Momentum Podcast: 150
Org Charts Are Essential
by Alex Charfen
There are some things in business that just work, organizational charts are one of them.
As an entrepreneur your organizational chart that shows you exactly what resources you have and how they're being applied. But it is much more than that.
Your org chart also shows you chain of command and the flow of communication.
Organizational charts help us reduce ambiguity and increased clarity through which we lead our team.
Recently there has been a movement to eliminate titles, organizational charts, hierarchy, structure, and bureaucracy of any kind in business.
This is BS.
You can try am run a business in this chaotic and haphazard way but it won't work. Growing a business is one of the most difficult things we do and helping the people in the business grow is essential.
Your org chart is your road map to success.
Full Audio Transcript
I'm Alex Charfen and this is The Momentum Podcast made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers, and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy, and make our greatest contribution.
Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny we define it. We don't understand defeat because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo we are the minority, the few who are willing to hallucinate there could be a better future, and instead of just daydreaming of what could be we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive human evolution, and we always will be.
Org charts are essential. I work with companies who have opportunities that will allow them to scale and grow fast. In fact, I don't work with just normal companies, I work with entrepreneurs who have created a massive opportunity and need help building the infrastructure, so that they can fulfill that opportunity on a consistent basis, and grow multimillion dollar companies. Does that sound like you? Does that that sounds like somewhere you want to be? In doing so, there are some things that are just essential, they are a must, you have to have them, and org charts are one of those things. The organizational chart, you've seen it. It's the chart with the CEO on top, and the cascade downwards that shows everyone in the company along with their titles, and shows you where they are in the organization now.
Before I go too far, I just want to say I realize there's this new regime of coaches, and consultants, and authors who say you don't need an org chart, who have this touchy-feely, new age, no hierarchy BS that you can just run a company without titles, and without an organizational chart, and you just make everybody do the right thing, and it all works the right away. I can tell you right now that if you're going to try, and grow a fast growth company in that manner without an org chart your dead. It's a joke. I challenge any one of those consultants to jump on a Zoom call on stage, on a broadcast with me and let's have it out because I'm sick and tired of people using these new joke strategies, trying to help people grow companies without a track record of success. The fact is, an organizational chart in a fast growth company is absolutely essential.
This morning I got a Boxer from one of my most incredible clients I've ever had in my career, and you've heard her name before if you listen to podcast, Layla Hormozi. She and Alex are growing a company so fast that if it was a car they'd be driving so quickly the paint would be peeling off. In July of last year, which is what? Only eight months ago they were doing about $2 million a year. Today, I think they're run rates in the 20s or $30 million a year. I haven't seen the most recent numbers. They've gone from three people total including the two of them in July, to 34 people this week. If you think you can have that type of growth without an org chart, with some no hierarchy, touchy-feely, no title situation you are smoked.
This morning, Layla left me a message and she said, "You know, it's just amazing that we've done all this, that we're bringing this many people on. We're growing departments, we're moving departments around, we're changing leadership roles, and we're doing it all at this really accelerated pace." My reply back to her was, "Layla, get your org chart printed, have it in front of you, and use it to help you lower ambiguity." Every CEO should have their org chart in front of them all of the time. Why? The org chart represents the human resources and the people you brought in the organization to help you grow it, and when you have it in front of you, and you understand where they all are, what departments they're in, who they report to, it lowers the ambiguity of growing a structure and an organization. It makes it easier to see where everyone is, it makes it easier to understand where all your resources are.
They're essential because here's what an org chart does for you, when you create your organizational chart the first thing it will show you is the balance of resources. You will see what leader has too many people, what leader doesn't have enough, who's leading most of the organization, what type of inequities are there in who's doing what. Do you have someone who's leading more than seven people? They're probably overwhelmed. Do you have someone who's not leaving enough people? You probably need to look at it. Is there a major department or division that doesn't have enough resources? Your org chart will show you. The time to create one of these is when you're small, when you add your fourth person, your fifth person, your sixth person keep looking at that org chart, and considering why you're adding people, where you're adding them, what type of resource will they be, what will they bring to the company?
The second thing you see from your org chart is the chain of command. You literally can see who reports to whom, and who should roll up issues to who, and who in your organization you're going to be talking to about what challenges, or issues, or people. You start seeing who's leading who, and it makes a clear map of how the chain of command flows, how your structure flows.
In addition to that, the third thing you get from an org chart is the communication flow. It's not just how command flows, it's not just how your authority flows, it's how communication flows in both directions. It shows you from leadership how communication flows through your organization, it also shows you how even the most entry-level person can push communication up in the organization. First to their manager, and then the manager above them, then the manager above them, and then possibly to you. Org charts are an essential part of growing a business that I feel like has almost been overlooked and forgotten.
There are so many goofball strategies out there that you should run from about how to do this. I was at an event last week and I had an entrepreneur pull up his org chart and it was in a mind map, which was a complete mess with lines going everywhere, no chain of command, crossover all over the place. I didn't even really understand why he had created the chart other than to confuse himself. When you're growing a fast growth business you need clarity, you need a clear chain of command, you need a clear flow of communication, and you have to quickly understand the balance of human resources that you have, the people you have because it's probably the most, or one of the most, highest line items you have is salaries, and what you're paying for people. The org chart is literally a map of exactly what you're paying for, what they're doing, what their position is in the organization, and how they're going to roll up through everybody else.
For you, if you're running a business and you have a few people, maybe even a few contractors start creating that org chart, put yourself at the top, and create an org chart in whatever program you want. You can use PowerPoint, you can use Google Slides, you can use something like Lucid Chart, but just do it. Even when you're small, even when you're first starting out creating the org chart and putting everybody who works for you on it, every contractor you have working for you on it, every resource or person that you have working within your organization whether it's direct or contract goes on the org chart, and what ends up happening is you actually see the structure you're creating. You start to get accustomed to it, you start to feel it better, you start to understand it at a higher level, and you start to grow it at a much faster pace because you understand it.
One of the hardest thing for us to do, as entrepreneurs, is ask for help, bring on more help, expose ourselves to having even more people in our company, and having more people who are there on a daily basis, and who we're responsible for. That can cause anxiety in even the best entrepreneurs. When we get clarity, when we remove the anxiety, when we put it down on paper, when we have it in front of us in black and white oftentimes it will cure the anxiety, make it go away, and increase the level of comfort, and more importantly the level of momentum you feel.
So if you don't have one yet make this a to-do list item for today, create your org chart, put it together, understand who's in your organization, who's managing what, how does communication flow. If you're like most entrepreneurs I've worked with and you already have a small team don't be surprised if by filling out your org chart today, and putting it in front of you have the immediate desire to make some changes. When entrepreneurs eliminate ambiguity, when we get clear we think at a different level, and we have a different level of insight as to what we really need.
An org chart even though it's a simple document is a game changer because when we understand the resources we have we can make decisions about how to apply them better, and we understand them at a different level, so don't let anyone tell you that you can lead a company without titles because it's a joke. Go back to 'Don't Give Away Titles,' the podcast I've already done, and don't let anyone tell you that there's any such thing as a company that can be led without an org chart. Go look at the organizations who have tried, they have not done well. Zappos with their [whole-archy 00:10:15], or the zero authority, zero org chart program has moved a lot of goods, but they've had trouble making any type of profitability.
Every time we see, I think it was called, [whole-ocracy 00:10:27], every time we see a social experiment like this in a business it's either incredibly expensive and it becomes what the business is known for. Then, they put most of their resources into just maintaining the awkward structure that they've made. Or it becomes what the business is known for, and the clear challenges that they have. For you, as an entrepreneur just use the system that works. For over 100 years org charts have told business owners exactly where their people are, and how they can best utilize them, support them, and help them grow. I know it will do exactly the same for you.
If you're ready to start growing your business, if you're ready to start expanding your org chart I want to help you to grow your business and take advantage of the opportunity you already created, and stop leaving business on the table. You are my ideal client if you have created an opportunity bigger than the infrastructure you have today will allow you to serve. You are my ideal client if you are ready to put the systems and structure in place to take your seven figure business, or your business that's approaching seven figures, and take it all the way to eight. You are my ideal client if you want to make a difference just as much as you want to make a contribution, and it is killing you that you can't do more, sell more, and put more out there right now because you know you could if only you had the right support.
Let me help you grow the structure around you, so you can grow the business of any size you want, and make your greatest contribution. Get in touch with us, and thanks for listening to the podcast.