Org Charts
All Org Charts are different, but here’s what matters in each one.
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Every company has an organizational chart which describes who reports to who. Even if you’ve never written it down, it exists in some form in the minds of everyone who works for you! Companies are not democracies so knowing the line of command is necessary to know who is in charge of any given decision.
You have complete freedom of how to design your org chart, as there is no “right” answer. There are some common patterns, however:
Organization by function, where there is an executive (e.g. VP of Sales) and everyone in that function reports up to them.
Organization by business line, where there is a general manager in charge of each business and they all report to the CEO. This is more common in conglomerates.
Organization by location, where there is a general manager for every geographic region and everyone in their region reports to them.
You can also combine these patterns, and many do, or create your own unique org chart based on the unique nature of your business. I’ve seen CEOs get very creative with their org charts.
The org chart matters much less than whether the organization serves the business. Whatever you choose should make the business work better, not worse. Unfortunately, that’s rarely the case.
When you look at your org chart, you want to ask some hard questions to understand if it’s helping or hurting the business. Here are a few:
Does everyone know their area of responsibility? A well designed org makes it clear who is responsible for what. You should be able to pick anyone in your organization and be able to ask them where their responsibility begins and ends. If you cannot, then your org is not well designed.
How often do we have events where it’s not clear who owns them? Sometimes things fall in between parts of your organization. For example, if a customer buys your product but has trouble setting it up is that the responsibility of sales, product or customer success? However, these should be very rare, infrequent events. If they happen a lot, and your teams are looking to each other to take ownership, your org is not well designed.
How many other parts of the organization do employees need to work with to do their job? Companies are groups of people that work together, but there is a cost. If an employee needs to coordinate with 5 other groups to do their job, there is a huge unnecessary overhead at play. You want to minimize dependencies so that you have as few necessary touch points as possible.
Is any single person irreplaceable? You should never have a situation where the entire company relies on a single person. Even the CEO may need to be replaced! Strong organizations have shared responsibilities and redundancy so that if someone quits or is fired the organization can take over. No one should be indispensable.
This is just some example questions, the full list can be very long. The important point is that you are interrogating your organization to understand whether it’s helping or hurting the ability of your employees. A great organization accelerates a great team, and a bad organization can make a great team mediocre.
Re-organizations have gotten a bad name as they have been over-used by large corporations. Some large corporations do re-orgs every few months! As a result, people think of re-orgs as a bad thing and try to avoid them.
However, much worse than a re-org is having a bad organization. If you have one, the best thing to do is fix it as soon as possible! That might require a significant re-org or it might just mean some minor changes. Whatever it is, make the change now.
Employees know if your organization is working or not, and it’s part of how they decide if you are a good leader. Putting thought into the org chart and ensuring it’s the right one for the business you have right now is an important part of your job. As your business grows, the org might need to change and as a result having a great org chart today doesn’t guarantee you will have a great one tomorrow.
There is a reason we have org charts. They are a critical tool for you as a leader, one you should not be afraid to use.
For more on Team Structure, see:
Great thoughts! I would like to add that there is also an inofficial hierarchy: https://www.leadinginproduct.com/p/gravity-maps-an-alternative-to-org-charts