What is the value of an organisation chart?

by | Apr 13, 2022 | Articles

When we are starting out in business we have the ability to remember virtually every aspect of our business. It is in our head and we can access that information quickly and easily. It is not the ideal way to run a business but it suffices, however, this system quickly runs into problems as we expand and gaps appear. For example, new employees join and in our mind we know where they fit, but do they. The challenge becomes greater as we add to our team and it is very easy to lose sight of where everyone sits within the company. I believe a simple exercise will help you make better decisions and benefit you in your search for new talent as the business grows. So let’s look at an organisation chart example that you can change to suit your particular organisation and how you might use it to reduce costs and be more strategic in your recruitment.


Level 1 – who is at the top of the business, are you the sole proprietor or are there other owners or directors. What is their title and what area of the business are they responsible for and who reports into them?


Level 2 – who sits here, what is their title and who do they report to, one director or a number of directors? Who reports into them?


Level 3 – again who fits in here, what title if any do they have and do they report into level 2 and/or Level 1? Does anyone report to them?


You can build up the layers and fill in the relevant information as appropriate. What is the value of this ongoing exercise, let me tell you a true life story to illustrate this by example.


I was working with a professional services company with about forty employees. It was in a niche sector and those at Level 2 were highly skilled, highly paid and hard to replace. An employee at Level 2 informed the directors that he intended leaving but in fairness was giving them six months notice which under normal circumstances should have given them sufficient time to replace him. But as we all know well, time moves quickly and the task of replacing this person was put on the long finger and I was made aware of it about six weeks before the vacancy was due to be filled. Naturally I was surprised that such an important task had been ignored for so long as there were a number of challenges that had to be faced. Firstly, if a recruitment company was engaged apart from the cost it would be unreasonable to expect them to find, screen, interview and have the right candidate in place within a six week timeframe. Secondly, the only person who could bring the new person up to speed was the person leaving and that was not going to happen as there was no time and finally the time required by the directors to be involved in this process would have a serious impact on the work they were doing.


I asked to see an organisation chart only to discover that the existing one was out of date by more than a year. Working with the directors we created an updated one, detailing key personnel at Levels 2 and 3 with particular emphasis on their skillsets, experience and performance. Very quickly we identified a person at level 3 who could fill the role and who could be up skilled quickly by the person they were replacing. They were delighted with the opportunity and were promoted immediately allowing a five week handover process that worked very successfully. However, this now left a gap at Level 3 and so the exercise was repeated as we moved to Level 4 to find their replacement. The net result was that a crisis was averted, the internal promotions were a success and a new employee at a more junior level was recruited to fill the gap.


The key lessons from this challenge for all business owners are;

    • Allow sufficient time to recruit personnel, particularly those that have niche skills and understand that the process could take several months to complete when all factors are taken into account.


    • An up to date organisation chart with all of the relevant details will help you make a more timely and informed decision. In the example above internal candidates were overlooked due to the panic when in fact it was the obvious place to look first.


    • Rushing out to find a candidate in the short timeline might have resulted in the recruitment of the wrong person and the serious cost implications that go with it.


Additional benefits of an organisation chart allow everyone in the company to know where they fit in and who they report into and who has seniority. This could be part of your onboarding pack and employing a graphic designer to include photos and contact details of each will make it more user friendly.


You can also create a more detailed version for yourself or the partners where salaries are included which can identify disparities in pay and help with the annual salary review.


The great news is this is not difficult to create or update and once in place will give you and your employees valuable information and a clear understanding of where everyone fits.


Would you like to know more?

Let’s have a quick confidential chat without obligation. Email alec@alecwdrew.com or why not schedule a confidential call without obligation.

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