BCom Notes Part II Management Organization Charts

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Organization Charts

What are Organization Charts? Discuss their advantages and limitations. Organization Charts

Organization structure is represented primarily by means of a graphic illustration called an organization chart. An organization chart is a diagram depicting organization’s formal positions and formal lines of authority. In fact, it is structural skeleton of an enterprise’s hierarchy of management. Organization charts are a means of avoiding conflict by clarification. With their familiar pattern of boxes and connecting lines, these charts are used as a management tool for deploying human resources.

An organization chart shows two dimensions of the structure: (a) the vertical authority structure, such as official positions, span of management, heirarchy of command, etc and (b) the horizontal differentiation of work activities such as work units or departments. It reflects the pattern of authority flow from top management to the lower levels. It also shows managers, ranks and jurisdications, types of authority relationships, line, staff or functional – communication lines throughout the organization, the number of levels in the managerial hierarchy, the span of management and the relative status of different managerial positions and departments. Organization charts also help in reflecting as to who reports to whom – who is superior and who is subordinate, how many subordinates are accountable to a superior and what are the avenue, open for advancement of a manager holding a particular position in the chart.

The organization structure can be diagrammed into an organization chart in three different ways:

(a). The traditional or conventional vertical chart shows the position of the chief executive at the top of a pyramid form, from where the authority flows downward. The managers towards the top of the pyramid have more authority than those who are towards the bottom.

(b). The horizontal chart originates from its left and proceeds to the right, depicting the chief executive’s position at the extreme left and placing the successively lower managerial positions towards the right end.

(c). The circular or concentric chart places and shows the chief executives position at its center and other middle and lower level managerial position radiate from the center in concentric circles, the lowest managerial positions being placed on the outermost circle.

The horizontal and circular charts represents a healthy departure to the extent that they de-emphasize the hierarchical, i.e., bureaucratic nature of organization structure. However, vertical charts are still common in practice. Normally, the greater the height of a vertical chart, the smaller the span of management and the lower the height, the greater the span of management. Organization charts with little height are usually referred to as flat and those with much height as tall.

Advantages of Organization Charts

They are useful in several ways as follows:

1. Organization chart is a means to indicate graphically how the managerial positions fit into the total organization and how they relate to each other.
2. It shows at a glance the lines of authority and reporting pattern.
3. It provides a connectional background to identify inconsistencies and deficiencies and thereby helps in deciding for further improving modifications to cope with future demands of the changing environment.
4. It serves as a reliable blueprint for newly recruited personnel who may understood the structure of the organization and the interrelationships among its various work units.
5. It provides a framework of personnel classification and evaluation systems.

Limitations of Organization Charts

1. Organization chart depicts only a static view of the organization, while the organization is a dynamic concept.
2. It shows only the formal relationships and fails to describe informal relationships in the organization, though informal relationships are equally important and significantly affect the functioning of the organization.
3. It does not show the quality and content of the managerial relationships that actually exist in the organization, but shows only the ‘supposed relationships’. Thus, it fails to tell about the effectiveness of various elements, processes, and other structural dimensions within the organization.
4. Organization charts become quickly outdated because they fail to incorporate into them the frequent changes or alternations taking place in the organization structure and in the patters of authority and activity relationships.