How to Read an Org Chart
So what is the big deal with Org Charts; why do people get so up in arms about them?
About having them, not having them, where people end up on them, etc. Org Charts are just a way to model an organization so that you can have a concrete discussion about how people are organized.
People seem to think that Org Charts show who gets to tell who what to do or who has more power to affect the organization. They rattle off all these anecdotal stories of how Org Charts have been used to enforce this — to enforce rigid hierarchy, rigid communication structures, top-down management — and that’s all totally true if you’re working in some old-school, 1950s corporate structure. That was absolutely true back then; that’s what Org Charts are meant to show in those organizations.
But those stories are all indicative of the problems with THAT type of organization, not Org Charts themselves. The problem is that Org Charts were first introduced and created by those organizations, and they carry a lot of cultural baggage from that. Where your company puts people on an Org Chart today doesn’t necessarily mean the same things it would have back then.
I think what gets everybody freaked out is that it’s like that 1950’s model is still how we are taught to interpret Org Charts. This leads to all these bad assumptions based on the level of the pyramid that you’re at or how many people are reporting to you or how far away from the CEO you are or how tall your pyramid is or whatever.
So maybe what we need to do is think a little bit more about how these tools can be used to represent modern organizational structures that aren’t necessarily 100% hierarchical.
And then is the traditional Org Chart doing the job? Is it enough to set some new standards for how we’re going to think about Org Charts and what they’re going to mean for us today, or do we need to come up with something better?
How Not to Use an Org Chart
The one thing that people seem to get the most stuck on is the meaning in the levels of the Org Chart: both where are they at in the levels personally and then how many levels are in the Org Chart total.
One thing people like to do is say “Oh look! I’m only one level down from the CEO. I have so much power in this organization because I’m basically reporting directly to the CEO.”
And that is not always wrong… In a small organization when you’re reporting directly to the CEO you may have a lot of power, but if you’re in an organization where 80 people report directly to the CEO, being one level below her does not necessarily give you a lot of power or mean you are being heard. It’s more of a consolation prize to your ego than anything meaningful.
People also like to say, “Oh, I’m one level below the CEO versus someone else who’s 3 or 4 levels down, so they have to listen to me and do what I say.” If you’re using that fact as a reason for why your idea should trump their idea, then that is a very bad use of the Org Chart. What does it say about your idea that the best reason you can come up with for it is basically that you are buddy-buddy with the CEO? I’m just going to leave that here and hope it’s obvious why this should never, ever be an acceptable reason within your company.
There are lots of things that actually can give you power in an organization, but in regards to who you report to, it doesn’t matter what their level is as much as it matters that they have a small enough team and a defined enough scope to actually represent you and your projects well within the organization. If you never talked to the CEO, then it meant fuck all that you reported to them. If you reported to the person that took your team’s input and created a cross-cutting, bottom-up, company-wide shift in thinking that significantly improved the infrastructure, abilities and standing of your team within the company…that matters.
Another thing people like to say, especially founders, is “Oh look! We only have one level in our organization. We’re all on the same level and we’re all one big happy team-family and that proves that we’re like a totally flat, friendly, modern meritocracy where everyone’s ideas are heard!”
And that is just absolutely not true. The number of levels in an organization — especially, an old hierarchical organization — did represent a dilution of power as you went down. And that meant that, yeah, if you were above someone else, you did get to tell them what to do just ‘cause, and you were much more likely to have an impact on the organization the closer you were to the top if only because you could tell more people what to do. But all of this is based on an old model that no sane start-up is trying to reproduce. And that’s why in these org the number of levels don’t necessarily prove anything.
Which brings us around to what does this all mean in a modern sense and can the Org Chart still serve a purpose?
Is it even Worth Having an Org Chart?
From Amazon’s anecdotal evidence around the 2 pizza teams rule to actual research that shows that managers can’t have more than 8 to 15 direct reports (because beyond that the complexity of the situation is beyond what their brains can handle), the size of your organization works the same way: beyond about 15 to 50 people you can’t hold the entire structure of your organization in your head anymore, even if you’re the founder, much less if you are just an individual contributor that doesn’t think about it that much.
Organization design is not necessarily something you’re going to have quarterly planning meetings and weekly check-ins about. It’s going to organically happen as the result of every decision you make if you are a founder, executive, or manager. Those effects will be amplified by high growth of a scaling startup or corporate division, so for managers or founders, this is actually a huge part of what we do everyday. You need to have an Org Chart in place as a check for when reality has deviated from the plan for better or worse, and as a tool to have fast, concrete conversations around how it needs to change to get back on track. If you have no model that represents how your organization is structured, you are never going to be able to have an effective conversation about how it needs to change as the organization grows or your priorities change.
The traditional Org Chart does have a lot of baggage around what it means, having been created and so strongly associated with those old, top-down organizational models. But not having an Org Chart is the equivalent of just ignoring the problem, it is not a solution to anything. Most of the problems with traditional Org Charts can be overcome by setting a clear definition within your company of what you are trying to communicate with it. If you can’t manage to communicate that, you’ve got bigger problems.
So What Can an Org Chart Show?
Even the traditional waterfall Org Chart can still communicate a lot about an organization, if we reframe what we are looking at.
Before we talked about the layers being a representation of power and certainly that’s the first thing people think of when they think Org Chart: it shows who is who’s boss.
But in a modern organization, layers represent a scope of focus, and lines represent channels of accountability.
Granularity of Decisions
Probably the biggest differentiator between modern organizations and old, top-down hierarchical organizations is that modern organizations recognize that to be fast, to be flexible, and to make good decisions in quickly changing environments, you have to push the decisions down through the organization to the people who are closest to the decision point, to the people that have the most timely and accurate information about what needs to be done there.
So one of the things an Org Chart can show you in a modern organization is the level of granularity of decisions that any person in that organization should be making. For example, the CEO at the top is responsible for setting the vision and the direction of the company, and those are very high-level, non-granular decisions to make. Then you have your managers who are responsible for a slightly more granular and more focused towards their specific expertise areas level of decision-making around planning, setting charters for their specific teams, and defining KPIs. Finally you have the ICs on those teams who are responsible for the super granular decisions around execution: what are we actually going to do and how are we actually going to move those needles on those KPIs, which all rolls back up into the organization’s vision.
In this case the Org Chart is a great check and balance, because if your CEO is making decisions about how you’re executing on a single team’s contribution to the vision, that’s not something your CEO should be doing. That is at worst a misuse of power and at best a huge distraction from what the CEO should actually be doing — execution details are definitely not the most effective way for them to be contributing to the organization!!!
And it also works the other way for ICs coming into the organization and looking at their career path. At what level do they want to make decisions and contribute to the organization? The Org Chart gives them an idea of where they are and where they need to get to in order to make that kind of impact and do that kind of work. And some people want to be in the granular details forever and that’s ok too, there should also be career growth paths within those IC levels. Just one more reason your level on the Org Chart shouldn’t be equated with power or seniority…
Kind of Role
An Org Chart can also show who are managers and who are individual contributors within the organization. This seems like it should be obvious, but in practice in fast growing startups, it’s harder than it seems, or at least making the right decisions based on this information is harder than it seems.
The difference between manager and IC is important thing because those two kinds of people within the organization should be judged very differently. Individual contributors are judged on their personal execution and how their efforts are contributing to moving the needle on certain factors within the organization. But the manager should be judged on how well their team is able to do their jobs. A manager should never be judged, and should never judge themselves, on their personal contributions to the organization above that of their team.
This is something that especially people first moving into management really struggle with, but that organizations moving from that everybody-wears-a-lot-of-hats phase also repeatedly drop the ball on. As people’s roles shift and change in a growing organization you can end up with this kind of legacy issue; with people who are now managing people still judging themselves or being judge by the organization as if they are still that lone individual contributor. People can struggle to get their manager legs back on even if they’ve managed people before and they know better.
This is where the Org Chart can really help to make issues apparent and help define the conversation around it. To say “You’re now being judged on how your team is doing, and yes you can still contribute to the organization personally, but that is always going to be less important than how your team is doing.” And that’s also to say to the organization, “If this person has to deprioritize what they are personally contributing in order to make their team successful, you as an organization have to be willing to not get those things in lieu of that team as a whole succeeding.”
Obviously, in an Ideal World we would all work ourselves out of a job and just hire someone to do all the things that we were doing. But so much of a startup’s critical growth happens in that awkward teenage phase where you’re right between these two things: You don’t quite have enough people to cover all the things that you were doing as individual contributor, but you also need to be nailing this fucking management role right now to get this team on its feet. And once you’ve got one team in hand, it’s some other team or subteams turn to scale, and you see it happen all over again. So knowing how to work through this phase is a superpower, and an Org Chart can be an important tool in having those conversations.
Channels of Accountability
Finally, the Org Chart makes clear what the channels of accountability are. I want to be really clear about this because in old-school Org Charts the line between you meant that your boss was in charge of you. They got to tell you what to do, and you were accountable directly to your boss. That is not true in modern organizations, especially data-driven organizations (or data-informed, if you prefer). The idea now is that every individual is accountable to the organization and for how their contributions move the organization’s metrics.
Individual Contributors are accountable to the organization, first and foremost, but managers are highly accountable to their reports for communicating the organization’s vision down to them and contextualizing it for their specific scope within the organization. This is reflected in what managers are first and foremost accountable to their reports for: for communicating a team charter; for communicating clear KPIs that affect the company’s vision; for enabling them with a healthy team structure, tools, resources and information they need to make good decisions regarding the KPIs; and for unblocking them and helping them work across the organization when necessary to affect those KPIs.
Those are all things that the manager is accountable to their reports for. In comparison, the manager acts only as a channel of accountability on behalf of the organization — reviewing performance, granting raises and promotions, and executing hiring/firing decisions — all based on whether or not people are contributing to the organization’s goals and working with the team as expected.
Where do we go from here?
So we’ve redefined what you are seeing in Org Charts, what that means in a modern organization and how you should be using it to communicate. Hopefully seeing what these can contribute even in modern, fast-changing organizations has convinced you that you do need one.
But even I’ll admit that maybe the traditional Org Chart just has cultural bias that’s built into it, and even reconfiguring our communication around WHAT the Org Chart is meant to show doesn’t solve all the problems I mentioned originally.
The “flat” organization is a great example, because the thing is, I don’t think an Org Chart CAN represent this. It has almost nothing to do with your structure, and everything to do with your culture — with what informs your decisions, how you structure the conversations around decisions, and how you communicate those decisions. You could have an organization with 20 layers, and if it does those things well, it will be more “flat” and fair and open to everyone’s ideas than an organization with zero layers that only listens to 3 or 4 people all the time and can’t communicate the structure for how it makes decisions.
But saying that being “flat” and inclusive has to do with the number of layers is confusing correlation with causation. Older organizations are more likely to have more layers, because they are bigger and have more people. And older organizations, for the time being, are also likely to be more top-down hierarchical, because we’ve only started playing with new models in the last 40 years~ish and only really succeeding and scaling with them in the last 20. And yeah, smaller organizations are likely to have less layers and feel more inclusive because consensus-based decision making can still work at sub-25 people. But I don’t know how a traditional waterfall Org Chart is ever going to capture that kind of political or cultural information.
Speaking of which, another thing that old-school Org Charts have lost when applied to modern organizations is the map of how communication works within the organization. Waterfall Org Charts did used to represent how communication worked in old hierarchical organizations, because teams didn’t laterally talk to each. But we do that all the time now in modern organizations because it would be too inefficient to ask your manager to talk to their fellow manager to talk to their people to go all the way back through that chain with the information. There’s just a ton more lateral communication happening across teams, and we’ve just totally lost that mapping of how does communication work at this company? I think it’s one of the reasons good communication seems to be one of the first things that breaks down for startups as they grow. It seems almost unavoidable.
I would love to see us try out new system and network mapping tools to maybe find a better way to communicate the structure of modern organizations. Networks are the most efficient form. Everything eventually evolves into networks. Cosmically, organically, socially, infrastructurally; eventually everything ends up in a nodes-and-branches-style network, and that’s probably what our organizations are moving towards as well. And the traditional Org Chart is definitely not going to handle that well, so we need to start thinking about a way that we can communicate modern organizational structures.
Maybe with a better way of communicating the structure of modern organizations, we would also be able to communicate more with less “training” required on what exactly the Org Chart means within our company. Or maybe we need more than 1 model to capture all the things that have been discussed here — a role-based model and a communication based model, for instance, that together would give you the complete picture of how the organization worked.
But whether it’s a redefinition of the old waterfall charts or some new modeling format we’ll come up with as we better understand today’s organizations, modeling the structure of your organization will remain an important tool for communicating and decision making for companies now and into the future.
