What is an organisation chart?
Put simply, it is a “tree” diagram of the positions in your business – who they are, what they do and are responsible for, who they report to, and who they supervise.
Notice I said “diagram of positions” not a diagram of people. And when I say “who they are” I did not mean the names of the current incumbent, I mean their position descriptions. This is important as I explain later – an organisation chart is about organising the roles and responsibilities in your business in the most efficient way – not about who does what right now because they are the most experienced or capable.
If you want to operate a business now, or at anytime in the future, where you are not called up[on to micro-manage every decision, to supervise every person and help them make every decision, where people in your business know exactly what to do and who to go to if they need help, then you need two things:-
- A very clear vision of what everyone should be striving for; and
- An organised team where everyone knows their roles and responsibilities and know what procedures they need to follow in their tasks.
An organisation chart is the start of an organised team.
You can download a free worksheet below that explains the organisation chart in more detail and provides a series of steps you can follow to design yours.
Now here’s a few rules about how you put together your organisation chart.
Rule 1, start now. I don’t care if you have 10 staff or it’s just you. Start putting together your diagram of every functional position you need to be working in your business when you have “got there” and have achieved your vision. Start with identifying the different business “functions” or activities your business will require, for example, sales and marketing, administration, production, delivery and distribution, and so on.
Identify the “management” position heading up each of these functions. From a deep analysis of your vision, work out how many people work in each function and what they are doing.
This is so that you design – from the very outset – how you are going to grow, rather than add branches as you go and on the run. Don’t create a functional branch just because you think it’s got too busy – if it wasn’t in the initial design it’s probably not required.
Recognise that – if you are small – some people might wear a number of different hats, which lead to Rule 2.
Rule 2 is to never combine functional positions because someone currently wears two hats. Just because your current “best” employee is the salesperson as well as involved in delivering the product to customers doesn’t mean that is the most efficient thing to do. What happens when your “best” person resigns and the next candidate is not “as good” and can’t do both? Separating positions logically allows you to grow, and to identify who you should hire next, to fill in one of the doubled-up positions.
This leads to Rule 3.
Rule 3 is never to organise individuals i.e. names and personalities. Just because Nancy who joined you as a bookkeeper has turned out to also be a really good Executive Assistant for the managers doesn’t mean that is one position. It is, as per Rule 2, two functional positions.
The danger of breaking Rule 3 is that once you organise by personality – in order to replace Nancy you have to find someone who is exactly like her. What are the chances of that?
The benefits of having an organisation chart designed properly by function, with position descriptions attached to each position, are:
- You give clarity about the purpose of a role;
- Each position is clear about their role and responsibilities;
- Each position understands how they fit into the whole and how they work with and alongside other positions;
- There is no confusion when people change – they just slot into the empty position and pick up the unchanged purpose, role, responsibilities and attached process or tasks and their predetermined procedures;
- It creates room to grow efficiently and in an organised way – you know exactly what positions have to be filled in advance;
- It creates room for your team to grow – they have a career path set out in front of them.
Now, don’t forget to download the free worksheet that provides more information about organisation charts, and takes you through a series of steps in a worksheet to help you design your organisation chart.
Having a well thought out and future proof organisation chart is part of designing your self-running business. If people knew exactly what they should be doing – it creates clarity of roles for them to make decisions for themselves without breaking the business.
If you want to know more about Creating The Self-Running Business, an online training program taking you through the steps to systemise your business, go over to my website and click on the Products page for more information.
While you’re there, write down a comment about your past or present attempts at creating your organisation chart and how you’ve found it as well as how it has helped you. I love hearing from people so that I can design more free resources for the website. See you there!