While an organization chart is standard in large-scale operations, smaller businesses gain similar benefits when they create one, especially at the ground floor. And, as new businesses grow their scale of operations, revenue and hiring, having an organization chart in place can help manage that growth in a sustainable way.
At first glance, the benefits are clear:
Functions or tasks that are not matched with a resource — meaning no one is accountable — are highlighted.
Resource management can be more effectively applied.
Performances are more easily monitored and evaluated.
Employees have clarity on managerial authority and know who to report to.
It’s easier to add new positions as the company grows.
Internal promotions become more readily apparent
Companies can create advancement tracks for entry-level employees.
An organization chart is about a company’s hierarchy. An effective hierarchy promotes accountability among company leaders for results and provides guidance and on managerial authority. At Boost Midwest, we find that when small businesses start thinking about a formal structure early in the growth stage — even as early as when designing the company’s model of business —short-term success and long-term sustainability are encouraged.
For small businesses, create the type of organization chart that best serves your needs. Many turn to a flat organizational structure that contains relatively few levels of management and features the following:
Front-line employees have the authority to make decisions.
Information travels from the top down and the bottom up, for a communication flow between management and front-line employees and vice-versa.
A tall or top-down organization structure is quite different and be aware that inefficiencies can more easily spread using this structure where:
Managers make most operational decisions.
Authority needs to be granted from several levels up before action is taken.
Information flows only one way, from the top down.
In smaller businesses, employees often perform tasks outside of their assigned role. In addition, brainstorming new ideas, solutions and practices occur among all levels of employees. So, the top-down hierarchy can, in effect, stifle company growth.
If we drill down even further, 5 additional benefits of implementing a flat organizational chart for smaller companies become apparent:
They assess employees’ workloads. While job descriptions outline the areas of responsibility for a given employee position, a solid organization chart shows the areas of control a manager has over operations, employees and other resources. This also allows an easier way to assess their workloads and makes restructuring responsibilities across an organization easier on leadership, when necessary.
They help assess competency. An organization chart defines functions and responsibilities, so employee contributions are better measured over time. This leads to employee evaluations more aligned with performance, and helps to manage employee growth, advancement and productivity.
Coordination across functions is streamlined. While an employee or team may be tasked with a specific function, most company projects require coordination among separate functions for successful business operations. A strong foundational organization chart will clarify how separate functions are connected, advancing employees focus and productivity.
They advance the allocation and analysis of resources. An organization chart can be used to create work teams, analyze budgets and generate reports that evaluate and analyze productivity. This helps maximize employee and financial resources for a company to grow in a sustainable way.
They give transparency. An organization chart should be accessible to all employees and given to new ones during the orientation process. It also helps to post the chart in shared areas, like lunchrooms and conference rooms. This way, all employees are clear on where they fit into the company and department structure in addition to the overall company hierarchy.
And just as start-up companies find value in implementing an organization chart as part of their foundational structure, they also turn to that chart when business objectives change. At this time, strategies, roles and functions should be revised to align with the new objectives. This calls for a new or revised organization chart. If this doesn’t happen, writes business coach Gill Corkindale in the Harvard Business Review, “responsibilities can be overlooked, staffing can be inappropriate, and people — and even functions — can work against each other.”
Boost Midwest aligns its business operations consulting with industry best practices, so our team can help companies build a solid foundation for sustainable operations and managed growth. In doing this, we’ve found that implementing an organization chart is a valuable tool that smaller companies may overlook.
As strategist and philosopher Sun Tzu famously said hundreds of years ago: “And regulation entails organizational effectiveness, a chain of command, and a structure for logistical support.” He may have been speaking in ancient times, but his words still hold true in today’s business climate, where the ability to pivot and change are more and more important in a technology-driven world.
Ready to learn more about how Boost Midwest can help you optimize your project management and operations? Schedule your free consultation call with us today using our Quick Schedule Link here.