Project Management

Are Organization Charts Still Useful?

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By: Lynda Bourne.

Has agile killed the organization chart? The concept of business management evolved with the development of factories during the early days of the Industrial Revolution. Initially, factories followed the same system as pre-industrialized enterprises where the “Lord of the Manor”/owner made all of the significant decisions and told others what to do. But this straightforward command-and-control process was limited by the capacity of the owner to stay on top of the flow of information and decisions needed.

As organizations grew larger and more complex, the delegation of authority became necessary—but initially appears to have been very ad hoc and dependent on personalities. But as the concept of an organization evolved in the 19th century, management structures became more formalized—and one of the early tools used to demonstrate the management hierarchy, and the division of labor, was an organization chart. The example below is from 1917:

This view of an organization give rise to concepts such as departmentalization, chain of command, span of control, centralization, work specialization and formalization. The business appears well organized (at least on paper), but is not very adaptive.

Traditional project management grew out of business management, and uses the organization breakdown structure (OBS) linked to the work breakdown structure (WBS) to define the person responsible for each element of the work. The OBS fulfils the same function as an organization chart in general business, defining the management hierarchy and reporting lines within the project or program.

But is this type of thinking useful in today’s flexible working environment? In one respect, knowing who is going to be responsible for delivering each element of the project and ensuring their work integrates with the other parts of the project is important, as is the need to balance the delegated levels of authority and responsibility with the capability of the assigned person.

The OBS is also useful for informing the people doing work who they need to keep informed of progress, issues and the completion of the task. These concepts are central to the way earned value management is designed with the management cells above becoming control accounts.

But does the effective management of human resources need a hierarchy, or can distributed responsibility work as effectively and more dynamically? There are many success stories built around self-organizing teams, cross-functional teams, and agile ways of working. And in business, matrix structures are probably more common than the hierarchic structure depicted by an organization chart.

The organization chart has been around for a very long time, but does the type of structure and management theories built around the concept of a management hierarchy really help at the project and program level when confronted with “alien” concepts such as self-organizing teams and agile? The two questions posed for discussion are:

  1. Do you think the OBS is useful, and is something similar used in your project or organization?
  2. What options are available—or need inventing—to replace the OBS in an agile, self-organizing workplace?
Posted by Lynda Bourne on: July 27, 2021 11:34 PM | Permalink

Comments (7)

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Dear Lynda
The theme that brought to our reflection and debate is very interesting.
Thank you for sharing, framing and asking questions.
One of the most interesting books I've read on the topic was "Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness" by Frederic Laloux
We found the answers to your questions.

Thanks Luis - I will add to my reading list :-)

Dear Lynda
I also had the opportunity to watch some videos about another approach to changing the structure of organizations: Holacracy - A Radical New Approach to Management - Brian Robertson

Thanks Luis for your comments And sharing useful material to think about this interesting topic. Reading how millenials are moving the concept of structured Organization, i feel / Think my Organization is having exactly the same question on how having a better collaboration within dpts.

Thanks for sharing.

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