Representing the formal structure of a firm in terms of authority, functions and relations.
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
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:
Strengths of the Organization Chart. Benefits
Limitations of Organizational Charts. Disadvantages
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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