In general, most of startups have adopted flat organizational structure in the early years which turns out to be a good result. They expand three to four times faster than their competitors with complex layers of management. But when the young company grows to matured organization, the org chart still keeps the same. The owner of the company fails to update the org chart because he mistakenly considers the management system as an inhibitor to creativity and flexibility. This wrong decision finally pulls the rapid growing to a stop and ends the prosperity of the entire company. So what’s the right org chart starup should adopt to keep the success sustainable? It will be illustrated based on two stages that a company stays. In each stage, the company needs different org chart.
Org Chart with Informal Structure
Org chart with informal structure will be the best option the firm can have till the number of employee is less than 50. During that time, usually the funder or the CEO can handle multiple tasks and oversee every aspects of the operation and demand all the subordinates report to him so as to pursue great efficiency. Using a flatter organization allows staff to make decisions based on their expertise, experience, and the strength of their ideas, not their hierarchical position.
Hence great flexibility is needed at this stage. So the org chart should be like:
Org Chart with Formal Structure
The org chart with formal structure should be taken when startup has grown to be a firm more than 50 people. The increasing in personnel indicates the expansion of business range. The founders or the CEO cannot handle all the work activities and manage all the staff due to the limitation of specialization and energy. They have to be devoted to company’s strategy and development. Naturally, formal structure would be more suitable for the long-term development and flourishment. More layers of management are required and the layout of the entire company can be more complex.
However this management style might lead to creation of bureaucratic procedures that deter coordination and collaboration. In avoidance of this bad hierarchical rank, you should describe individual authority, roles, and responsibilities clearly and let this layer of management less than 4.
The org chart with formal structure: