While the traditional organization chart can clearly show employees by departments, locations, or functional areas, it may not provide the level of detail needed to capture all the accountabilities, especially for larger organizations.
This is where the Functional Chart comes in.
Typically, org charts show business, division, or department heads with middle managers and subordinates underneath.
By comparison, a functional chart provides a clear view of the major functions within an organization, the primary roles for employees, and the areas of responsibility.
Have you ever heard someone say 'That’s not my job', or 'I thought you were doing that?'
Many jobs stall because nobody appears to be responsible for a specific task. It happens more frequently when there isn’t a clear division of duties and employees are unsure which responsibilities belong to them.
Whether you are trying to define accountability for your entire organization or on a project-by-project basis, making sure everyone understands their roles can help create more efficiency. Reducing confusion and defining expectations will help everyone make decisions more quickly, distribute the workload properly, and the actions they are responsible for completing.
Interactive demo: Functionly includes a built-in function and accountability library. You can customize and add your own functions, assigning them to roles and, ultimately, people within your organization.
Research from McKinsey shows that organizations that have clearly defined roles and built-in responsibility are 76% better than competitors in executing strategic goals.
One way to define roles is to use the RACI matrix, also called a 'Responsibility Assignment Matrix'.
RACI stands for:
Each RACI component helps define responsibilities.
RACI Matrix for the 'Lord of the Rings'
Credit Source: The Digital Project Manager
Here’s a business example...
Let’s say that Nora is creating a marketing plan designed to improve qualified leads for the sales team. While Nora is the responsible party, she has been assigned the task by her manager Laura (who she reports to).
Laura is ultimately accountable for the successful completion of the project and has decision-making authority about strategy.
Nora may consult with the sales team to get their provide input and ensure they are aligned with goals and objectives. When it’s time to implement the plan, those charged with the execution will need to be informed about what needs to be done.
Professional project managers have been using some form of the RACI matrix for years to define:
There are some pitfalls in using the RACI model, however. There needs to be a clear distinction between who is responsible and who is accountable.
In some cases, this may be the same person - so, no problem - but in many cases, there could be multiple people who are partly or wholly responsible or accountable. Without a clear definition of who does what, there can be confusion and poor outcomes.
When it comes to the consulting roles, your RACI matrix also needs to explain whether the person consulted is providing direction and information to complete the task or whether they will play a role in the decision-making.
In the example above, Nora discussed sales objectives with the team for inclusion in her plan. In some cases, sales managers could play a more active role in helping develop the market plan to produce more sales-qualified leads.
Also, no chart is going to fix a dysfunctional team. While RACI improves workflow and communication, it takes a cohesive group that understands their roles and executes seamlessly to maximize effectiveness.
A study done by the Harvard Business Review emphasized this point well. Examining 125,000 profiles across more than 1,000 companies, government agencies, and non-profits, they found that about 60% of employees felt their organizations were weak at execution.
Employees cited a lack of shared information, unclear decision-making responsibilities, and process structure as impediments to smooth operations.
To be effective, here are some of the rules you should follow when creating an functional chart using the RACI approach:
Functional Chart - simple overview
While an functional chart is an important tool in any business, there are some frameworks for management and execution that require an functional chart as part of their organization.
'EOS' and 'Scaling Up' are two of them.
EOS, the Entrepreneurial Operating System, is a set of concepts that more than 100,000 companies use to clarify and simplify their vision.
The EOS construct frames the organizational process using six components, including:
Within these components, accountability is essential to producing a strong functioning organization.
The Scaling Up platform helps companies that are growing rapidly to increase revenue. It focuses on four key disciplines to optimize and manage growth:
Both the execution and people phases call for clear accountability and division of responsibilities.
Your organization may not adopt a formal management and execution framework such as EOS or Scaling Up, but you may still benefit from an functional chart.
In some industries, clearly defined accountability is necessary for compliance. For example, companies governed by Sarbanes-Oxley (SOX) are required to define unambiguous roles, activities, and responsibilities as part of their IT framework. Compliance with SOX requires formal documentation of accountability.
Publicly traded companies or privately-held companies with compliance regulations may also require such documentation, whether it is used internally or externally.
In either case, an functional chart can help demonstrate that a company has an organizational framework to meet its goals, objectives, and compliance with regulations.
When companies are looking to bring in investors or seeking financing, a functional chart may be a necessary part of a business plan or prospectus.
TRY IT OUT: Functionly includes the ability to add accountabilities and responsibilities to your org chart (you can even select them from an inbuilt library). Go ahead and click into one of the marketing roles in this interactive template. For example, click on the "Head of Marketing" role to view that roles accountabilities and responsibilities.
At the core of creating a functional chart, you need to provide the answers to three specific questions:
If you can answer these three questions, you will be well on your way. It may help to use a functional chart template to develop your plan.
Whether you do or not, however, there are six steps you should follow to create and implement a basic functional chart.
The best place to start is by defining the structure first without selecting team members for roles. This helps people to focus on tasks and not people.
Create an org chart with titles, job descriptions, or positions listed and show lines of authority to represent reporting relationships. Alternatively, you may decide to create an org chart based on departments, product lines, or projects.
Within each box, list the top five or six responsibilities that each person is responsible for. Don’t be worried about creating more boxes than people, as individuals may occupy different boxes. You may need to create additional or different job descriptions based on your goals and objectives.
Only after you have completed the first two steps can you begin to plug in people’s names. There should only be one name in each box, but names may appear in several boxes.
Evaluate your organizational structure. You may find some people have an overwhelming number of tasks or responsibilities. You may find gaps where nobody is responsible or accountable for certain tasks.
This is a good time to step back and evaluate whether you are asking too much of people, don’t have enough people, don’t have the right people on board, or need to provide additional training and coaching.
Optimizing your structure can be complex. Can you combine tasks and responsibilities that have previously been assigned to multiple people into a single role? Can you reorganize responsibilities to improve efficiency? Do you need separate roles to have a clear line of responsibility and authority?
Optimizing your plan will take careful thought and discussion.
Once you are comfortable that you have created an efficient functional chart that will govern how your organization operates, it’s time to roll it out to the team.
Clear and consistent communication will be necessary to get buy-in. It’s important you articulate the reasons behind any changes. In other words, explain the why behind the what.
How you present the functoinal chart will make a big difference in whether your plan is embraced or discarded.
According to McKinsey, 70% of change programs fail to achieve their goals. It’s not that the plans themselves were flawed, but that employee resistance to change and a lack of management support became roadblocks to success.
As with any change management program, create a clear communications plan which has its own set of responsibilities and accountability measures.
A functional chart will help you plan for the future. As you identify areas where you need additional resources, it can outline a better job description as you seek to fill open spots.
As your business grows, a functional chart also helps show you where you need to add resources. For example, when you reach a certain threshold of customers, you know you will need to add additional customer support services. Knowing this now can help with your budgeting and forecasting when you are developing new product lines.
This will also help you with succession planning to identify the pathway for development. It helps identify the skills and experience needed to move into leadership positions within the organization.
Jonathan Smith of EOS offers these tips to build effective functional charts.
Building a functional chart is a team project. Best practices would include involving departments and team members in designing your functional chart to make sure you build a comprehensive plan. It also helps to get buy-in, especially if changes are needed to current operations.
Explain the goal, create the framework, and set deadlines for contributions.
How you divide responsibilities and accountability may not make everyone happy. You may wind up moving tasks or authority away from someone that doesn’t want to give it up or assigning it to someone that doesn’t want that role. That’s why it’s important to design by task and role and not people first.
Once you establish your needs, then you will need to plug in the people charged with carrying out your plan.
In many cases, people have multiple responsibilities across projects, especially in small companies or startups. It’s fine as long as everyone knows their responsibilities and who’s accountable for what, and team members aren’t overloaded with too many tasks.
You may need to go through multiple versions before you get it just right. Seek feedback to find gaps in planning and revise as needed.
Your final functional chart may look very different from the way your organization has operated in the past. It may take time for people to adapt to a new approach. It can disrupt processes and systems that worked before the plan was implemented, but the long-term benefits will outweigh any short-term confusion.
Your structure will need to evolve as your company grows. As you bring on more employees, expand your customer base, and bring new products or services into the mix, it can make your functional chart obsolete. Review your functional chart regularly and adjust it to make sure you are ready to handle growth.
One of the key ingredients of our intelligent org chart and work design tech solution at Functionly includes the ability to build an functiomal chart for your own company.
Use the online tool to allocate the right accountabilities to the right leaders and teams, design future states in a collaborative and safe environment. Align people's responsibilities, map everything that gets done and see any gaps or overlaps at a glance.
Without the right structures and organizational setup, your company outcomes could be severely restricted. Get this right, and the whole organization can take off.
Sound good? Why not try a free trial of Functionly today to get you started.
~~
Sources
Photo Credits
Title header photo: Photo by Lukas / Licensed under Pexels License