Organisation chart is the vital tool for providing information about organisational relationships. Such a chart is a diagrammatical form which shows the major functions and their respective relationships.
Organisation charts can be divided into:
1. Master Charts: The master chart shows the entire formal organisation structure.
2. Supplementary Charts: The supplementary chart shows details of relationships, authority and the duties within the prescribed area of a department or major component of the organisation.
There are three ways in which organisation chart can be prepared
1. Vertical or top - down chart
2. Horizontal or left to right chart
3. Circular Chart
In top down chart, highest position is shown at the top level followed by other positions in the hierarchy or management levels. Positions shown in the same horizontal level in the chart can usually be considered to have the same relative importance in the organisation.
An organisation chart can be drawn to show the highest to the lowest level reading from left to right. In the left to right chart, organisational levels are represented by vertical columns, the flow of authority from higher to lower levels being represented by movement from left to right
The various positions or functions of an organisation can be shown in circular form. In this arrangement, centre of circle represents the position of supreme authority. Functions and positions making up the organisation structure are clustered around this centre in such a way that the closer the position of function to the centre, the more important is the function. Positions of relative equal importance are located at the same distance from the centre, that is, on the same concentric circle. Lines joining the different blocks of functions or positions indicate the channels of formal authority, the same as in other arrangements.
Management Tool: Charts serve as tools by providing the broad picture of authority and responsibility relationships. Thus, they provide clarity in interactional pattern of the organisation.
Avoidance of Overlapping and Duplication: Charts are prepared after careful analysis of jobs and position requirements in the organisation. Primarily it ensures that all activities are covered properly by various positions and there is no duplication of activities. If there is any corrective action can be taken.
Secondly, it will bring out the organisational weakness (very easily), if any. If anything is hampering, measures can be taken to overcome that.
Solution of Organisational Conflicts:
Many conflicts of jurisdictional and procedural nature take place in the organisation either because of misunderstanding or because of lack of authority and responsibility. Such conflicts can be avoided with the help of organisation chart if it is prepared carefully.
Training Guides: Organisational chart can be used as an integral part of training. It prescribes what one is expected to do in the organisation. It can also act as the information centre. It is also helpful in pinpointing the type of training that a person should receive in order to perform his task properly in the organisation.
References for Outsiders: With clarity of authority and responsibility organisational chart serve as reference for outsiders in dealing with the organisation. Outsiders who are strangers to the organisation may know very easily with whom they have to interact for a particular work.
Organisational charts have their own limitations and have to be used with certain precaution
1. Rigidity: Organisational chart provides rigidity in the organisational functioning. Since charts are in written forms frequent changes that take place in an organisation can be reflected in the chart immediately and it becomes outdated.
2. Partial View: Organisational chart represents only limited view of the total organisation and its functioning. They show only official relationship and procedures. Besides formal relationship certain informal relationship also exists in an organisation which is not reflected in the chart.
3. Inappropriate Description: Organisation chart particularly provides description of authority. The exact quantum of authority and responsibility is not shown by the chart. It merely depicts the reporting relationships, who should report to whom. The organisation may equate a personnel officer with production manager in terms of reporting relationships but both may differ considerably in terms of salary, perquisites and authority.
4. Psychological Problems: Organisational chart may create psychological problems among individuals in the organisation. A chart puts people in superior or subordinate positions more prominently. Therefore a feeling of superiority or inferiority may develop which may work against the team spirit