 What
is an Organization Chart? Description
Every organization has both a formal and an informal organizational
structure. Examples of organizational structures are:
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.)
 Many
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.
 McCallum
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
-
 Defining
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:
-
Strategy (structure follows strategy) versus
Structure (organization design influences future strategies)
-
Accountability (for today's goals) versus Adaptability
(to future changes)
-
Ladders (vertical hierarchies) versus Rings (horizontal
networks)
-
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 -
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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:
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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 or..." |
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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 f..." |
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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..." |
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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 ..." |
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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.
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Creating Organization Design
"Hi, can you suggest any good books to understand the conept of creating and standardising levels in an organization?" |
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Matrix Structure or Unworkable?
"I would welcome your thoughts on my position; I am supposed to run a team of project managers who work across the company as and where required. We just took on a second location and my boss set up a ..." |
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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?" |
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The Matrix Organization
"In the matrix organization chart the traditional vertical hierarchy is complemented by a horizontal structure. The horizontal layer may consist of products/services (families), projects, business sub..." |
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Structure versus Strategy
"When you're creating organization charts, you'll often have to deal with the eternal question: Does structure follow strategy or does strategy follow structure ?
But you have to refine it and rel..." |
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What is a Divisional Structure?
"The divisional organization structure can be seen as one type of functional structure, or as a seperate organizational strucure.
It is often broken down into three types:
1. the product divi..." |
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The Org Chart of McCallum
"Who could supply me with a copy of the 1854 org chart made by Daniel McCallum? Who has proof of even earlier organizational charts? Please send them to me, thanks" |
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Organization Chart | Organizational Chart | Organigram | Organogram | Org Chart Special Interest Group
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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
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