Organisation chart: The pattern of network of relations between the various positions in an organisation as well as between the persons who hold those positions is referred to as "Organisation chart". Organisation data are often shown in the form of graphic chart.

Organisation charts are the important tool for providing information on managerial positions and relationships in an organisation.

Meaning of Organisation Chart

According to Harold Koontz and Cyril O' Donnell, "Every organisation can be charted, for a chart is nothing more than an indication of how departments are tied together along their principal lines of authority."

In the words of George R Terry, "A chart is a diagrammatical form which shows important aspects of an organisation including the major functions and their respective relationships, the channels of supervision, and the relative authority of each employee who is in charge of each respective function."

According to Louis A Allen, "The organisation chart is a graphic means of showing organisation data. Organisation charts are snap-shots; they show only the formal organisation and depict it for only a given moment in time."

In the word of J Batty, "An organisation chart is a diagrammatic representation of the framework or structure of an organisation."

According to Henry H Albens, "An organisation chart portrays managerial positions and relationships in a company or department unit."

From the above definitions, it is clear that an organisation chart is a diagrammatical form which shows important aspects of an organisation including the major functions and their respective relationships. It is a graphic portrayed of positions in the enterprise and of the formal lines of communication among them. It enables each executive and employee to understand his position in the organisation and to know to whom he is accountable. The organisation chart has the following characteristics:

  • It is a diagrammatical presentation
  • It shows principal lines of authority in the organisation
  • It shows the interplay of various functions and relationships
  • It indicates the channels of communication.

The organisation chart should not be confused with the organisation structure. An organization chart is merely a type of record showing the formal organisational relationships which management intends should prevail. It is, therefore, primarily a technique of presentation.

Advantages of Organisation Chart

  1. Organisation chart gives a clear picture of the organisation structure and the relationships that exist in an organisation.
  2. It shows at a glance the lines of authority and responsibility. From it, the individuals can see who their associates are, to whom they report and from whom they get instructions.
  3. By providing a detailed and clear picture of the authority relationships existing in an organisation, they help to avoid misunderstanding of jurisdictional problems and minimise organisational conflicts.
  4. It plays a significant part in organisation improvement by pointing out inconsistencies and deficiencies in certain relationships. When management sees how its organisation structure actually looks, it may discover some unintended relationships.
  5. With the help of an organisation chart, outsiders can easily know the persons whom they have to approach in connection with their work. This helps the outsiders to save their time and also to form a better opinion of the concern.
  6. By providing a clear picture of the lines of authority and responsibilities, they help to avoid overlapping and duplication of authority and secure unity of command.
  7. It serves as a valuable guide to the new personnel in understanding the organization and for their training.
  8. It provides a framework of personnel classification and evaluation systems. They show to the personnel what promotions they can expect, and what extra training is required for promotion to a higher position.

Disadvantages or Limitations of Organisation Chart

  1. Organisation chart shows only the formal relationships and fails to show the informal relations within the organisation. Informal relationships are also important in any organisation.
  2. Organisation charts, no doubt show the line of authority but they do not show the quantum of authority vested in different managerial positions. Thus, it is not bale to answer the questions like how much authority can be exercised by a particular executive, how far he is responsible for his functions and to what extent he is accountable.
  3. An organisation chart is incomplete. It is not possible to include all information affecting the organisation.
  4. It shows a static state of affairs and does not represent flexibility which usually exists in the structure of a dynamic organisation.
  5. When there is an organisation chart, the personnel in the organisation become too conscious of their responsibilities and boundary line. This injects rigidity and inflexibility into the organisation structure. Updating is not possible without disturbing the entire set-up.
  6. Organisation chart gives rise to a feeling of superiority and inferiority which causes conflicts in the organisation and affects team-spirit adversely.
  7. It does not show the relationships that actually exist in the organisation but shows only the "supposed to be" relationships.
  8. The organisation charts just display the organisation structure. They neither guarantee a good organisation structure nor good management.

Types of Organisation Chart

An organisation chart can be drawn in different forms. They are:

  • Top-to-down chart or vertical chart
  • Left-to-right chart or Horizontal chart
  • Circular chart.

Top-to-down chart or vertical chart: Most organisations use this type of chart which presents the different levels of organisation in the form of a pyramid with senior executive at the top of the chart and successive levels of management depicted vertically below that.

Top-to-down organisation chart

Top-to-down organisation chart

Left-to-right or Horizontal Chart: Horizontal charts which read from left to right are occasionally used. The pyramid lies horizontally instead of standing in the vertical position. The line of command proceeds horizontally from left to right showing top level at the left and each successive level extending to the right.

Horizontal organisation chart

Horizontal organisation chart

Circular Chart: In this chart, top positions are located in the centre of the concentric circle. Positions of successive echelons extend in all directions outward from the centre. Positions of equal status lie at the same distance from the centre on the same concentric circle.

Circular Organisational Chart

Circular Organisational Chart

Meaning of Organisation Manual

An organisation chart shows who has the authority over whom but does not state that extent of authority or the duties each person in the organisation is expected to perform. In order to supplement the information of this chart, an organisation may prepare a Manual or Management Guide. Manual sets down in the form of a book or booklet all the details of the organisation, its objectives and policies, authorities, functions, duties and responsibilities of each unit and all information relating thereto.

Organisation Manuals

A Organisation manual can be a useful instrument of management which more than justifies the amount of work and money involved in its compilation. Where a good manual is in use, each person can determine the responsibilities of his job and its proper relationship with other jobs in the organisation. Jurisdictional conflicts and overlapping can be avoided. A manual provides quick settlement of all misunderstandings. It relieves the manager from the botheration of repeating the same information time and again. It provides uniformity and consistency in the procedures and practises. If, a good organisation manual is in use, each personnel in the organisation can know the responsibilities of his job and its relationship with other jobs in the organisation. Good organisation manual has the following contents.

  1. Nature of the enterprise
  2. Objectives of the enterprise
  3. Policies of the management
  4. Job Descriptions
  5. Duties and responsibilities of various personnel
  6. Instructions relating to the performance of standard as well as non-standard jobs.

Types of Manuals

The different types of manuals are:

  1. Policy Manuals: It describes the overall limitations within which activities are to take place and thus reveals the broad courses of managerial action likely to take place under certain conditions.
  2. Operations Manual: It is prepared to inform the employees of established methods, procedures and standards of doing the various kinds of work.
  3. Organisation Manual: It explains the organisation, the duties and responsibilities of various departments, and their respective sub-divisions. Promotional charts may be included in the organisation manual which will show possible promotional lines throughout the entire organisation.
  4. Departmental Practice Manual: It deals in detail with the internal policies, organisation and procedures of one department.
  5. Rules and Regulations Manual: It gives information about he operating rules and employment regulations. It is a handbook of employment rules.

Advantages of Manuals

  1. It contains in writing all-important decisions relating to internal organisation of the enterprise.
  2. It avoids conflicts and overlapping of authority.
  3. It enables new employees to know the various procedure and practice in the shortest possible time.
  4. It enables quick decisions.
  5. It contains rules and regulations which employees must follow.

Disadvantages of Manual

  1. The preparation of manual is costly and time consuming and process.
  2. Manuals leave little scope of individual's initiative and direction.
  3. Manuals bring rigidity to the organisation.
  4. Manuals may put on record those relationships which no one would like to see exposed.

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Principles of Management and Organisational Behaviour Topics