The Importance of Your Organization Chart | EMyth

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 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

1. 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.
2. 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.
3. 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.
4. 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.

Share your story

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? Post a comment and tell us about it! And here's an organization chart template that will help get you started.