An org chart shows each person’s job title and may include HR stuff like job requirements.Organizational structure defines the purpose, accountabilities, and key performance indicators (KPIs) for each business function and role.An org chart is built around people and titles.Organizational structure is designed around the functions a business performs (e.g., sales, marketing, finance, engineering, etc.).
The Key Differences Between an Organizational Structure and an Org ChartĪn organizational structure and an org chart can often appear similar on the surface, but there are some profound distinctions: It starts with creating the new organizational structure. But redesigning a business doesn’t start with the org chart. Having personally restructured over 50 companies and seen them transform into lean, mean, growing machines, I want you to know that while it is challenging, restructuring is absolutely necessary if the organization is transitioning into a new lifecycle stage and/or changing its strategy. You’ll end up making cosmetic, surface-level changes-or no changes at all-when what’s really required is deep thinking-that is, thinking deep into the structure of your organization to execute on an evolving strategy for an evolving market. You’re stuck in the past when you should actually be leaning into the future. If you ever find yourself in a conversation like this one, it’s a sure sign that you’re not thinking deeply enough about your business.
I guess we’ll just stick with the status quo, even though we all know it’s not working well at all.” OK, how about if instead Peter takes over for Ron and Ron can head up the new product line? No, that won’t work because Ron’s ego is as big as the Grand Canyon and he’ll feel like he’s taking a step backward. “OK, so what if we have Sally and Mike report to Jeff, Jeff report to Ron and Ron and Helen will split reporting responsibilities? That could work. When this happens, it sounds something like this… Many companies set themselves up for failure by attempting to redesign the organization from an existing org chart. Individual perceptions of job status, internal politics, titles, compensation, and desired career paths can make changing your structure seem complicated, if not daunting. If your business design sucks, then your execution will too.Ĭhanging an organizational structure can be very challenging because there’s a lot of inertia tied up in the status quo.
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As I’ve written in “ The 5 Classic Mistakes in Organizational Structure: Or, How to Design Your Organization the Right Way,” everything has a design to it. It should be intuitive that, in order to manage and scale your business, you need a sound organizational design. Here’s what you need to know…Īre You Attempting to Redesign Your Business from an Org Chart? So drop the classic org chart and instead embrace the principles of effective organizational structure combined with a role-centric HRMS. Trying to maintain a classic org chart-or, heaven-forbid, to redesign your business based on one-causes much more harm than good. The org chart tends to quickly become obsolete and leads to a counterproductive focus on who’s where in the organizational pecking order… You do not need a classic org chart-that constantly-changing and almost instantly-out-of-date diagram that shows names, job titles, and lines of reporting responsibilities.
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