Organization charts

Too frequently in the case of organizational problems arising the first response is to look to the organization chart i.e. names of jobholders in boxes that show a formal reporting relationship between the jobholders.

When people are trying to decide the 'best' structure for their organization they often forget that work has to flow through it, and that different structures have different attributes. For example, that adaptability is poor in a traditional hierarchy but good in a network. Instead structure decisions are made based on personalities, politics, and expediency. This is a mistake on two counts. First, failing to explicitly recognize that structure choices impact organizational capabilities, and second that getting work done efficiently in order to meet organizational goals is, or should be, the purpose of the organizing frameworks and structures.

On the first point – that structure choices impact organizational capabilities – Conway's law says the technical architecture of a computer system reflects the bureaucratic structure of the organization that produced it. Think about Microsoft as an example. It has the Windows Group, the Office Group and the XBox group, and their systems are isolated from each other. Although at one stage Office and Windows were 'joined at the hip', trust-busters made Microsoft erect a Chinese wall between the two organizations, so their architectures had to bifurcate.

On the second point – that getting work done efficiently in order to meet organizational goals is, or should be, the purpose of the organizing frameworks and structures – organization charts offer almost no insight into how work is done. Work occurs in what is commonly called the "white space" in the chart – and can be mapped by organizational network analysis, and social network analysis. In most cases the organizational network analysis chart showing how work is getting done via information flows and collaboration bears very little relationship to the formal organization chart.

The possibilities that technology now offer for charting the way work actually gets done in organizations and the advent of new business models raise the question about the future of the traditional organization chart. Are they of any real value? Three different but common scenarios make it a question worth thinking about.

Take the way work gets done. In many organizations employees play multiple roles, for example, working on project teams, (perhaps more than one at a time), contributing expertise and skills in a variety of forums, and they often work for more than one boss. In these cases, and even using dotted lines, it is not so easy to allocate them to a slot in an organization chart.

Now consider the business model of a new organization. LiveOps, established in 2000, deploys cloud computing to virtualize their business services. It is a cloud-based call centre service that manages a network of more than 20,000 independent at-home agents. Companies use the service on a pay-as-you-go model, either as a fully outsourced call center or to augment their own. The technology enables an on-demand, scalable service to subscribers. The relationship of the stakeholders – LiveOps, the independent agents, and the companies buying the services of the agents via Live Ops is not easily depicted in a standard chart. Nevertheless the three parties together form an organization that delivers a service to a customer.

In other organizations fully employed members of staff work side by side with contractors, consultants, and temporary workers. It is difficult to argue this type of staff augmentation is not part of effective organizational functioning and success (why pay for their services if not to contribute?) yet these people do not appear on a standard organization chart.

In all three instances – and others like them – organization chart development and maintenance could well be a redundancy that is better not introduced in the first instance, or if it is already established should be reviewed for its value. Is it enough to spend time, effort, and money to produce and maintain something that shows in broad terms the level of formal authority of various positions, their numbers, and their presumed reporting relationships?

Sun Hydraulics is an example of an organization, established in 1970 and profitable from the start, which decided not to have an organization chart. Its website explains:

Our workplace is as distinctive as our products, and provides just as many advantages. We have no job titles, no hierarchy, no formal job descriptions, organizational charts or departments. We have open offices, promoting open communication. This environment encourages innovation and helps develop a spirit of entrepreneurship throughout the organization. The result is a workforce inspired to satisfy every customer, no matter the challenge.

W. L. Gore, also very financially successful, takes the same approach

Gore has been a team-based, flat lattice organization that fosters personal initiative. There are no traditional organizational charts, no chains of command, nor predetermined channels of communication.

If the decision is made that it is of value to spend time, effort, and money to produce and maintain something that shows in broad terms the level of formal authority of various positions, their numbers, and their presumed reporting relationships then the start point is to determine the work flow, the activities, and the work volume that needs to be done to deliver the business strategy from this the number of people and their grade levels can be gauged.

Are organization charts as we know of any organizational value? What's your view?

(Thanks to Michael Stanford for contributions to this content)

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