Leadership

Face it: Organizational charts don't work

Can something as simple as your organizational chart impact the company's performance? Executive leadership coach says definitely. In this blog, he explains why.

Recently, I was asked to take a look at a client company's organization chart. It was to be a part of a review on performance and morale. Company management wanted me to review and make suggestions that would help ensure they were accurately depicting their business. After reviewing the first page, I declined.

From experience, I knew it would have been a frustrating exercise (talking to a lot of people and hearing their opinions and recommendations). More importantly, I knew it wouldn't have resulted in any effective changes within the place. By declining, I chose to look after the client's expenses. And my sanity.

The company used a traditional pyramidal structure, i.e. boss at the top, next in command on the line below, their underlings on the next level. As far as I can tell, this structure probably started about 5,000 BC with the Sumerian civilization. After they crashed, it was picked up by subsequent generations of leaders -- next being the Egyptians about 2,000 BC. It has existed, more or less, in the same style since then.

Given how successful this reporting and management structure was for all the past civilizations, I am not inclined to recommend it to anyone.

There are tons of management studies that support the reasons for not using a structure like this. Key issues include

- they're always out of date,

- they don't deal with how things "really" get done, and

- they distance company leadership from the important work of the organization.

I like flat organizations: They work when the boss is involved. And, if he or she isn't involved, they show that the leader is not up to the task and should be replaced.

It's not simply for small companies. The critical factor -- that the boss is never more than one step away from the person who's doing things -- can be modified for even the biggest companies. Apple's structure proves it can work. In that organization, virtually every key area's leader reports directly to Steve Jobs. Nobody "in charge" of a key area is more than one step away from the boss. Consequently:

- decisions are made faster,

- money is spent according to the priorities of the company, and

- there's less culture clash internally with fiefdoms being created by each department head.

If you oversee an organization, reduce the levels between you and those "on the bottom." Challenge yourself to get involved, and you'll be surprised (maybe amazed) at how fast things start moving.

For anyone who really enjoys his or her job, reducing the number of levels will make it more fun -- and successful.

About

John M. McKee is the founder and CEO of BusinessSuccessCoach.net, an international consulting and coaching practice with subscribers in 43 countries. One of the founding senior executives of DIRECTV, his hands-on experience includes leading billion d...

30 comments
kevsan
kevsan

These charts exist mainly as a tool to create an initial guide programmers can follow when creating software. Using it for a hierarchy has little impact on actual work. Most employees report to their immediate supervisor who in turn reports to whoever and so on until what ever relative data reaches the person who requires it. Creating a massive hierarchy chart serves little purpose at lower levels and frankly the ones at the top care little about who is on the lower level beyond their immediate subordinates. Charts such as these can be used effectively if each chart restricts itself to three levels listing those below and above a particular level. Too much information can be as dangerous as too little.

natalia.csik
natalia.csik

Flat organization is not about involved boss - is about involved employee. An employee is involved if he/she is empowered .So the real issue is : does organization culture moves toward simple processes but complex jobs or it still lingers in the conveyer paradigm: simple standardized activities and a lot of hand overs.

l_e_cox
l_e_cox

... but we don't really need to go there. The fact is, we aren't talking about org charts per se, but about organizing methods. Supposedly these are taught in business management schools. But I know at least one good method that isn't. We can look at all the extinct organizations and try to figure out why they failed. Or we can look at the ones that are still around and try to figure out why they haven't failed. You can probably learn more about workable organizing methods using the latter approach. Assuming you can find such an organization and figure out how it is really organized, you have the beginnings of a workable model. What this little article makes most clear is that this is far from a wrapped-up subject. And probably that is true of many aspects of business management. But here are a few hints from what I have learned: 1) Don't overload the top. We assume the guy running the show is the visionary, the planner. If his or here immediate juniors can't cope with day-to-day challenges but let them "float up" for him or her to handle, that erodes the leadership that most organizations need to survive. 2) Don't confuse command lines with communication lines. Orders are only required where responsibility has failed, so most day-to-day work should consist of non-command communications. If an in-charge thinks he has to control all communication in and out of his group, then that group will have problems. The communication pattern is totally different from the command pattern. 3) Don't leave anything important uncovered. There are certain vital actions that any organization must do to stay alive. Make sure they are covered competently. The whole group can go down in a ball of flames because they thought "someone is taking care of that" when nobody really was.

OakvilleMyKey
OakvilleMyKey

Org charts have been successfully used for over 5000 years. (As you stated) There's nothing wrong with hierarchy so why not lay it out on paper. The six inches between the person at the bottom of the page and the person at the top of the page doesn't represent a disconnect; it doesn't take personalities into account. (if that was your point) I think you made the right choice when you decided to be the accountant as you probably would have failed them.

wgreer
wgreer

...or org structure. They failed for many other reasons. In some cases, they may have failed because they did not stick to the hierarchy described in their org chart. Sorry, but this article sounds like a progressive trying to convince a capitalist that socialism is really good for business. Business is war, so the association with military-like organizational structure makes sense. How do you think we would have done in WWII if our military had this flat org structure? So, what is the next step once you go flat? Every one gets the same pay? I don't want a flat structure. The big guy needs to stay in his ivory tower and out of my way so I can get the job done. He can deal with the stakeholders and the politicians and the regulators. He was hired for that role. I was hired to do my job. I do it very well. He knows it and I know it. The hierarchical org strucutre makes sense for most companies. If it works for Apple, fine. I have to think that that is only because of Jobs. Once he is gone, just watch and see how long that lasts. The org chart is a valuable tool. This article is not.

darrylhadfield
darrylhadfield

You've missed a major key point that, sad (for you and your article) to say, invalidates the whole thing. An organizational chart is just that: A chart. Reporting Structure != Organizational chart. The chart is just a pictorial presentation of the reporting structure - and there are a number of different reporting structures that can all be pictorially presented as an Org Chart. You did start down the path of organizational analysis, but then you lost it.. that's a shame. As the amount of information available to one person increases, their ability to process and USE that information decreases. One person coordinating the efforts of 100 people is far less effective (generally) than one person coordinating the efforts of 5 people who are each organizating the efforts of 20. In short: Organizational charts *DO* work. How you organize your business is crtitical to how successful you are (or aren't) - good thing you turned down the client who was asking for your advice. Congratulations on your Fail. Better luck next time.

caddr2
caddr2

In my opinion organizational charts are meant to do many things, one of them is to help visualize who supports whom. A good manager will make sure the employees that report to him or her are enabled to do their job and is also able to step in and help any of those employees. Companies should focus more how what they do and manage how to do that better. More often than not management is focussed on trying to figure out if the structure works...those managers don't support their employees. It's rather simple: If you are a manager and you either don't know what your employees do on a daily basis or are feeling over-worked supporting your department the structure isn't working. Try an 8:1 employee:manager structure for better results and call me in the morning. :)

premiertechnologist
premiertechnologist

"As far as I can tell, this structure probably started about 5,000 BC with the Sumerian civilization. After they crashed, it was picked up by subsequent generations of leaders - next being the Egyptians about 2,000 BC. It has existed, more or less, in the same style since then." Don't forget the Romans. And the irony is that they all failed... big time. So you don't get the lesson in that? Let me give you a clue: It doesn't work. Moreover, org charts are nothing but lies. The true relationship of positions, roles and who does the work, never seems to match the titles. The truth is that any organization of any size isn't a two dimensional linear one: It is three and four dimensional with interactions and continuity built on the neural networking model. Of course, business consultants can never understand that because they lack structural visualization and being able to discover the true nature of any organization with more than 50 people in it would be like trying to explain rainbows to earthworms.

DOSlover
DOSlover

An organisational chart helps give people a perspective. It does not preclude the boss from talking, observing or assessing the work face activity. I am working in a company that has no structure as the GM has allowed everyone to turn to him for a decision in an organisation of 250 people. THe result is supervisors and site managers not knowing what is going on in their part of the operation. This has caused poor management, undermining of the authority of supervisors, accidents, inefficiency and excessive cost. The org chart is not perfect, it is a guide. Without one it is difficult to give people an understanding of where they fit into the operation. Just because it is an old concept doesn't mean it is bad. The measurement of hours and minutes has been with us for a very long time. That works quite well.

codepoke
codepoke

In a small organization it's easy to control who does what, but as that org grows it can be hard for a person with a specific need to find the part of the company that meets that need for a living. Without a strong org chart, you'll find multiple people all doing work for themselves rather than letting the people you hired for it do it. n * (n-1)/2.

b4real
b4real

The issue is widespread acknowledgement of them. I've been on both sides, and prefer when they do work.

sissy sue
sissy sue

Part of the problem with business is that its organizational structure was traditionally built upon the military chain-of-command. Naturally, if you are a general, you give orders and your subordinates obey. This might be fine for the military, but it is a stifling structure for businesses to pattern themselves upon. It assumes that all of the knowledge is at the top of the structure, and that subordinates simply exist to carry out orders. Since upper management is not "in the trenches," they are often ignorant and out-of-touch with what is actually happening in their organizations. Therefore, they sometimes issue orders which are contrary to productivity, efficiency, and common sense. They generally are also the most protected members of an organization, immune to layoffs, often immune to their own bad decisions. I agree that a flatter organization, where top management is connected to their subordinates, is a much better paradigm, but I doubt very much whether most organizations are positioned or motivated to change. There are those that are, but you will find that these organizations are already implementing a flatter organizational structure and are by their nature and culture much more progressive than your traditional businesses. Is it any wonder that subordinates within these traditional organizations find themselves frustrated and disheartened?

Flyers70
Flyers70

....everything looks like a nail, doesn't it? And so it is with business consultants. The org structure of any company should be what is best for that company and those people. Flat or pyramid or whatever. Oh, and if you think an "involved" boss is always conducive to productivity, I have a bridge in Brooklyn I'd like to sell you. "Involved" bosses are only effective if they understand their role and sometimes "involved boss" is a synonym for "micromanager". I work in a flat structure and it's good in many ways, but it is far from a panacea. An org structure is only as good as the people in that org.

Alpha_Dog
Alpha_Dog

The issue here is what you do with that org chart. Like any other chart, it is not gospel, but rather a visualisation of the hierarchy and command structure in the organisation as the creator of the chart understood it at the time the chart was published. It should be taken with a grain of salt and used only for new person orientation and high level decision making, never specific calls. This is similar to the financial charts. They are good for the 30,000 ft view, but are useless to understand the day to day finances of the company. Takeaway: Use the right tool for the job.

dsrobinson
dsrobinson

the issue is that it doesn't work. I think the issue is that as the organization grows, the "answer" is to add more layers of management. When an organization becomes top heavy is when it becomes ineffectual. CIO to DepCIO to Director of a department to three layers of management before you get to the grunts... that's top heavy and ineffectual. CIO to Director to one or two layers to the grunts - this should be more efficient, and allow everyone to get done what they need. But as others have said, it depends on the size of then environment. In my organization, we have over 50K employees; we can't run flat. (Not in IT, overall. IT runs just under 2K.)

maj37
maj37

You missed the mark with your description of the military chain of command. It does not assume that all of the knowledge is at the top. The higher you go in the pyramid, either military or business, the more you focus on policy and the less you focus on day to day trench work. That doesn't mean that the folks in and right above the trenches don't make decisions they just make different decisions than the folks at the top. I am also not saying that there aren't organizations that would work better if they were flatter but you can also get too flat. What is best is what works best for your organization and what works best for your organization today is seldom going to be the latest fad in management techniques. Of course the latest fad is what many organizations wind up with. maj

blarman
blarman

Flat hierarchies mean that you are closer to the boss, yes, but that can lead to problems all it's own. The problem is that there are both management and functional aspects of management positions that have to get done. Pyramidal hierarchies work when there is a lot of functional work that must get done. Flat hierarchies work when there is more management work than functional work. Pyramidal structures do tend to separate people, but if they don't work, it is because there hasn't been sufficient delegation of authority/decision-making power. Pyramidal structures ONLY work when there is sufficient delegation and trust in one's direct-reports to make things happen. The Flat structures allow for and encourage more micromanagement simply due to proximity. The problem with micromanagement is that the underlings never get the chance to take charge and manage their own people and learn to do things. The other thing that can go wrong with a Flat structure is that you overwork your managers because the combination of micromanagement and functional work throws out a good work-life balance. Another problem with a Flat hierarchy is what is called "span of control". People can't effectively manage more than 5-7 other people directly. If your Flat system has more than that reporting to you, you're probably overwhelmed by the management portion of your job and have little time for the functional aspects. In short: don't fall for the hype. Use the system that best accommodates your needs for both management AND functional work.

blarman
blarman

Flat hierarchies mean that you are closer to the boss, yes, but that can lead to problems all it's own. The problem is that there are both management and functional aspects of management positions that have to get done. Pyramidal hierarchies work when there is a lot of functional work that must get done. Flat hierarchies work when there is more management work than functional work. Pyramidal structures do tend to separate people, but if they don't work, it is because there hasn't been sufficient delegation of authority/decision-making power. Pyramidal structures ONLY work when there is sufficient delegation and trust in one's direct-reports to make things happen. The Flat structures allow for and encourage more micromanagement simply due to proximity. The problem with micromanagement is that the underlings never get the chance to take charge and manage their own people and learn to do things. The other thing that can go wrong with a Flat structure is that you overwork your managers because the combination of micromanagement and functional work throws out a good work-life balance. Another problem with a Flat hierarchy is what is called "span of control". People can't effectively manage more than 5-7 other people directly. If your Flat system has more than that reporting to you, you're probably overwhelmed by the management portion of your job and have little time for the functional aspects. In short: don't fall for the hype. Use the system that best accommodates your needs for both management AND functional work.

robertb
robertb

Flyers70: I agree - You have to 'play with the team that got you there' - and the org chart should reflect that (both the current reality and one for desired future state). Involved boss is definitely another word for micromanager. We have an involved boss (good: at least she has the guts to get things done. bad: we have a traditional pyramid structure that such involvement has cut the legs off the direct reports to the involved manager & recent efforts to re-empower them has resulted in power struggles, lack of consensus and, most importantly, a disconnect with the next tier managers that REALLY got us there that now they are unappreciated (and with the divisive top layer, always wrong in someone's eyes. It's a necessary growing pain but could be handled better (as the involved manager is quite skilled about showing appreciation and caring for all levels - unless the involved manager doesn't agree: Then you are in for elephantine memory of that disagreement and feel the punishment for a long, long time. Not all the middle tier managers are strong (but will never be displaced due to the loyalty of the involved manager - even amidst long term punishment. We've brought new blood in (at all levels) and, instead of empowering the top tier, it has lead to entrenchment as middle tiers are punished in favor of new people who the 'old timers' are going out of their way to help get up to speed (and they get the credit). I see an explosion on the horizon soon if it isn't addressed (which would be the best use of the involved manager) as a handful of top tier managers are using their positions to block progress (their way or the highway) in areas they have zero experience in.

sissy sue
sissy sue

You said "When an organization becomes top heavy is when it becomes ineffectual." When a business does badly, they lay people off. But not the upper managers. Only the "grunts." Upper managers only get the ax when they upset a powerful person politically. Even then, they have their contracts and golden parachutes. What does the "grunt" get? I know of one organization that announced downsizing and promised that their laid off employees would get severance pay. When it actually happened, there was NO severance pay for any one of the "grunts." That's how it works in America; you lie to your employer and you get fired; they lie to you and there are no repercussions for broken promises. I'd guess that there are a lot of companies in America that are "top heavy" and "ineffectual."

sissy sue
sissy sue

but I don't necessarily agree with all of it. If it is not assumed that all the knowledge is at the top, workers and soldiers would have more input, on the grounds that what they know has value and can contribute to decisions made at the organizational level. Being able to make decisions regarding the tasks that are within one's responsibility is quite different from making decisions at the organizational level. The knowledge that upper managers possess contributes to their decisions that affect policy. The knowledge that subordinates possess is relegated to the tasks for which they are responsible, and any attempt a worker might take at using his knowledge to affect organizational decisions is by and large unwelcome by the upper echelon. This is true for the military, and it is true for most businesses. BTW, I agree with you regarding the latest fads in management techniques.

Insuranceman2
Insuranceman2

There is absolutely no one-size fits all business model, and obviously what works for Apple will probably work for a small business because everyone is in close communication anyway about office gossip, so they're probably in close communication on-task as well. What;s remarkable is that Apple is succeeding with such a wild business model for such a large company, so I see the point of recommending it to IT programs, but I (and I assume most of the readers) are part of a small team at a small company.

sissy sue
sissy sue

You said: "I see an explosion on the horizon soon if it isn't addressed (which would be the best use of the involved manager) as a handful of top tier managers are using their positions to block progress (their way or the highway) in areas they have zero experience in." Those in upper management in traditional organizations are inclined to want to continue the status quo (just as all people with power and wealth are so inclined). Taking risks and being a pioneer would set an upper manager apart from his peers and would endanger his/her standing within the organization. You don't get progress when the mindset of those is power is to entrench themselves in old methods and politics.

sissy sue
sissy sue

...is madly in love with upper management. So I suppose they are either in upper management themselves, have blinded themselves to what is going on in the world because they are satisfied with their lot, don't care about the misery of others, or think that it's OK when employers lie to their employees. I happen to think that promises should be honored. If Big Business has a bad name, it's because they deserve it. BTW, as a taxpayer, I resent having to bail out executives and businesses that are managed badly. I am sick and tired of corporations lining up at the public trough. I am sick and tired of executives getting big bonuses for mismanagement while laying off employees. I am not alone in my outrage. I love Ayn Rand and "Atlas Shrugged." However, in her novels, the business heroes deserve to get on because they are competent and productive and don't go crawling to government for special favors.

NickNielsen
NickNielsen

But so are you. The knowledge is there, but just as the nature of the decision-making changes as you rise through the ranks, so does the nature of the knowledge. At the field level, the knowledge is specific and personal: names, faces, places. At the command level, the knowledge is more general: units, capabilities, and deployment. The general doesn't need to know who is in Charlie Company any more than Charlie Company needs to know the order of battle outside their immediate area.

sissy sue
sissy sue

I've lived long enough and have worked long enough to know that worklife in America is definitely worse than when I began this game in the early 1970s. You can attempt to paint a rosy picture by thinking only of yourself and what you have accomplished, but the reality is something quite different. You can't stick your head in the sand and pretend that all is well with the world and with worklife in America. Yes, I am quite happy with the lot I've made for myself. I've made a good career and income due to my own ambition, drive, and abilities. However, I am compassionate and empathetic enough to see the view from the perspectives of others, and I see a lot of human misery connected with worklife here in America. It doesn't have to be that way. In 1980, professional magazines pertaining to personnel and human resources predicted a great renaissance of employee rights in the workplace (and I should know because I was in that field then). So, what happened to that renaissance? Look back and think about it.

rastr
rastr

The reason "subordinate" and "wage slave" are different words is because they are different. If you think you're a "wage slave" your views are shaping how the world looks to you. To me, a subordinate is someone who wants to (or agrees to) do a number of jobs that need to be done, and doesn't want to hassle with all the things a manager has to handle. I was a manager for 6 months and it was a very different experience. I can imagine management jobs I'd be willing to do, but am currently happy being at the bottom of the pyramid. My happiness is due to my views, which are mostly under my control.

sissy sue
sissy sue

a viable and desirable option that is not afforded to the soldier who has to "do or die." Unless, of course, he/she wants to go AWOL and/or end up facing a court martial. If America keeps bleeding good-paying jobs, even jumping ship may not be a viable option. IMHO, if you are a subordinate, you are a wage slave, and that is all you are to the upper echelon.

info
info

Newer generations look back at WWII battles where those 'at the top' gave the order to 'take that hill', were blindly obeyed by those 'at the bottom', and achieved (or failed) said objective with huge losses... and say, "Screw THAT! If *I* were there, I wouldn't listen. It'd only get me killed!" That's the 'micro' view of the folks at the bottom, performing their individual tasks, having a limited view of the World. If everything was done 'as a committee', getting EVERYONE'S input like you suggest, nothing would ever get done. Either from a time or a willingness standpoint. It works both ways. The Executive might not have a totally accurate view of how things work 'at your level', but you almost certainly don't know everything that's going on at their level, either. Sometimes you just have to trust that they're making the right decisions, and if you KNOW they're not, jump ship...

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