Organization Chart

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What is an Organization Chart?

Every organization has both a formal and an informal organizational structure. Examples of organizational structures are:

• Hierarchical structure (typical for the small, entrepreneurial organization)
• Line-staff structure
• Functional or Departmental structure (based on function, products/service, customer type, geographic region)

• Matrix structure (dual reporting lines)

These formal structures of organizations can be represented in the form of an organization chart. Sometimes also referred to as organizational chart, organigram, organogram, or org chart. It graphically shows the hierarchical authority, roles and responsibilities, functions and relations within an organization. For a new employee, the organization chart helps to understand what should happen within the firm. (The informal structure represents what is actually occurring within the organization.)

Many people have pointed out weaknesses and limitations of org charts. Others have coined a dizzying array of buzzwords to categorize organizations, including networked organizations, transnational organizations, front-back organizations, boundaryless organizations, learning organizations, virtual organizations and social networks.

Nevertheless organizational design continues to be one of an important and challenging demand on top management, because it influences and interconnects the business and corporate strategy, marketing, decision-making, communication, finance and investing, and leadership within any organization. And organization charts will continue to play a major role in this process, although they may look quite differently from the traditional tree-like forms of the past. Simply because people can more quickly absorb information when it is shown in a graphical way.

Origin of the Organizational Chart. History

It is not unlikely that the ancient Egyptians already had documented their methods of organizing the division of labor for their massive public works projects in one way or the other. However the first real organization chart was probably created in 1854 by Daniel McCallum, superintendent of the New York and Erie railroad company. McCallum was responsible for creating a line for nearly 500 miles stretching from Jersey city through Pennsylvania and New York to the shores of the Great Lakes.

McCallum noted that "other things being equal, a long road should be operated for a less cost per mile than a short one".  But things were not equal. The essential functions of a railroad company - coordinating the delivery of freight and people, repairing cars and track, monitoring the positions of trains - were vastly more complicated over 500 miles than over 50 miles. Without effective organization, additional miles of track made railroads more costly to operate. McCallum developed the organization chart, which according to writer Henry Varnum Poor resembled a tree. Its roots represented the president and the board of directors. Its branches were the five operating divisions and the passenger and freight departments. Its leaves indicated the various local ticket and freight agents, crews and foremen, and so on.

Historically, the organization chart is a symbol of the evolution of Western industry from being fundamentally personal in nature to enterprises in which the creation of organizational capabilities became a prerequisite for survival.

Usage of the Organization Chart. Applications

• Defining the roles and responsibilities of all personnel within the organization.
• Establishing a hierarchical structure of authority, power and, hence, decision-making.
• Establish communication channels and information flows, incorporating a chain of command with specific rules and regulations relating to reporting procedures and accountability methods.
• Establishing control mechanisms, such as the degree of centralization and the span of control. Compare: Centralization and Decentralization.
• Establishing strategies for co-ordination of work practices.
• Establishing decision-making processes.
• Establishing specific operational functions and tasks.

Creating an Organizational Chart. Process

Robert Simons (Levers of Organization Design, 2005) suggests that there are four main tensions or levers underlying any organization design:

1. Strategy (structure follows strategy) versus Structure (organization design influences future strategies)

2. Accountability (for today's goals) versus Adaptability (to future changes)

3. Ladders (vertical hierarchies) versus Rings (horizontal networks)

4. Self-Interest (individual) versus Mission Success (department, business unit, corporation).

Compare also: Greiner, Growth Phases and Simons, Levers of Control.

Strengths of the Organization Chart. Benefits

• Transparent and predictable. Helps to understand what should happen within the firm.
• Provides a quick snapshot about the formal hierarchy in an organization.
• Who is in charge of what. Who reports to who.

Limitations of Organizational Charts. Disadvantages

• Static and inflexible. Organizations change and go through Growth Phases.
• Does not help much to understand what actually happens within the informal organization. In reality, organization often behave quite chaotic and follow complex guesswork and amplification mechanisms (Core Group Theory).
• Traditional org charts can not cope with changing boundaries of firms due to Outsourcing, Information Technology, Strategic Alliances, and the Network Economy.

Book: Robert Simons - Levers of Organization Design

Forum Forum discussions about the Organization Chart. What is a Divisional Structure? The divisional organization structure can be seen as one type of functional structure, or as a seperate organizational strucure. It is often broken down into three types of divisional structures: 1.... 37   3 comments Your Employees' Work is Changing: From a Job to Several Roles We live and work in a very dynamic and competitive world. In order to survive, our organizations are forced to be flexible and high-performing too. This is increasingly influencing the way work and jo... 27   33 comments Special Organizational Structure for Construction Industry? In the construction industry, health problems and security risks are always nearby and there are many crisis situations. Which organization structure could be followed by management at project site lo... 13   2 comments Channels of Communication Within an Organisation? What are the communication channels within an organisation?... 12   Bypassing your Boss / Position in the Line of Authority Can one bypass a certain position in the line of authority in an organization?... 11   2 comments Organization Chart Software Can anyone help me find org chart software that is able to handle matrix orgs? We have looked at 10 different versions. None can flexibly do matrix orgs. Any ideas?... 11   2 comments Organisation Chart and Communication Is it true that the organisation chart dictates the network of communication?... 7   1 comments Reorganizing a Radiology Department Anyone in the health care sector know of good ways to think through merging two diagnostic imaging departments in an academic hospital and come up with a new org structure. Current structure of the tw... 7   Utility of Organizational Charts The purposes of an org chart are specific: Internal purpose - employees need to know where they fit, to whom do they report, who reports to them, and the corollary, to whom do they not report. Exter... 6   What are Line Relationships? Line relationships are superior-subordinate relationships and can be traced in a "chain of command" from the organization president through a succession of levels of managers to the lowest worker.... 6   Organization Chart for Export / Import Business What way is the best to organize an export/import business (in terms of staff and their responsibilities) given that: products are manufactured in HQ Germany, imported to Mexico from Germany and expor... 5   2 comments Information Flow and Hierarchy Structure How does information flow in a typical (ICT) company, when using the hierarchy?... 5   1 comments Importance of Organisational Structure Let's assemble a list of the importance of an organisational structure here.. Who can provide some points?... 5   Organization Design as an HR Offering Good day. How do you create and implement internal Organization Design capabilities as an HR offering? What are the steps that should be taken to ensure successful implementation and adoption?... 4   1 comments 🔥 Top Level Organization of the Ministry of Education (Education Department) The Ministry of Education (Education Department) is the backbone for the development of any society. It should therefore reside under the Public Policy and Management/Administration Ministry and be b... 3   2 comments Where are Projects in Organization Chart? In some large company, with different lines of business, whenever a project is undertaken, the main decisions and planning will typically be carried out by: • The GM or Finance Manager of the line of... 3   1 comments Organization Chart for a Manufacturing Company What is the optimal organization chart for manufacturing companies? It should not compromise any activity.... 1   The Fluid Organogram Organizational design today has to respond to local, strategic and global challenges – normally unpredictable. In this context I propose the fluid organogram coupled with clutter free communication: ... 0   2 comments Start a new topic about the Organization Chart Sign up for free

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Best Practices The best, top-rated topics about the Organization Chart. Here you will find the most valuable ideas and practical suggestions. 🥇 Should Structure Follow Strategy? When you're creating organization charts, you'll often have to deal with the eternal question: Does structure follow strategy or does strategy follow structure ? But you have to refine it and relate ... 96   12 comments 🥈 Org Chart of a Virtual Organization Could a virtual organization have an organization chart? What would that look like?... 70   3 comments 🥉 Levels in Organisations and Role Clarity Broadly-based on the concept of the Requisite Organisation and Stratified Systems Theory (Elliott Jaques), we can distinguish the following Levels in Organisations: Level 1: SPECIALIST, time horiz... 47   26 comments When is an Organization Design Good? 7 Indicators of an Effective Organization Today, most managers believe that happy, committed, actively involved employees and a positive corporate culture are important measures of effectiveness. Richard L. Daft in his book 'Organization The... 31   26 comments The First Organization Chart Who could supply me with a copy of the 1854 org chart made by Daniel McCallum? Who has proof of even earlier organizational charts? Please send them to me, thanks.... 28   4 comments Higher End Uses of Org Charts I am doing research for federal government and would like to know: how is your organization using the organization chart / table of organization for budgeting, analysis, etc.? Are organization charts ... 20   1 comments Organizational Charts Say a Lot About the Organization at a Glance I think the choice of an organizational chart/structure should be and is unique to the needs of the organization. Organizational charts say a lot about the organization at a glance including responsib... 17   How do You Keep Organizational Charts Current? Organization charts are most commonly out-of-date because they are such a fuss to prepare and update. The majority of organizations are using PowerPoint, which creates attractive charts for smaller or... 15   1 comments When is an Organization Chart Out of Date? When should an organization chart be considered out-of-date?... 13   5 comments The Future Proof Organization An idea that has fascinates me is to make the concept of future proof organizations tangible. A future proof organization results from an assortment of individuals who see themselves as future proof... 9   3 comments

Expert Tips Advanced insights about the Organization Chart. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips Advantages and Disadvantages of the Matrix Structure Organization Design Advantages: + The matrix structure focuses on the unique needs of particular products, services, customers and/or geog... Organization Charts are Compromises Creating Organization Charts Any organization structure you design is per definition a compromise between the various possibilities, each with their ... Advantages and Disadvantages of a Functional Structure Organization Design Advantages: + The functional structure encourages people with jobs in the same area of specialization to work together.... Key Considerations in Deciding Upon your Organizational Design Organization Set Up, Organizational Structure, Centralization, Span of Control, Departmentalization When setting up a business or organization, it is important to think about the roles, processes and relationships within... Implementing Coordination Linking the Activities / Tasks When the first draft org chart is completed and the tasks have been assigned to manageable departments, the next phase i... Implementing Specialization Task Allocation Organization charts are (the) key instrument to achieve specialization in any organization. Two forms can be distinguis... Marketing Organization Options to Consider Booz Allen identified 6 types of marketing organizations (May 29 2006 of Brandweek): 1. Marketing Masters: authority to...

Information Sources Various sources of information regarding the Organization Chart. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. Effective Organizational Design in Short: Steps, Types, Key Factors and Tips Organizational Design, Organizational Structure, Organization Chart, Organogram This concise presentation elaborates on effective organizational design and structures. The presentation includes the fo... Organizations and Structures Organizational Structure, Departmentalization, Centralization, Decentralization Good presentation on Organizational Design. Author: Michael Crandall. First of all the concept of “organizations” is e... Designing Organization Charts: Main Issues and Types Organization Design, Organization Chart, Organizational Structure Good presentation by Stephen Robbins and David Decenzo with lots of example org charts. Topics: - Identify and define t... Organizational Structures: Principles, Types and Diferences Organizational Structure, Organizational Design This presentation contains information about organizational structures and designs includes the following sections: 1. ... Organization Chart Diagrams Organizational Development Download and edit these 12manage PowerPoint graphics for limited personal, educational and business use. Republishing i... Funny Org Chart Picture Org. Charts / Culture Funny picture to explain organization charts and/or organizational culture.... Brief Overview of the Informal Organization Informal Organization Presentation that elaborates on the concept of informal organization. The presentation includes the following sections: ...

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Compare with Organization Charts: Levers of Control  |  14 Principles of Management  |  Organizational Configurations  |  Chaos Theory  |  Growth Phases  |  Parenting Styles  |  Acquisition Integration Approaches  |  Organic Organization  |  Bases of Social Power  |  POSDCORB

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