As Paul pointed out in his article, “Why the Organization Chart is Not Obsolete,” the real purpose of org charts—the most common method for expressing roles—is to build a blueprint for your organization’s future growth.
Using SmartDraw.com itself as an example, here is what our organization chart looked like back in 1994, when Paul founded the company:
Paul was the lone employee, responsible for:
- Product Development
- Marketing
- Sales
- Finance
- Customer Support
- Operations
- IT
- Vision and its implementation (CEO stuff)
Here’s what his org chart would look like if we annotated it with the names of all employees filling those roles:
So what’s the point of having an org chart with Paul’s name on it, in nine different places?
The point is that Paul used an org chart like the one pictured above to lay out how he wanted to expand his human resources as his organization grew—the first person he hired was someone to help fulfill the roles of CFO and the Shipping Manager. Specifically, Paul needed someone to process and ship incoming orders. Here’s what our org chart looked like after Bob Jones, the new hire, was added to SmartDraw’s organization:
You can see where I’m going with this—the next person that Paul hired was someone to manage the website (CIO) and to answer incoming support phone calls. So we added Carl Stevens to the org chart.
Think of your org chart as a skeleton for your organization—it defines your organization’s human resource structure based upon your activities and needs. This is exactly what we have done as we’ve grown from a one-man show to a larger organization.
The Steps
So how do you do it? How do you start with a blank org chart and eventually turn it into a guide for making hiring decisions? Here’s a broad way of doing it:
- Write down your organization’s current needs. What COGS do you need in order to get the wheels of your organization to turn tomorrow?
- Consider your organization’s future needs. What COGS do you need in order to get the wheels of your organization to turn in five years? Back in 1994, SmartDraw did not need a VP of Engineering as all of the development was in the hands of one employee. However, as SmartDraw’s customer base grew and its needs changed, SmartDraw eventually hired a full-time person to manage the development of our software. The role was on the org chart for a long time though, before we hired someone to tackle the VP of Engineering responsibilities!
- Define roles responsible for satisfying those needs. That’s what a role is—a responsibility to fulfill a business need. Encapsulate a number of related needs under a single role and define your roles using written job descriptions.
- Organize your roles into a reporting structure using an org chart. As soon as your organization expands beyond one person, you’re going to have to establish a reporting structure. The employees who fulfill the roles you’ve defined have to be held accountable by someone—and a reporting structure is a simple, formal means of expressing that accountability.
- Prioritize your hires according to the magnitude of your needs. Paul hired a shipping manager / CFO within a few months of selling the first copy of SmartDraw because the sales volume increased to a point where Paul was spending too much of his own time filling orders; ditto for answering customer service calls and maintaining the website. So he made those two hires first because the needs were greatest in those areas of SmartDraw’s organization. Do the same for your own business: determine which needs are the most pressing and make hires to fill out the roles that satisfy those needs first.
- Adjust your roles and your org chart as your needs change. An org chart is not an inflexible definition of your organization’s structure, folks—it should be treated as an organic document that evolves in accordance with your organization’s changing needs. Update it accordingly.
This six-step process is simple, straightforward and suitable for most small organizations. Really, all this process does is help you transform your business needs into actionable hires; however, there are a multitude of other nuances to take into account, such as how to group appropriate responsibilities into roles. This process won’t help you answer all of those questions, but if you’re starting with an entirely clean slate, this process will be enough to get you started. And it will help you layout a blueprint for your organization’s growth plan.
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