The Organization Chart is the most fundamental business system. It graphically represents the operational structure, leadership, and relationships within an organization. It divides a company into high-level administrative departments such as marketing, finance, and operations. It can also show lines of authority, sometimes known as the “chain of command.”
The Organization Chart is like the skeleton of the body; upon it hangs all the muscle, tissue, vital organs, and life-giving systems of the organism.
The following chart shows several business functions within a typical company. Below them are listed example systems or subsystems within those general functions.
How Your Organization Chart Works
On an Organization Chart, the people who fill positions at higher levels are managers. On the same level across the chart, they are usually considered peers. Supervisors and other workers fill lower-level positions. The flow of authority is downward where business activities also become increasingly specialized.
Some companies have broader Organization Charts and are characterized by more department managers, greater specialization, less bureaucracy, and the ability to make faster decisions. Other companies have narrower and deeper Organization Charts with a few managers wearing “multiple hats.”
For example, a large organization could have a Human Resource Department, an Information Technology Department, and an Accounting Department, all having separate managers with a narrow focus of responsibilities. In a smaller organization, however, these same three business activities could fall within a single Administration Department that is managed by one person.
The Framework for All Your Business Systems
The Organization Chart is your foundational business system and provides the framework upon which your business is built. All business systems and processes cascade down from the high-level activities described on the Organization Chart to lower-level tasks, and finally to steps within each task.
As Michael Gerber (“E-Myth Revisited”) teaches, organize around the business functions on your Org Chart, not around specific people. People come and go, but you need your organization structure to stay intact. People come and go, but your organization structure should remain the same.
It is OK to put names under the functions on the Organization Chart so that everyone knows where each person fits in. Some people may have their name on more than one box until the workload becomes further distributed. Do not create an Org Chart with only the names of people and no business functions!
Develop your business systems within each major function on the Organization Chart. Then, let the systems run your business, and people run your systems. Again, people may come and go, but the systems remain constant, and your business continues steadily forward without interruption.
By the way, Box Theory™ Software will enable you to create your Organization Chart and the unique business systems that fall within each major business function. This is the best way to build an organized and smooth-running company. Check it out today!
