What Is An Organisation Chart And Why You Need One

 

Post by Warrick Bidwell

In the almost 10 years I’ve been personally working with small business owners, I can count on one hand the number of these that have had an ‘org chart’ when I’ve first met with them.  Of the rest, it’s only another handful who even know what one is.

So, if you’re still in the dark, or even if you’re not, here’s a basic outline of what an ‘org chart’ is and why you must have one for your business.

An org chart, more correctly known as an organisation chart or positional flow chart, maps out all the roles within your business, their titles, who fills each role and their relationship to the other roles in your business… including you. It’s an important document because it makes it clear for everyone on your team who does what, who reports to whom and who’s responsible for certain tasks within your business.

So what?

Well, without this simple document, your team members end up doing what they think they should be doing and talking to who they think they should be if they have questions or challenges in completing their daily role.

Let’s play a little game to illustrate.  Picture this…

You’re sitting at your desk, or mine if you don’t have one. In front of you is a pile of paper. Printed on those sheets of copy paper are $10 notes… real ones, with serial numbers, that just have to be cut out and then you can go and use them (ok, this is a mildly fictitious example but stick with me).

Your job as the business owner is to cut out as many $10 notes as you can in the shortest possible time. They must be perfectly cut out or you can’t spend them. You’ve been provided with a very sharp, very accurate pair of scissors for exactly this task, a job which you’re actually quite good at when left to your own devices.

Now, standing in front of your desk in a big group, is every member of your staff, your suppliers, your banker, your accountant, your bookkeeper, your spouse. Everyone who normally interrupts your day with questions or demands. Even your customers.

Here’s the problem. You know you can cut $10 notes pretty well and, given some focused time, you could cut quite a few. Easy, right?  Well, the rule of this game is that every time someone from the crowd in front of your desk asks you a question you must stop cutting and attend to their query or demand

Ready? Go…

How many do you think you could cut before the first question comes at you and you have to pause?  A minute? An hour?

If I gave you 6 minutes to cut as many as you could, how many do you think you’d stack up? 5? 10?

Now, picture the same scenario but with a significant change. There’s now a long line of people standing in front of your desk, one behind the other and the same rules apply… they ask you a question, you stop cutting. Here’s the difference though… your team, customers, suppliers are ‘ranked’ in order of decision making capability, with the most ‘qualified’ to make decisions standing in front of your desk, then the next down the order and so on. The questions start at the end of the line furthest from you and, instead of approaching your desk directly, they must ask the person next up the line from them. If that person can’t answer their question, they turn and ask the person next up the chain from them and so on. All the while, you keep cutting until the one person in front of you turns and asks you a question.

Now how many do you think you’d cut in 6 minutes? Twice as many? Three times?

I’ve played this ‘game’ with business owners and their teams in the training room before.  The reality is, they usually barely manage one $10 note in the 6 minute timeframe under the ‘free-for-all’ question asking scenario.

Under the structured example they can cut up to 10 times as many!

Sadly, this is how many businesses are run, where everyone has open access to the owner. The problem with that is rather than generating additional revenue and profits, new business and new products (read: cutting $10 notes) for the organisation, the business owner spends almost all their time answering everyone else’s questions and putting out spot fires.  So the most valuable person in the business ends up involved in some of the least valuable tasks and problems.

Contrast that with having appropriately qualified people, directly responsible for their ‘team’ below them or even next to them on the organisational ladder and you protect yourself as the owner from more of the day to day workings, spot fires and challenges that face any busy trade business. I’m not suggesting a completely military hierarchy but certainly something closer to that than the random collection of individuals that is unfortunately most common among small to medium businesses.

See the very simple example below for a starting point and then make sure you have at least a one page, written ‘position description’ for each of the roles on your chart.  Those position descriptions should also include key performance indicators or measurements so that the person allocated to that role knows what they’re aiming at and how to achieve it.

Once that’s done, you should have a lot more time for cutting $10 notes and spend a lot less time answering those frustrating, simple questions.

Organisation Chart Tradies VA