For more than a century, the classic business organizational chart has been a corporate fixture. Yet, corporate structures and managerial techniques have evolved significantly.
Organizations with a flat hierarchy and cross-trained personnel who switch projects may believe the organizational chart is outmoded.
Does an organizational chart still have value for modern small businesses that don’t have a traditional hierarchy?
We believe that all businesses, even those with a horizontal structure, require a hierarchical organizational chart. It is, without a doubt, a basic text from which all procedures flow.
5 Benefits of a Small Business Organizational Chart
Remember that your company requires the proper org chart. There are numerous diagrams and templates available online for various organizational structures and supervisory connections.
It is also critical to keep it up to date, because it should be a dynamic, living document, regardless of its level of complexity.
So, let’s look at the advantages of small business organizational charts:
1. Each employee can see their role in the context of the entire company
Consider a new employee attending her first project meeting. We’ll refer to her as Kim. She met her supervisor at employee orientation, but she has yet to meet everyone on her team or anyone outside of the team.
Her coworkers remark stuff like during the meeting. “I discussed X with Cathy. They are waiting for Kevin to complete Y before Ruth approves Z.”
Kim, of course, has a lot of questions. Who are these individuals? Are they employed in my department? What are their roles?
Did you go through anything similar when you first started your job?
An Organizational Chart has a Goldmine of Information
Imagine if Kim could immediately view each name and job title, as well as reporting relationships, by looking at a graphic diagram in the business HR system. She notices that Cathy is the head of the department, and Kim’s team is one of five. Kevin is a contractor whose company is in charge of a portion of the project, and Ruth is the project manager.
Several businesses put contact information on their organizational charts. If an employee examines it to learn the reporting structure, they will have the information they need to communicate with the proper person.
A new employee who understands their place in the business and the chain of command may concentrate on mastering their duty. When searching for fundamental information such as contact information, one can easily lose excitement.
In addition, an organization chart isn’t just for new employees. A chart with a function that displays the date of hire and promotion history is extremely useful. Employees are more inclined to believe they can advance in their professions if they see their peers advance. Employees leave because of a lack of promotion chances. If your company’s owner prioritizes talent development, an org chart can demonstrate this to present employees. It can attract good staff to stay in this way.
2. You can make quicker decisions about allocating labor resources
Every data point you collect is used in the context of the company structure. As a result, an org chart serves as the foundation for data-driven decision making. This holds true for small business owners, HR professionals, and hiring teams.
Here’s an example of how HR metrics can be used in employee reports and HR analytics:
Assume you discover that one manager accounts for 60% of all overtime. It’s now time to go into the data and figure out why. Perhaps the output targets are too ambitious. Perhaps the crew is understaffed. Sometimes the manager simply does not understand how to create shift schedules.
Context is required to answer the challenge. What team is the manager in charge of? How many people work on the team? What are the precise responsibilities of each team member? Is the team comprised of full-time, part-time, contractors, interns, or temps?
You get the picture. When it comes to employee reporting and HR statistics, the corporate organizational chart is unquestionably the best place to start.
3. It helps prevent silos and duplicated work
A silo is a collection of data or processes contained within a single functional area or system. When it comes to increasing efficiency, breaking down silos is the low-hanging fruit. Silos are ridiculously inefficient and opaque, stifling both innovation and morale.
You cannot defeat an opponent you do not comprehend. Begin with your organizational chart to break down silos. Examine the processes and functions that each team and department is responsible for. There may be overlap between HR and Finance, Operations and IT, and Sales and Marketing in firms with a common structure.
4. It improves communication and collaboration (especially for distributed teams)
Teams that are no longer physically together may struggle to work successfully. Resilient businesses have implemented smart technology and developed new processes to collaborate during pandemic-induced disruption. A digital org chart that employees and department managers can access 24 hours a day, seven days a week is essential, especially for firms that use virtual teams and asynchronous work.
5. It helps the company hire and develop talent
Recruiting, hiring, onboarding, learning & development, and succession planning are all aspects of talent management. Developing a hiring strategy, career path program, and succession strategy all begin with a comprehensive functional structure. After all, how can you plan for the future if you don’t know where you are right now?
