Rules for Building Organisation Charts

Organisation charts are a crucial part of any efficient business. Today I’m covering the Dos and Don’ts of this important business system.

DOs

1. Your Organisation Chart starts with your Strategic Intent – what is it the business does and how will it do it? How will it need to be structured to do it effectively and efficiently?

2. Build if for how you want it to be in the future – not how it is now. Like a house plan, design it for how you want it to be and then work out how you will live in it and grow into it.

3. Each box represents one position or function:

a. Remember : there cannot be more than one person in each box. Where there are two owners, such as a husband and wife, or two business partners, you have to make a decision. The one place you can have more than one person is at Board level – the board of directors.  You might have a DEO or MD underneath that (only one person); you might split the responsibilities with two Managers underneath – one in charge of Finance and Marketing and one in charge of Operations. You get the idea

b. There may be a number of people with the same position title – such as sales, or tradesmen.

4. Each position has only ONE manager.

5. Just because there is not a full time person in that position now doesn’t mean you don’t draw it. Let’s say you don’t have a marketing director.  Well, you actually do, because it’s a function of the business and marketing has to happen, so someone is doing it (whether well or not is not the point). Usually at this stage, it is the business owner, as everything not delegated to someone else falls on their shoulders.

6. If a position exists on the organisation chart, it has a clear outcome. Decide what the outcome or purpose is for every position on your chart.  Be careful here.  What the person does in their job is NOT the outcome.  The outcome or reason their job exists is the result of what they do.

7. Put the name of the position in the box – that way you don’t have to recreate the chart every time someone leaves. The business still needs that function.

8. You can then put initials under the title as you allocate who is doing what.

DON’Ts

1. Never create or delete a position to please someone.
2. Never create your business or your organisation chart around people.
3. Don’t call someone a manager if they are not managing positions underneath them.
4. Don’t give any one any more than 5 people to manage.

Until Next Time…

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