The Importance of Mapping Organisation Structure

Organisational charts help define the functions of a company and demarcate relationships between staff members. Entrepreneurs would do well to take note of this critical aspect, especially start-ups…

The late author and management guru Chris Newby, who was often called upon by the world’s leading organisations to offer sales advice and training to its executives, knows a thing or two about the significance of company structure and organograms. Having held various sales, marketing and business management jobs over a quarter of a century with IBM before starting his own consultancy, Newbytes, in 1993, Newby understands the benefits of having an well-defined organisational chart in companies, especially start-ups.

“The organisation chart is important for several reasons. It shows each individual's position within the organisation, he writes in his book ‘Sales Strategies: Negotiating and Winning Corporate Deals’. “It shows the line responsibilities within the organisation and who reports to whom. It shows how the organisation is structured and how the various administrative functions within the organisation are grouped.”

To put it plainly, an organisational chart helps divide the functions of a company, enterprise or department. It also shows the relationships between the organisation's staff members. Organisational charts often outline employee tasks and which manager is responsible for overseeing each employee.

It is here that most Indian start-ups tend to falter. For a young or newly set up company, implementing an organisational chart may not necessarily be on the list of top priorities. Entrepreneurs may argue: “why should I bother putting in place an organisational structure when I only have 10-12 employees, and everyone knows their role well?” It may also seem too much of a formal procedure.

By and large, entrepreneurs tend to perceive organisational structure as a chart that outlines the reporting relationships of every employee in the company. “That’s a common cardinal mistake among Indian start-ups;” according to HR professional Saritha P. “I for one would however like to argue that organisational structure encompasses more than merely outlining reporting relationships. I feel an organisational structure – howsoever small, also allows entrepreneurs to ensure that their company’s human capital is aligned with their strategy and vision. It also increases the visibility and transparency of their organisation. Entrepreneurs can thus have a much clearer view on how each member of their team is contributing to the company’s objectives - and in case of larger set-ups, how teams are communicating to make sure that everyone is on the same page.”

‘Forbes’ magazine recently published an article titled ‘Why Defining a Corporate Structure for Startups Matters’. The article gives clear insights on how to create your own organisational structure. It encourages entrepreneurs to record all the roles for their company. The best way to do it, it says, is to create a job description for your current and prospective positions. In your job description, clearly outline what the duties and responsibilities of the job-holder are and the minimum requirements for the position. Now, as a start-up, you will find that many of your employees may have more than one hat since everyone is helping out in the different areas of the business. Do not assign names to the positions as you do not want to hinder your current employees into a specific role for the moment.  The purpose of creating the various job descriptions is to take a proactive approach. So while you are building what your structure looks like, it makes you to think ahead of what specific positions you will eventually need in the near future.

It is vital to map out how work is done, the processes required for the business to perform efficiently, and how information is shared throughout your company. This guideline will allow you to determine your main teams and to assign the different positions into each unit. For example, you may want a design, marketing, customer service, and manufacturing team. One important part of this step is to ensure that your organisational structure facilitates communication through the organisation. For example, you will absolutely design your sales team to be in direct communication with your development team. When your company starts growing in size, some of your employees may be in cross-functional teams reporting to different managers. An organisational structure will allow you to clearly identify the reporting relationships.

All things considered, an organisational structure is certain to benefit your company no matter what size it is. Organisational structure helps team leaders to effectively manage their teams, and also establish clarity for the entire company in terms of role play. Clarity, in turn, encourages a culture of transparency within your company. So it’s about time you went ahead and set up your company’s organisational chart.