The Future of Organizational Charts

We’ve all taken the Management and Managing People at Work classes focused on teaching us the different ways to organize businesses.Organizational charts can get pretty fun, especially when you start talking about matrix structures….But all of these notions of organizational charts are a bit outdated.   It’s one thing to define the hierarchy and reporting structure of your organization, it’s quite another to actually understand how your organization REALLY works.  What you draw in your org chart and how your company really functions can be really different things…..

Organizational Charts 1.0 :

The history of corporate organizational charts dates back to David McCallum, the Superintendent of the Erie line for the New York and Erie Railroad Company in the 1850's.

“In his annual reports to the corporation’s Board of Directors, McCallum laid out the principles and organization of the first “modern” corporation in the mid-1850’s. His organization chart, which became widely adopted, laid out the fundamental structural difference between the ubiquitous “functional” organization and the emerging corporate or “multi-divisional” structure. McCallum observed that for short-haul railroads a superintendent can directly know and manage operations. But, with a rail stretching over 500 miles this is not feasible. He proposed and implemented an organization that broke the rail line into geographical divisions of a manageable size, each headed by a divisional supervisor. Divisional supervisors reported to headquarters. His Multi-divisional form of organization enabled a large business to operate as efficiently as a small one. J. Edgar Thompson at the Pennsylvania railroad quickly adopted McCallum’s idea and developed staff functions at corporate headquarters for planning and financial controls and , and to implement general business policies.”  (http://www.mgmtguru.com/mgt301/301_Lecture1Page7.htm)

Organizational charts 2.0

Alfred Chandler entered the picture in the early 1900’s and continued the process of defining management hierarchy in the workplace.  In his book, The Visible Hand: The Managerial Revolution in American Business, he argued that organizational charts (defining hierarchical structure), help corporations lower costs and boost productivity.  From this concept has evolved the types of org charts we know today : hierarchical, line-staff, functional and matrix. 

Organizational Charts 3.0 - The Networking and Connectivity Revolution

The truth is, there can be a large disparity between what an organizational chart claims and how the company actually works. Rob Cross in his book “The Hidden Power of Social Networks” makes the argument that organizations can learn a lot about the true inner workings of their organization by conducting a Social Network Analysis of their companies. 

 
  “Getting an accurate view of a network helps with managerial decision making and informs targeted efforts to promote effective collaboration.  Rather than leave the inner workings of a network to chance, executives can leverage the insights of a social network analysis to address critical disconnects or rigidities in networks and create a sense-and-respond capability deep within the organization.”

Understanding and managing the connectivity within an organization is “critical to performance, learning, and innovation.”  Organizational charts were born out of this principle, and today we finally have the tools in place to not only define connectivity within an organization, but to actually visualize it, and enhance it in real time.   You can now know whether your Marketing Department is talking to your Sales Department, and actually act on any divisional gaps you identify....Revolutionary!

Welcome to the world of managing organizations, and enhancing collaboration, connectivity, and innovation within an enterprise....in real time.  

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