The Importance of Organizational Chart

Oct 9, 2022

Sharon: Good morning, this is Sharon, and I’m here with Steven Kohnke from Denver Business Coach. Good morning, Steven.

Steven: Morning, Sharon. How are you?

Sharon: I’m good. I’m, as always, looking forward to our business conversation this morning. So what is the topic at hand today?

Steven: Yes. So as we’ve been talking about, it’s good for business owners to really understand their business as something that’s not it doesn’t just happen, but it’s a bunch of different things that happen simultaneously. And they all deserve the time and attention to run a good business. So, we’ve broken down into components, pillars being the foundations, leadership, sales, marketing, operations, financials and H.R. We’ve put together this series here with tips and insights to help business owners grow in these areas. So today, really, we’re focusing in on the H.R. pillar and more specifically, the organizational chart within that one.

Sharon: Right, I am sure this will be an interesting one, so what is the significance of having an organizational chart? Why is that so important?

Steven: Yeah, the organizational chart is a visual representation of the reporting structure of any business. One of the biggest reasons to really have this is it eliminates the confusion for a communications within the business. You know exactly who you’re supposed to communicate important messages to and who you’re responsible for as a leader to get those messages to be communicated with. You know, to take it a step further, when you’re growing your business, you can create the future organizational chart, which you see or can see the positions of what your business can grow into what you need to hire for the future growth of the organization. This should be a part of the planning to what we’ll do at Denver Business Coach is even add the element of roles and responsibilities to each position there and understand where the gaps are.

Sharon: So would you say, though, for business owners at every stage, it’s important to have this organizational like visual representation and why? I think you said some of it, but can you say a little bit more about the why at every stage?

Steven: Yeah, that’s a great question, because it’s it’s very common that business owners don’t really look at an organizational chart as an important aspect of growth of their business. You know, they think organizational chart. They think giant corporations. You know, they have these big complex organizational charts and something to follow there. And if it’s a five person team or even less, what’s the point? I know who’s in the business. I know where they go. I know who to talk to. But it’s really beyond just that. It’s it’s the visual representations of the people who who like who learn visually and who retain information visually. It’s really good to see something like that. And, you know, the the real benefit is the clarity, you know, as I mentioned, the communications aspect of it. But in Goal Planning, we’ve talked about goal planning in the past here of really understanding, you know, what it’s going to take from a personnel standpoint, from a roles and responsibilities standpoint to grow into the future of your business. You know, if you want if you’re trying to grow to a five million dollar business from a one million dollar business, that’s going to take some personnel changes. And so it’s not enough to just say we’re going to do sales and marketing and we’re going to have delivery team to to do whatever the business is about. But you need all the supporting roles along with that. Sometimes you need to bring marketing in-house. Sometimes you need to bring financials in-house. So it’s really kind of understanding where the business is and seeing what you can actually grow into and being able to better plan for future growth. So those are those are the really the big benefits to being able to do it at every stage.

Sharon: Yeah, that’s super helpful. So how would a business owner start to develop an organizational chart if they don’t have one? And then part two of that question is, if they do, how can they improve on what they have?

Steven: Yeah, great. So, you know, the easiest way to begin the organizational chart is, you know, take a pen and paper, draw some boxes on it, write some names in it and draw some lines connecting those boxes. That’s your organizational chart, right. So, you know, there’s there’s software out there where you can actually make it look professional and beyond. Just some some drawings on a piece of paper. But that’s really I joke about it. But that really is step one. It’s simply just saying, OK, this is where we are today, whether it’s two people, three people, five people, ten people, and understanding where those lines are, the communications, the roles and responsibilities there, you know, once you kind of have that visual representation done, you know, kind of that next step into really developing this and creating the future organizational charts is, you know, bullet pointing the roles and responsibilities next to those boxes, next to those positions within your business and understanding where the main responsibilities are being placed through that information. You usually you will see a certain position or certain person is wearing many different hats. They have a lot of different responsibilities within the business. And that can shed light into where the future state organizational chart will be by saying, OK, this person has way too much responsibility right now. The chances of burnout for this person are really high. So let’s get them a little bit of extra support. So probably the next hire might be someone to assist them, someone to take some responsibilities off their plate. And then you repeat this process for one years, three years, five years, and kind of see how your your organization can grow from that internal structure standpoint.

Sharon: That’s awesome. I love org charts. So I might be an anomaly, but to me, they do give that clarification and that that visual representation of, you know, what’s going on now and where are we headed.

Steven: Yeah, good.

Sharon: Thank you. Yeah. So if someone wants to talk with Denver Business Coach more or find out how they can get support in this process, what’s the best way to do that?

Steven: Yeah, the easiest way really is to just go to the website and reach out to us through there we have a couple of different ways to do that in any one of us would be happy to talk to you about your organizational chart needs.

Sharon: All right, thank you, Steven, and great talking to you today.