Organization Chart

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Representing the formal structure of a firm in terms of authority, functions and relations.

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Hierarchical Organization ChartWhat is an Organization Chart? Description

Every organization has both a formal and an informal organizational structure. Examples of organizational structures are:

  • Hierarchical structure (typical for the small, entrepreneurial organization)
  • Line-staff structure
  • Functional or Departmental structure (based on function, products/service, customer type, geographic region)
  • Matrix structure (dual reporting lines)

These formal structures of organizations can be represented in the form of an organization chart. Sometimes also referred to as organizational chart, organigram, organogram, or org chart. It graphically shows the hierarchical authority, roles and responsibilities, functions and relations within an organization. For a new employee, the organization chart helps to understand what should happen within the firm. (The informal structure represents what is actually occurring within the organization.)



Line-staff Organization ChartMany people have pointed out weaknesses and limitations of org charts. Others have coined a dizzying array of buzzwords to categorize organizations, including networked organizations, transnational organizations, front-back organizations, boundaryless organizations, learning organizations, virtual organizations and social networks.


Nevertheless organizational design continues to be one of an important and challenging demand on top management, because it influences and interconnects the business and corporate strategy, marketing, decision-making, communication, finance and investing, and leadership within any organization. And organization charts will continue to play a major role in this process, although they may look quite differently from the traditional tree-like forms of the past. Simply because people can more quickly absorb information when it is shown in a graphical way.

 

Origin of the Organizational Chart. History

It is not unlikely that the ancient Egyptians already had documented their methods of organizing the division of labor for their massive public works projects in one way or the other. However the first real organization chart was probably created in 1854 by Daniel McCallum, superintendent of the New York and Erie railroad company. Functional Organization ChartMcCallum was responsible for creating a line for nearly 500 miles stretching from Jersey city through Pennsylvania and New York to the shores of the Great Lakes.


McCallum noted that "other things being equal, a long road should be operated for a less cost per mile than a short one".  But things were not equal. The essential functions of a railroad company - coordinating the delivery of freight and people, repairing cars and track, monitoring the positions of trains - were vastly more complicated over 500 miles than over 50 miles. Without effective organization, additional miles of track made railroads more costly to operate. McCallum developed the organization chart, which according to writer Henry Varnum Poor resembled a tree. Its roots represented the president and the board of directors. Its branches were the five operating divisions and the passenger and freight departments. Its leaves indicated the various local ticket and freight agents, crews and foremen, and so on.


Historically, the organization chart is a symbol of the evolution of Western industry from being fundamentally personal in nature to enterprises in which the creation of organizational capabilities became a prerequisite for survival.


Usage of the Organization Chart. Applications

  • Matrix Organization ChartDefining the roles and responsibilities of all personnel within the organization.
  • Establishing a hierarchical structure of authority, power and, hence, decision-making.
  • Establish communication channels and information flows, incorporating a chain of command with specific rules and regulations relating to reporting procedures and accountability methods.
  • Establishing control mechanisms, such as the degree of centralization and the span of control. Compare: Centralization and Decentralization.
  • Establishing strategies for co-ordination of work practices.
  • Establishing decision-making processes.
  • Establishing specific operational functions and tasks.

Creating an Organizational Chart. Process

Robert Simons (Levers of Organization Design, 2005) suggests that there are four main tensions or levers underlying any organization design:

  1. Strategy (structure follows strategy) versus Structure (organization design influences future strategies)

  2. Accountability (for today's goals) versus Adaptability (to future changes)

  3. Ladders (vertical hierarchies) versus Rings (horizontal networks)

  4. Self-Interest (individual) versus Mission Success (department, business unit, corporation).

Compare also: Greiner, Growth Phases and Simons, Levers of Control.


Strengths of the Organization Chart. Benefits

  • Transparent and predictable. Helps to understand what should happen within the firm.
  • Provides a quick snapshot about the formal hierarchy in an organization.
  • Who is in charge of what. Who reports to who.

Limitations of Organizational Charts. Disadvantages

  • Static and inflexible. Organizations change and go through Growth Phases.
  • Does not help much to understand what actually happens within the informal organization. In reality, organization often behave quite chaotic and follow complex guesswork and amplification mechanisms (Core Group Theory).
  • Traditional org charts can not cope with changing boundaries of firms due to Outsourcing, Information Technology, Strategic Alliances, and the Network Economy.

Book: Robert Simons - Levers of Organization Design -




Organization Chart Forum (25 topics) Help
  Your Employees' Work is Changing: From a Job to Several Roles
We live and work in a very dynamic and competitive world. In order to survive, our organizations are forced to be flexible and high-performing too. This is increasingly influencing the way work and jobs in organizations are set up: inst...
     
  Levels in Organisations and Role Clarity
Broadly-based on the concept of the Requisite Organisation and Stratified Systems Theory (Elliott Jaques), we can distinguish the following Levels in Organisations:
Level 1: SPECIALIST, time horizon short, e.g. day-to-day, perhaps sometim...
     
  Organization Chart for Export / Import Business
What way is the best to organize an export/import business (in terms of staff and their responsibilities) given that: products are manufactured in HQ Germany, imported to Mexico from Germany and exported directly from Germany to all other countries i...
     
  The Fluid Organogram
Organizational design today has to respond to local, strategic and global challenges – normally unpredictable. In this context I propose the fluid organogram coupled with clutter free communication:
- A fluid organogram is one that almost imperc...
     
  When is an Organization Design Good? 7 Indicators of an Effective Organization
Today, most managers believe that happy, committed, actively involved employees and a positive corporate culture are important measures of effectiveness.
Richard L. Daft in his book ' 
   
  What are Line Relationships?
Line relationships are superior-subordinate relationships and can be traced in a "chain of command" from the organization president through a succession of levels of managers to the lowest worker....
     
  How do You Keep Organizational Charts Current?
Organization charts are most commonly out-of-date because they are such a fuss to prepare and update. The majority of organizations are using PowerPoint, which creates attractive charts for smaller organizations. Templates are available that can spee...
     
  Special Organizational Structure for Construction Industry?
In the construction industry, health problems and security risks are always nearby and there are many crisis situations. Which organization structure could be followed by management at project site locations to prevent and deal with these problems an...
     
  The Future Proof Organization
An idea that has fascinates me is to make the concept of future proof organizations tangible.
A future proof organization results from an assortment of individuals who see themselves as future proof – which is evidenced the moment they b...
     
  Reorganizing a Radiology Department
Anyone in the health care sector know of good ways to think through merging two diagnostic imaging departments in an academic hospital and come up with a new org structure. Current structure of the two departments is highly functional (researc...
     
  Higher End Uses of Org Charts
I am doing research for federal government and would like to know: how is your organization using the organization chart / table of organization for budgeting, analysis, etc.? Are organization charts static or are they kept current? How is budgeting ...
     
  Organizational Charts Say a Lot About the Organization at a Glance
I think the choice of an organizational chart/structure should be and is unique to the needs of the organization. Organizational charts say a lot about the organization at a glance including responsibilities, communication channels, lines of autho...
     
  When is an Organization Chart Out of Date?
When should an organization chart be condered out-of-date?...
     
  Utility of Organizational Charts
The purposes of an org chart are specific:
Internal purpose - employees need to know where they fit, to whom do they report, who reports to them, and the corollary, to whom do they not report.
External purpose - when the "bad" thing happens...
     
  Channels of Communication Within an Organisation?
What are the communication channels within an organisation?...
     
  Importance of Organisational Structure
Let's assemble a list of the importance of an organisational structure here.. Who can provide some points?...
     
  Organization Chart Software
Can anyone help me find org chart software that is able to handle matrix orgs? We have looked at 10 different versions. None can flexibly do matrix orgs. Any ideas?...
     
  Organization Structure vs. Charts
How does an organization structure differ from organization charts?...
     
  Organisation Chart and Communication
Is it true that the organisation chart dictates the network of communication?...
     
  Bypassing your Boss / Position in the Line of Authority
Can one bypass a certain position in the line of authority in an organization?...
     



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Expert Tips - Organization Chart Premium
  Advantages and Disadvantages of the Matrix Structure - Organization Design
 
  Organization Charts are Compromises - Creating Organization Charts
 
  Advantages and Disadvantages of a Functional Structure - Organization Design
 
  Implementing Coordination - Linking the Activities / Tasks
 
  Implementing Specialization - Task Allocation
 
  Marketing Organization - Options to Consider
 

Resources - Organization Chart Premium
Organization Design - Organization Design
Organizations and Structures - Organizational Structure, Departmentalization, Centralization, Decentralization
Organization Chart Diagrams - Organizational Development
Funny Org Chart Picture - Org. Charts / Culture
 

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Compare with Organization Charts: Levers of Control  |  14 Principles of Management  |  Organizational Configurations  |  Chaos Theory  |  Growth Phases  |  Parenting Styles  |  Acquisition Integration Approaches  |  Organic Organization  |  Bases of Social Power  |  POSDCORB


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