Understanding Organizational Charts – Charts that show the interconnectedness of various positions in an organization in their authority and responsibility. Every institution or business has a position that shows the position of each person in it. Each position or job has authority and responsibility that are interrelated with each other.
Basically, there are three organizational patterns, namely line organization, functional organization and line and staff organization (organization chart). In an organization, it is very important to have an organizational chart. So, what is actually meant by the definition of an organizational chart? Let’s see the explanation of the Definition of Organizational Chart below, grameds!
List of contents
- Understanding Organizational Charts
- The Importance of Organizational Charts
- Organizational Chart Functions
- Structure allows for better communication
- Clear reporting relationships
- Growth and Expansion
- Efficiency in completing tasks
- Know what went wrong
- Adjusting to company needs
- Organizational Chart Elements
- Job specialization
- Departmentalization
- Chain of command
- Span of control
- Centralization and decentralization
- Formalization
- Types of Organizational Structures in Companies
- Functional Organizational Structure
- Divisional Organizational Structure
- Line Organizational Structure
- Line and Staff Organizational Structure
- Matrix Structure Organization
- Committee or Project Organizational Structure
- Examples of Positions in Organizational Structure
- Board of Directors
- Manager
- Division or Department
- Administration and Warehouse
- Steps to Design an Organizational Structure
- Design the organizational structure according to the vision and mission
- Design the organizational structure after formulating the business
- Consider the talents and abilities of workers
- Consider the age of the worker
- Positions or jobs that do not match employee competencies
Understanding Organizational Charts
An organizational structure or organizational chart is a diagram that visually conveys a company’s internal structure by explaining the roles, responsibilities and relationships between individuals within an institution or organization.
The definition of an organizational chart is a broad description of the entire company or tracing down to a specific department or unit regarding the roles, responsibilities and relationships between individuals in an institution or organization.
Another definition of organizational structure is a system used to define the hierarchy within an organization. It identifies each job, its function and where it reports to within the organization.
An organizational structure is not standard but can be developed according to the needs of the implementation of the organization concerned. Because there are many types of organizational structures, each has its own advantages and disadvantages.
The Importance of Organizational Charts
Organizational charts play an important role in running an organization to avoid role confusion. Because the organizational chart provides information on each person’s position, their duties and responsibilities to whom they should report their duties.
Ultimately, it is important to improve the organizational structure of the group in order to achieve its goals. Here is an overview of the importance of an organizational chart, including:
- Explains the responsibilities of each person or member in the organization.
- Explain positions and coordination to facilitate communication flow between teams.
- Describes the relationship between individuals in an organization to make work processes more efficient.
- Seeing the leadership’s portion in controlling and supervising employees.
- Organizational chart elements.
Organizational Chart Functions
A good organizational chart can describe the entire company down to each department or specific unit. So the organizational chart has the following important functions:
1. Structure allows for better communication
Communication is very important in the success of an organization, with an organizational structure designed with clear lines of communication can help improve good communication. For example, between related departments such as the financial planning and analysis department. Both communicate and report to the Chief Financial Officer and Marketing Officer.
2. Clear reporting relationships
Everyone in the organization needs to understand clear reporting relationships in order to understand their responsibilities and who they are accountable to. Clear relationships help each party carry out their duties.
For superiors, it can make it easier to monitor the performance of everyone under them. While for employees, it makes it easier to know who to ask for direction or help. In addition, everyone can be aware of their position and authority, so as not to exceed the limits and not interfere with each other’s positions, yes grameds.
3. Growth and Expansion
A company or organization can grow rapidly if every position is occupied by the right people. So, the function of the organizational chart or structure to regulate how the company utilizes the resources it has appropriately in terms of organizing is a management talent.
Structure can show the weak points in an organization’s team, because a good structure puts the right people in the right positions. Over time, organizational structures can change, both development and downsizing, according to needs.
4. Efficiency in completing tasks
Having a well-designed organizational structure to facilitate project completion helps project managers identify the human resources available to carry out the responsibilities of each department.
So team formation also needs to measure the ability of each team member to be in the right position. In this case, the project manager organizes the team’s needs and places them according to their expertise.
5. Know what went wrong
When a project or work of an organization goes badly, it can be checked because most likely the organization is poorly structured. For example, work that is not in accordance with the target, completed past the deadline and so on. It could be because the tasks given are not in their portion so that they conflict with other managers.
6. Adjusting to company needs
Each company or organization has a different structure according to the needs of the company, so the structure must be made to meet the needs of both arrangement, development and so on. So, not all organizations can be considered the same because the resources needed by each industry can vary.
Organizational Chart Elements
The elements of an organizational chart include:
1. Job specialization
To see to what extent tasks in the organization are divided into separate jobs.
2. Departmentalization
The basis used to group jobs together. This can be processes, products, geography and customers.
3. Chain of command
An unbroken line of authority that extends from the top of the organization to the bottom and clarifies who reports to whom.
4. Span of control
The number of subordinates a manager can direct efficiently and effectively.
5. Centralization and decentralization
Centralization refers to the degree to which decision-making is concentrated at one point within the organization. Decentralization is the opposite of centralization.
6. Formalization
The extent to which jobs within the organization are standardized.
Types of Organizational Structures in Companies
There are 6 types of organizational structures known in a company, including the following:
1. Functional Organizational Structure
Functional organizational structure as the most common type of organizational structure used by a company or organization. In a functional organizational structure, the division of work is then carried out based on the function of each management.
Among them are financial management, marketing and human resource management, production management and others. Every employee who has the same skills and abilities will be grouped into one work unit. This is what makes this type of organizational structure very appropriate to be applied to an organization or company that only produces several types of products or services.
The advantage of this type of organizational structure is that it can reduce the company’s operational costs and make it easier for the managerial team to supervise and evaluate employee performance.
However, implementing this type of organization also has an impact on the difficulty in discussing and communicating between work units. In addition, general management training for employees also has its own limitations.
2. Divisional Organizational Structure
Divisional organizational structure is a type of organizational structure that groups products based on similarities in products, services, markets and geographical location.
This type of organizational structure is usually applied to medium to large scale companies because the operational costs incurred will be higher when compared to a functional organizational structure.
By implementing a divisional organizational structure, your company has more ease of management because it breaks down divisions in the company into smaller parts. While the weakness lies in the problem of resource allocation, as well as the distribution of costs that must be incurred by the company.
3. Line Organizational Structure
In a line organizational structure, the relationship between superiors and subordinates occurs directly and vertically. Where from the highest leader to the lowest-ranking employee in this organizational structure is connected by a chain of command or line of authority.
Therefore, this type of organizational structure is also better known as the military organizational structure. The advantage of using a line organizational structure is that the leadership unit lies in one person. while the disadvantage is the dependence on one person in its hierarchical structure. This type of organization is very appropriate if applied to small organizations such as rice shops, Tegal stalls, workshops or neighborhood associations.
4. Line and Staff Organizational Structure
This organizational structure is a combination of several combinations of line organizational structures with the command principle, but the leader’s duties will be assisted by several staff. Each staff in the line and staff organizational structure has a role in providing advice, input, assistance, new ideas and concepts as well as information data needed by its leader.
The line and staff organizational structure is very suitable if applied to small-scale companies because it has the advantage of ensuring high moral discipline of employees according to their respective job descriptions. However, employee solidarity is still lacking because many of them do not know each other.
5. Matrix Structure Organization
Matrix organizational structure as an organizational structure that is a combination of functional organizational structure with divisional organizational structure with the aim of complementing each other and covering the deficiencies in both organizational structures. This type of organizational structure is often known as a project organizational structure because each employee in a functional organizational structure work unit must work on organizational projects assigned to him.
The implementation of this type of organizational structure results in a command system where an employee is required to report to two leaders, namely the leaders of the divisional and functional work units.
The matrix organizational structure is very suitable for application in large-scale companies to multinational companies because of its ability to achieve the level of coordination that is very necessary in responding to the dual demands of the corporate environment.
However, this structure also has weaknesses. Where sometimes because of the dual demands it can cause confusion.
6. Committee or Project Organizational Structure
This type of structure is used by companies, every leadership task and other special tasks must be carried out and accounted for collectively by a group of officials in the form of a board or committee.
The organization of a committee usually consists of a committee leader (Executive Committee) who is a leader with line authority and a staff committee who are employees with staff authority.
The advantage of this type of organizational structure is the implementation of decision-making that takes place well through joint deliberation between shareholders and the board. While the weakness lies in the avoidance of responsibility if a problem occurs.
Examples of Positions in Organizational Structure
There are several job titles that will always be displayed in an organizational structure. However, they are not limited to the following four positions:
1. Board of Directors
The board of directors is the person who is responsible and has the authority to manage a limited company. The board of directors as an important part, its position is at the top of all positions.
In general, a company has one president director, three deputy president directors, and six directors. However, this can follow according to the type of company and its needs. The board of directors has the authority to make decisions about the company.
The board of directors must also be able to account for every decision of the company. The function of the board of directors as the company’s determinant. For example, what type of business will be developed and what type of product should be produced. The board of directors is also the person who organizes the company’s activity schedule.
2. Manager
The manager position is a position that is responsible for integrating various variables and characteristics of its employees in achieving company goals. The manager’s job is to make directions and decisions, policies, and develop employee potential in order to advance the company.
Managers are usually positioned in each division or department and become the main managers. For example, marketing managers, HR managers, production managers and so on. Managers will receive reports from team leaders and other members and then submit them to higher ranks.
3. Division or Department
This section is led by the division head who has the task of leading the field of duty of his department. There are various departments or divisions in a company’s organizational structure according to the characteristics of the company. Among them are the marketing and sales department, HRD & GA department, production department and so on.
4. Administration and Warehouse
This position consists of accounting, CMT and cashier. The task is to manage the company’s finances and record every expense and income and even take care of things related to outsourcing.
Steps to Design an Organizational Structure
Design the organizational structure according to the vision and mission
Before creating a company organizational structure, make sure that there is a vision, mission and goals or objectives of the organization that have been made clearly. It is not uncommon for some parties, especially startup companies , to rush into creating a structure without paying attention to the clarity of what is expected from the company organization they are building.
2. Design the organizational structure after formulating the business
In creating a company organizational structure, it is very important to know the business targets to be achieved. Formulate what businesses will be run and what are the targets.
3. Consider the talents and abilities of workers
It is mandatory to conduct analysis and observation of the possibility of storing skills in workers. It is possible that your organization has had many talents stored, but not found for the growth of the company.
4. Consider the age of the worker
In forming the organizational structure of the company, the age factor is one that should be considered. That way, you are able to place them in the positions that have been designed.
5. Positions or jobs that do not match employee competencies
Forming the right organizational structure by considering the talents and abilities of the workers is ideal. However, when this is not always realized and causes problems in the field, an evaluation of the existing structure is needed.
Well, that’s about the definition of an organizational chart along with its functions. A good organizational structure greatly influences the success of work in an organization..