Which Organizational Chart is Best?
Organizational charts sometimes feel like an intangible element in our business that doesn’t offer a lot of value. Sure, if tasked with this responsibility, we may revisit the organizational chart once a year, but does it really have a positive impact on our people and production? The answer is that it can! Organizational charts are a major opportunity for our business to drive culture, improve communication, show staff a pathway to promotion, and showcase relationships between different departments.
To get the most out of our organizational chart and to create that clarity, it's best for us to think about the ideal organizational chart. President Abraham Lincoln stated, “Give me six hours to chop down a tree and I will spend the first four hours sharpening the axe.” Spending that amount of time preparing for a task may seem like a waste of time but consider the benefits; if our organizational tools are sharp, well balanced, and ready for action, it can be extremely efficient in accomplishing the task at hand.
Think about the barriers our teams have encountered due to a lack of proper oversight and the uncertainty of who is supposed to sign off on a significant change or a new project. Due to a lack of clarity in our organization, our teams may feel in limbo on what the next step may be, which is why spending intentional time on organizational design is crucial.
One of the first steps of creating an ideal organizational chart is identifying what type of chart to create. Although there three common ways to create an ideal organizational chart, People Centric recommends one of the following - can you guess which one?
Hierarchical Organizational Chart- The traditional and top-down organizational chart
Flat Organizational Chart - A common chart for new companies with smaller headcount
Matrix Organizational Chart - Introduced in the 1970s, it’s the practice of supervising staff with more than one reporting line
If you went with Hierarchical, you are correct!
While Flat and Matrix are attractive to smaller and innovative companies and appeal to the eye because of it's equality and detailed lines across the organization, there are a lot of pitfalls and consequences in using either of these. A lot of organizations using these styles do so in an effort to foster open communication, place individuals, not roles, in positions based on strengths and skillsets, and demonstrate their value on innovation. These are all great and valid reasons. However, when creating an ideal organizational chart, these types of charts aren't easy to scale with our businesses, and because of it's complexity, it can sometimes cause confusion between team members, managers, and employees, actually hindering all communication and innovation.
At People Centric, we believe that simplicity is best. Using a hierarchical chart will establish realistic and clear expectations throughout an organization, and it can easily be created to scale. This style clearly defines which role has what responsibilities and identifies where the direct lines of management and communication are. The other two are useful, but oftentimes have a short shelf-life, whereas creating the ideal and hierarchical organizational chart opens the door to long term opportunities and leadership pipelines.
Ideal organizational chart need to be clear and nimble enough to adapt to our growing companies, and it can start with the design.