Does your business have an organizational, or org, chart? What about an organizational chart strategy?
If not, it should.
Many business leaders of small and even medium-sized companies assume that since their organization is small, they don’t need an org chart. But if you still think of org charts as nothing more than a sheet of paper you hand a new hire, think again.
There’s been an org chart evolution. Over the last decade, these charts have gone from sticky notes on a whiteboard to digital tools used for strategic organizational planning.
The org charts of old have evolved into an active management tool that can help you spot the sort of big-picture issues often revealed only by a high-level overview of your entire business.
Imagine how useful it would be to see not just a list of full-time employees, but also part-time, contract and open positions overlaid with key payroll data. Such a picture could help you more easily spot when it’s most advantageous to change seasonal workers into full-time employees.
Or, what if you were able to identify two to three years in advance that 70 percent of your employees in one department will all retire within six months of each other?
Being able to visualize your HR data helps you proactively plan for now and the future. A dynamic org chart gives you hard evidence of how teams are divided, where salaries are spent, and where responsibilities are centered.
Here’s a closer look at what today’s organizational charts can help you do.
1. Facilitate your decision-making
Once upon a time, updates to org charts were a time-consuming ritual that took place each time someone new joined the company. Old-school org charts were reactive, static boxes filled with departments, titles and names, often developed in spreadsheets or presentation slides, printed on paper and perhaps posted over the copier.
These days, it’s more about your organizational chart strategy than the org chart itself. Robust, cloud-based charting software eliminates the laborious process of manually creating org charts.
Advanced org chart software can automatically build and update your charts by capturing existing data in your HR system and other databases, such as your payroll, talent management or performance management system. Because such org charts pull from your HR data sources, they can be updated as often as your structure and employees change – even daily, if needed.
This software allows you to use your integrated, functional org chart to easily:
- Plan for growth and succession
- Optimize the size and structure of your business
- Align goals with division performance
- Identify departments that need more, or fewer, resources
As a business leader, having readily available at-a-glance views of statistics on salaries, productivity, turnover (and more) can be invaluable in helping you make informed decisions in less time.
2. Build hypotheticals
A dynamic organizational chart program will allow you to easily drag and drop roles to build hypothetical management structures ahead of anticipated growth, the end of a major project, a reduction in force, or a reorganization of departments.
Being able to preview the results of a structural change helps you prevent unanticipated problems.
For example, it may seem feasible to consolidate purchasing under the supply chain manager. But when you start moving things around, you realize that this would place 15 direct reports under a single manager. That would create a problem, as you’ve previously determined that five employees or fewer is the optimal span of control for your managers.
Crisis averted, however, because you’re able to explore the scenario beforehand and avoid an unworkable solution. You can also steer clear of the other extreme of creating a new management position with too few direct reports or overlapping responsibilities.
Also noteworthy, the flexibility of an integrated, functional org chart becomes especially helpful during mergers and acquisitions.
As part of change management, you can color-code the different companies’ positions – and switch out roles, responsibilities and teams – to get an accurate headcount of available personnel for each department.
You can also search for people by title or experience to fill open positions and more.
Growth is a funny thing – it tends to happen with breathtaking speed. An effective organizational chart strategy that leverages integrated employee data can help you identify key players already on your payroll who are available to ramp up should that next big contract come through.
3. Balance skills and experience
It can be easy to lose sight of strategic personnel issues amid the day-to-day management of a company. A reputable organizational chart program can help you actively identify gaps in skills and experience, rather than wait to react when a problem has emerged.
A common example is when one department becomes too heavily weighted with brand new employees. Such a department may develop operational or cultural issues related to a lack of company experience, rather than the poor performance of the individuals involved.
A dynamic org chart can help you discern ahead of time when there’s a lack of experience in a particular department. Then, you can identify a tenured employee to transfer into the area, so that a newer staff member can be recruited into a department elsewhere.
And if your company operates from multiple locations, an org chart program can help you optimize the composition of your teams across the organization. Someone who is underutilized on a lower-priority project may be open to working in another office on a higher-priority project, but you have to be able to identify them first.
Organizational planning simplified
Business moves at lightning speed. With so many moving parts, and so many different tasks vying for your attention, your organizational planning may currently be more reactive than proactive. But it doesn’t have to stay that way.
A solid organizational chart strategy can help you take a more targeted approach to personnel issues and give you more time to spend growing your company.
Functional organization charts are just one of the strategic tools you can use to better manage your workforce. To learn more about what integrated HR technology can do for your business, download our free e-book: HR technology: How to choose the best platform for your business.