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Co-CEOs...and Other Org Chart Disasters to Avoid

Your org chart should have one purpose and one purpose only--to help your team make good decisions. Here's where org charts go wrong.
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There are of course any number of contributing factors in the sad, sorry tale of the decline of RIM (known to most people by the name of their flagship product, the Blackberry).

It's a case study in market domination gone awry.

One straw in the wind was particularly telling, however, and that was trying to run the business with two co-CEO's. I first commented on this back in January 2012 when the experiment was eventually abandoned as a failure (too late by far, as it turned out).

The issue isn't the existence of co-CEO's per se. It's what the existence of those co-CEO's signify that is important for your business-- something seemingly so mundane that it is easy to miss its vital importance to your business.

And here is that boring, mundane, granular lesson for your business from RIM's demise: that for any organization to scale successfully, its org chart must be one thing, and one thing only: a machine for decision-making. Not a plaything for the CEO; not a repository for status, ego or politics; not a parking lot for burned out managers, incompetents or ineffectuals; not even a graphic representation of relative seniority: one thing only-- a machine for decision-making.

RIM lost the plot because its org chart stopped functioning as a machine for decision-making (the co-CEO's being a big red flag that this was so), and as a result, it made really, really bad decisions. As we've seen before, the secret to success in business is consistently making good decisions. Make sure your org chart is a machine for decision-making. Here are three steps to get you started:

1. Ensure absolute clarity of reporting.
Matrixed reporting (where someone has a line manager and a project manager, for example), is fine -- so long as the areas of responsibility of each manager are clearly delineated and there are no grey zones where no-one is exactly sure who is accountable for what.

Contrast this with fuzzy reporting, where someone has a dotted line to someone else (usually with the vaguest of defined roles on either side). A frequent example is where a founder/owner develops such a tight relationship with their CFO that no matter what the org chart says, the CFO has a preferred status compared to other senior executives. In this case, the lack of clarity causes dysfunctional decision-making, and often also demotivates those who have to work around the 'fuzz' to get their jobs done.

2. Separate status from role.
When a younger, smaller business is growing fast it's relatively easy to toss out titles as a way to give key people recognizable status in the organization or as a way to compensate them for not getting paid at market value ("I can't afford to give you a $30k raise this year, but how about we call you 'VP of Sales'?").

This works fine until the business grows to the point where it actually needs a VP of Sales-- a real one, not just someone with a title. Usually at this point, rather than facing the issue and letting a person know we need her to vacate the needed title, the org chart is rendered even more dysfunctional by letting them keep it, and inventing something new (like "VP of Customer Solutions" for the incoming new hire.

3. Get rid of what isn't working.
Your CFO is meant to be in charge of IT, but really it's being looked after by Jim in legal? Change your org chart to reflect that. You have three so-called regional sales VP's, but in reality one of them is managing the other two? Change your org chart.

Remember two things: (1) to be a machine for decision-making, your org chart needs to be living, true, real-- not a cold, fossilized parchment that no-one ever consults; and (2) there's no rule that says your org chart has to be baked in stone for a year, a quarter, or even a month. Stick it up on a company-wide wiki and start amending it as realities change. Far from being overwhelmed with a sense of constant change, you'll likely find your folks actually embrace your org chart as a real tool for making quality decisions--perhaps for the first time.

Download a free chapter from the author's WSJ best-seller, "Predictable Success: Getting Your Organization On the Growth Track - and Keeping It There" to learn more about making your org chart a machine for decision making.

Last updated: Aug 15, 2013




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