve our strategy and goals as an organization, we need people and whenever we bring multiple individuals into an organization, we need some method of a reporting relationship. We need established methods of communication, procedures for making decisions and solving problems. This is where the organizational chart comes in to help create organizational order and eliminate chaos.
The organizational chart is crucial for defining roles, responsibilities, and reporting structures within a business. It helps establish clarity, accountability, and communication channels, contributing significantly to operational efficiency and team alignment. A well-designed organizational chart can streamline decision-making processes, enhance collaboration, and foster a more productive work environment, ultimately contributing to the success of the business.
Reporting relationships create a formal system of responsibility and accountability. Everyone within an organization knows who they are to report to and who reports to them. The organizational chart serves as a blueprint for establishing roles, responsibilities, and the lines of communication. However, these formal systems are not without their problems. There can be a disconnect between the organizational chart and the dispersion of power within the organization. Sometimes these formal systems, particularly the communication aspects create other problems when there is a strict adherence to the lines of communication and can prevent or slow progress. Many of these communication problems come from a strong top-down , one-way communication patterns. When this occurs an informal system of communication begins in the form of rumors, sharing within specific groups, silos, speculation, and informal clicks.
This creates a tendency to screen information that serves the individuals needs not the organizational needs which causes friction and miscommunication due to the tension between the formal system and the informal system that evolves.
This tension between formal and informal communication undermines productivity and energy within the organization. Professors Robert L. Sutton and Huggy Rao, in “The Friction Project,” address how such friction slows down businesses. They advocate for a balance between hierarchical and flattened organizational structures, with leaders knowing when to delegate and when to step back. They recommend that there is a time for typical hierarchal structure coupled with a flattened organization structure. They suggest that the best leaders are able to adept at flexing the hierarchal order that they know and knowing when to delegate, defer and then get out of the way within a more flattened structure.
I would recommend that we build the organizational chart around job function, not the people. If we imagine the best organization we could possibly create and one that would continue to function in the future as the business grows and evolves, what job functions will be necessary. In Jim Collins 2001 book Good to Great, he describes business as a bus. In order for the business to be successful, we need to know what the seats on the bus that need to fill in order to not only be successful today but in the future. These seats are in the form of job function not who is in the seat. Once we know what the seats are, we can then focus on getting the right people on the bus and in the right seat. We also, need to get the wrong people off the bus, because they have a tendency to drag others down. Mr. Collins assertion is that Good to Great companies did not first figure out where to drive the bus and then get the people to take it there. They first figured out what seats were needed on the bus to ensure success and then they got the right people on the bus and in the right seats. Then these Good to Great companies figured out where to take the bus.
Having an organizational chart that is well thought out as to what are the seats on this bus that we need in order to be successful today and into the future and then determining if the individual in that seat on the bus is the right individual is critical to our success today and in the future. The individual currently in that seat may not be the right individual and rearranging the people may be necessary.
I often discuss with my clients that just like a sports team, in order to win the game of business we need to have “A” players and “B: players that are working hard to become “A players. We need to have seats on our bus that can only be occupied by “A” players that are willing to put forth A+ effort. At the same time, we need to be developing a bench of “B” players that can step in when necessary. Designing our organizational chart to accommodate an understanding as to what are my most important job functions and who do we need to fill that seat in order to ensure success is a primary responsibility of leadership.
In essence, designing an organizational chart around critical job functions ensures alignment with current and future business needs. It allows for the strategic placement of individuals who can drive success while fostering a culture of continuous improvement and development.
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