The most common method for depicting the structure of an organization, including an emerging company, is the “organization chart”, which shows both the division of work activities among various units and the formal hierarchy of authority. The organization chart provides an overview of who does what within the company and at whose direction these activities are carried out. Once they reach a certain size and complexity, companies generally departmentalize their activities by function, product, territory or customer and many companies evolve toward the use of some combination of two or more of these types as the business grows and becomes more complex.
The traditional form of organization chart includes a box for each of the key positions in the company and each box has a line connecting it to the applicable immediate supervisor that defines the primary reporting relationship for the position. By looking at the organization chart one can quickly determine the authority of a position by looking at how high on the chart it is, how many subordinate positions report to it, and how many activities must be integrated through the position. The summary information on the organization chart is typically supported by job descriptions that detail the tasks to be performed; the skills necessary to perform the tasks; and the qualifications, education and/or experience considered to be necessary in order to perform the responsibilities of the position.
What the organization chart does not show is the various policies and practices of the company with respect to key issues such as planning and control, compensation, promotion and recruitment. In addition, every company has its own set of informal structures that arise in response to the formal structure and the personalities and attitudes of the specific and unique individuals that make the organization run. As such, in order to understand how the company really works it is necessary to identify four important facets of organizational structure—the formal set of organizational interrelationships depicted on the organization chart, the job descriptions and responsibilities, company policies and practices, and the casual and spontaneous communications that arise outside of the formal direction of management (i.e., social networking).
Companies should consider how a formal manual and additional training and communications can be used to describe the organizational structure and provide managers and employees with a guide to how the work of the company will be divided and coordinated. Without this information, employees will encounter problems in completing their tasks and thus may experience high levels of stress and anxiety. This process should begin from the very first day that employees join the company with an explanation of the company organization chart and any additional chart or diagrams that may have been prepared to outline work activities in a particular group or department. New employees should be provided with a copy of the organization chart and a follow up meeting should be scheduled for soon after the employee arrives to spend additional time explaining the company’s organizational structure and how the employee’s department or group, and specific job duties, fit into the overall work flow.