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E-Myth Blog

Your Organization Chart

2008 | Oct 8 in Home Page News , Management , Leadership

Most companies organize around personalities rather than around functions.

That is, around people rather than accountabilities or responsibilities.

The result is almost always chaos.

-Michael Gerber, The E-Myth Revisited

One of the exercises we ask business owners to participate in at our Seminars involves drawing their organization chart. The result of this exercise is fascinating.

Some people just pick up their pens and within a few seconds, they've drawn out a neat, structured hierarchy of boxes and positions. Everybody has a place and a part to play.

But some people become panic-stricken: you can literally see the sweat form on their brows! Why? Because they've just realized that they don't have clearly defined roles within their company. Their organizational chart looks more like a spider web: a mess of lines, boxes, job titles and names. Everything overlaps. It's confused.

This is usually the point when the business owner recognizes the fact that it's their name in most of the boxes; that essentially they're doing most of the work!

If this is you, don't worry — you can work your way out of it. Keep in mind that your organization chart is an essential, central and critical piece of documentation in your business. If it's been a while, perhaps now is the time to revisit your chart and take a strategic look at your organizational structure.

What is the Organization Chart Supposed to Do?

Your organization chart is like the grand schematic of your business.

It's the visual representation of your strategy.
It's the chart of the systems in your business, stated in terms of the results they obtain.
It's the picture of an organism that is working in concert for a common objective.
It clarifies the broad accountabilities of every position in your company and their interrelationship.

Remember, if your business is to thrive, you need to find other people to do the tactical work so your time is free to do the strategic work. Your organization chart is the means through which that crucial transition can be made.

Four Tips To Creating Your Organization Chart

There is no box on the chart labeled "Owner." If you are an owner, you need to occupy one or more boxes on the chart and play by the same rules you would have for any other employee.
Every position on the chart reports to one (and only one) manager. Giving two or more managers the power to direct the activities of one employee is an invitation to miscommunication and chaos.
Make sure you divide up the work according to what the business needs. Don't try to design a position to fit the particular talents of one individual. If (when) that person leaves, you'll have to start all over with a new chart because you won't be able to find a replacement.
Instead of using titles, designate positions in terms of the results they will obtain.

Keep an Eye on the Future

Once you have a working organization chart, the next step is to figure out how that chart is going to serve the future of the business. We refer to this as Double Vision: keeping in mind how the present is going to serve the future. As you build your business toward your Strategic Objective, think about how your organization chart needs to morph and evolve in order to serve that vision.

Now take a few minutes to draw your organization chart (keeping in mind our four tips). What does this exercise tell you about your business? What did you learn? Tell us about it!

Comments

Victoria A. says:

Very helpful - thanks

Submitted Oct 9, 2008 11:41 AM
Jeff S. says:

I work for a company that keeps their org chart a secret, refuses to publish it and make it accessible to employees - what do you think about that?

There is some rationale behind it - they are afraid of it getting outside the company and of recuiters using it to cherry pick talent.

You just kinda learn who reports to whom and who does what over time. You can ask to see one if you exhibit a real business need - and then and only then will they show you one on the spot - but then quickly put it back under wraps.

Just curious if anybody has had a similar experience.

Cheers,

J

Submitted Oct 9, 2008 11:54 AM
Ronald S. says:

is there a fill template for an org chart handy?

Submitted Oct 9, 2008 12:10 PM
Hans R. says:

Good information. I have been struggling with this, but the tips will help me.

Jeff, the owners haven't read the e-myth revisited yet, otherwise they wouldn't be so secretive. To me it feels that they're using the old Roman strategy, give them bread and games. In other words, the less they know the better it is. I work for a company like that and just left management because of it. The problem is often that because of this attitude the company can't fully benefit from the intellectual power of the employees and therefore growth will be stagnant at some point. Saying that it will keep recruiters from cherry picking is bs. They're just afraid of giving up control.

Hans R.

www.propertymill.com

Submitted Oct 9, 2008 1:03 PM
Bob F. says:

I would be interested in an easy to use template as well

Submitted Oct 9, 2008 1:13 PM
Vi W. says:

There is an org chart template in Powerpoint that make for a good starting point.

I used it when I did my first org chart a few years back. This advice is spot on. I think it is a good time to review my org chart.

Thanks again!

Vi Wickam
President/Sales Manager/Chief Operating Officer
On-Site Computer Solutions
http://www.424help.com

Submitted Oct 9, 2008 1:20 PM
Fred M. says:

Mind Mapping is a great tool for doing and org chart plus much, much, more.

Mind Mapping is a visual, no-linear brain storming tool and is perfect for strategic planning, problem solving, decision making, brain storming and other brain related activities.

Discover more at: http://www.mastermindmapper.com

Submitted Oct 9, 2008 1:35 PM
Pauline L. says:

Busy working on a chart right now with a client of mine so was really great to read the ideas here as they reinforce we're on the right track. thank you!

Submitted Oct 9, 2008 2:13 PM
Jeff S. says:

http://www.orgplus.com/

There is a free trial download of this tool and I believe a web-based version that is totally free for less than 30 employees.

Submitted Oct 9, 2008 2:21 PM
JOHN B. says:

The purpose of an organisation chart is to formalise and clarify two operating issues - specialist task assignment and hierarchy. Along with systems, skills (etc) 'structure' is thus intended to assist the implementation of the business strategy. Whether your structure is a 'good' one depends on the extent to which people understand and agree with your approach to the two fundamental matters. If they 'like' doing your assigned tasks and feel appropriately rewarded, this obviously helps as well.

Submitted Oct 9, 2008 3:01 PM
Patrick S. says:

To Ronald S:

In Microsoft Powepoint, you can choose a Dias, where it is possible to design an org. chart. It works really well, and I've used it in my business after reading E-myth.

Submitted Oct 9, 2008 11:21 PM
Jake D. says:

I use OrgPlus software and it does a great job. Very good article.

Submitted Oct 10, 2008 5:23 AM
Godsday C. says:

Good piece. I discovered also that failure to clearly capture job roles and accountabilities using an org. chart is one of the reasons for role conflicts in small businesses in particular.

The future org. chart must therefore be unambiguous, with clearly defined accountabilities that suit the business peculiarities.

E-myth articles are usually must read. Thanks.

Submitted Oct 10, 2008 8:41 AM
orang k. says:

I have applied this "organization chart " in my business. it helps me though not throughly. As the person in one of the position leaves chaos re-occurs... I wonder why...but it is until just now when I've read this article. I didn't do it as tips no 2 and 3. There must be one manager on every department for the tactical employee to report to., and never to design a position based on a particular talent of a person in the company.

Thank you very much. I am sure these ideas will bring my Org chart to the next level.

Submitted Oct 12, 2008 8:15 AM
Doug C. says:

There is also drawing tools in MicroSoft Word that you can create an Org Chart. It works well if you have to go outside of the boundries of a template and create anything you want. I haven't used some of the other templates used above, so I don't know how they compare. I definitely agree that an Org Chart is necessary for a business structure. Great tips!

Submitted Oct 14, 2008 5:14 PM
Hester F. says:

Excellent article and i am always encouraged by the other readers and their ideas as well. Thank you so much all.

Submitted Oct 15, 2008 1:00 AM
nkasi O. says:

just created mine,was a great help.Can see the roles clearly.

Thanks.

Submitted Oct 16, 2008 12:05 PM
olu b. says:

i quite agree with you.I was able to rediscover my biz

Submitted Oct 24, 2008 3:03 AM
Steve A. says:

If you need to work a large or complex org try Visio it can be a bit tech heavy the 1st time but is a very powerful tool.

I always thought the org chart was a bit like a stick and fences beat the employee in to their place and keep them there. But this gives me a new way to look at it and new can be a good!

Submitted Oct 24, 2008 11:32 PM
Erica L. says:

Does anyone feel the same way I do? Currently, it's just me and my business partner, at the very beginning of establishing my company. To be drafting up an org chart makes me feel like a complete nutcase. I guess this is the double-vision Gerber talks about, and also the donning of the entrepreneurial hat. I can't help but feel a bit crazy because in my org chart, I'm currently wearing the lowest position's hat, as well as the CEO's. Eek!

Submitted Oct 28, 2008 6:20 PM