From CompliNEWS | Financial Service Intelligence Watch
The importance of an organogram
By Lee Rossini
Within the organisational structures of a business, an organogram serves as the blueprint, delineating the relationships, hierarchies, and responsibilities of individuals and departments. Whether you’re launching a startup or managing an established small business, effectively implementing an organogram can be pivotal in fostering clarity, efficiency, and productivity within the business.
Defining an Organogram
An organogram, also known as an organisational chart or hierarchy chart, is a graphical representation of the business structure. It visually depicts the relationships between various positions, departments, and individuals within the business. It serves as a roadmap, offering a bird’s-eye view of the business hierarchy, reporting lines, and communication channels.
Characteristics of an Organogram
- Hierarchical Structure
Organograms showcase a hierarchical arrangement, illustrating the chain of command from top-level management, back-office, and frontline employees. This hierarchical representation facilitates a clear understanding of authority and reporting relationships within the business. - Departmental Segregation
Different departments are delineated within the organogram, providing clarity regarding the division of labour and specialisation. This segmentation ensures that each department knows its role and responsibilities within the broader framework of the business. - Clarity of Reporting Lines
One of the primary functions of an organogram is to highlight reporting lines and communication channels. By clearly outlining who reports to whom, it helps prevent confusion, streamlines decision-making processes, and fosters accountability. - Role Descriptions
Organograms often incorporate brief descriptions or titles associated with each position or role depicted, offering insight into the responsibilities and duties associated with the position. This clarity assists employees with understanding their roles and ensures alignment with business goals. - Flexibility and Scalability
A well-designed organogram should be flexible enough to accommodate changes in the business structure, such as expansion, restructuring, or the addition of new departments. It should be scalable to reflect the evolving needs and dynamics of the business.
Guidelines on Drawing Up an Organogram
- Identify Key Roles and Positions
Begin by identifying the key roles and positions within the business. These may include executive leadership, management positions, functional departments, back office, and frontline staff. - Establish Hierarchical Relationships
Determine the hierarchical relationships among various positions and departments. Clarify reporting lines and identify who reports to whom. - Define Departmental Structure
Segregate different departments based on their areas of operation and specialisation. Clearly outline the roles and responsibilities of each department on the organogram. - Consider Span of Control
Ensure that the span of control, namely, the number of subordinates directly reporting to a manager, is reasonable and manageable. - Utilise Organisational Chart Software
Use organisational chart software or tools to create a professional-looking organogram. These tools offer templates, customisation options, and features for easy editing and updating. - Ask for Feedback and Iteration
After drafting the organogram, ask for feedback from key stakeholders within the business, such as department heads and employees. Incorporate their input and iterate the organogram to ensure accuracy and alignment with the business structure and objectives. - Regularly Update
Business structures evolve over time due to internal and external factors. Therefore, it’s essential to regularly review and update the organogram to reflect any changes in roles, positions, or departmental structures.
An organogram is a useful tool for businesses to delineate their structure, clarify reporting lines, and encourage alignment and efficiency within the workforce. By drafting, implementing, and regularly updating, an organogram, business owners are laying the foundation for the future success of their business.