Have you ever been involved in an audit? Always one of the first items requested is the company or department organization chart. It becomes the company's first impression and this is what it can say:
No organization chart exists - this company likely does not have processes in place and consistency, reliability and quality need to be carefully looked at.
The chart looks like a Dilbert cartoon - the company has no clear lines of authority and lack trust in the leadership.
The chart is very detailed with the technical side of the company but is not balanced with quality functions and business functions - there is likely inconsistent quality, if any. If the product is good it is like the business is not healthy because the focus, looking at the chart, is so lopsided to the technicians.
The actual linking of the company's departments - tells lines of authority, responsibility, communication channels, expected processes and systems, oversight, and departmental ranking to company.
The leadership team - this can be deduced from the chart and then observed in practice which will give insight into the believability of documents versus reality.
So what are the outcomes of these types of first impressions?
- If you are in an audit it might change the audit agenda (for better if your chart is great and worse if you have some of the characteristics above) and lead to findings.
- If the chart is part of a due diligence analysis (a bank lending money, a major contract, possible acquisition) the impression from a bad organizational chart could break the deal because of the message about the health of the company.
There is no right way to create an organization chart though there are many wrong ways. This document conveys a first impression to stakeholders in your company. Take a look at your chart again and think about the message your boxes are sending. Is this the message you meant to send?
Have questions? Email me, I'll be happy to help.
3 comments:
Is it appropriate to have several organization charts? For example, one for escalation, one which focuses on business and another that represents the technical component of an organization?
It is possible to have different organization charts depending on the purpose. But realize that each chart serves a function and sends a message out to the readers about your organization.
A reason to have separate charts would be: 1) for internal use to shown company-wide chain of command and to signify levels of leadership and management; and 2) for customers to view how your organization matrixes or pulls together to focus resources on customer service. For some companies this may be one and the same. For diversified companies the separation may be an important message to deliver.
CAUTION: Ensure that if you use multiple charts that they are aligned with one another. If not you send out mixed signals and create confusion which is the opposite goal of having the organization chart to begin with.
Great question!
Kristina makes a great point about audits. Don't forget about SOX mandated compliance. SOX deeply affects HR, financial process, IT controls and accountability. Compliance falls squarely on the HR dept.
An org chart is a powerful tool to assist with areas of risk. With a well-conceived chart you can show auditors visual proof of Segregation of Duties, Contractor Management, Chain of Command and IT System Access.
Just make sure if you are a large company, you have an enterprise-grade charting system that can pull HR data from your HRIS to map the hierarchy and populate the chart with relevant information. With this type of system, you can set auto-refreshes and archive changes and publish the chart to the intranet for on-demand access.
If you are a small company, use a desktop software such as Orgplus to chart your company. Don't bother with Powerpoint--which is for reports, not org charts.
For all the pharmaceutical and life science companies out there-- the FDA will also ask for org charts when auditing government research grants.
My two cents.
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