The Importance of an Org Chart During Mergers and Acquisitions Activity

published on 10 January 2022
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When you're running your own company, you always have a lot to do. But when you merge or acquire another company, suddenly things get exponentially more complicated! That's where an org chart comes in. This blog post will discuss how using an org chart during mergers and acquisitions activity makes life easier for business owners like yourself.

What is an Org Chart?

An org chart is basically a diagram that shows the structure of an organization. It should include all relevant details about each position in the organization, including who they report to and their job responsibilities. 

The Importance of Organizational Structure in the Merger Process

It is essential to keep track of which employees share similar positions because this will give you insight into your company's culture. In addition, using an org chart during mergers and acquisitions activity makes the transition much easier for everyone involved.

People need structure to feel comfortable, especially when dealing with a major organizational change like this one. You can ensure that each employee feels secure by showing them where their department is located within the newly-formed organization. Displaying this information will also help you to keep track of who reports to whom. Having a clear structured approach can help improve company culture. Especially, in larger organizations.

On the other hand, if your staff are feeling unsure about their place in the new company or feel that they're being treated unfairly by management, then you'll end up with a lot of stress and burnout on your hands and even your team leaders may lose confidence in the management team. 

A third-party org chart app can help you quickly visualize or change your organization's structure when required, which is very helpful in an M&A situation.

In addition, if one of your companies runs on a different HR system than the other, you won't be able to make any changes until your IT department figures out how to merge them. Having an org chart app will allow you to quickly adjust your structure and easily communicate it with your employees and help them achieve success.

Why do Organizations do Mergers and Acquisitions?

There are many reasons why people within an organization might decide to start the M&A process. It can be a great way to increase efficiency, become more profitable, or even get the best talent.

Merging your companies will also allow you to combine resources like equipment and employees to save time and money while also making it possible for everyone to work together more efficiently.

How are Employees Affected by Mergers and Acquisitions?

Employees are affected by mergers and acquisitions in many ways. On the one hand, they might get excited about this new opportunity to work with other people and new management that share their interests or goals. On the other hand, it could also be a cause for concern because the collaboration may not work out as planned due to different company cultures.

Some people might feel like their position within the company is being threatened by this new collaboration. If they're not doing as well compared to their peers, they might be concerned about whether or not they'll have a job in the future. This sentiment can affect management and team members, alike.

It's natural to feel some anxiety due to this change, but management can help ease those feelings by using an Org Chart app like Huey during mergers and acquisitions activity. There's no way of knowing how the employees will react until you actually bring two companies together, so it's a good idea to keep an open mind and be ready for anything.

Why an Org Chart is one of the most Common Organizing Practices

Org charts are one of the most common organizing practices because they are so helpful. Organizational charts allow you to clearly see your company structure, which makes it easier for everyone to grasp how they fit into their department. This can give them a sense of security and make sure that there aren't any gaps between positions.

Management and employees can easily find each other within the company.

Keep key stakeholders informed and allow for successful planning.

Organizational Charts help foster taking a structured approach to the M&A process.

Types of Organizational Structure

There are many different types of organizational structures, but the most common ones include functional and matrix.

Functional organization is when employees share similar skills or responsibilities, which can be especially helpful for large teams that need to collaborate regularly.

On the other hand, people who work within a matrix structure will have multiple bosses who each supervise their own employees. This kind of structure is typically used to coordinate multiple projects, so it's great if your company does a lot of work in different disciplines. 

However, management should be wary about using this type of organizational chart because many potential issues can arise as a result. For example, if management is not careful with how much authority each leader has, then it can be easy for them to cross lines and abuse their power.

Tips For Creating a Good Organizational Chart

  • Make sure each employee is listed on the org chart. This way, if someone's name is there, it will be clear where they fit in within your organization.
  • Use titles that are relevant to everyone involved. If you're using acronyms or terms that people aren't familiar with, make sure to provide definitions. 
  • Keep your org chart up-to-date. It's not easy to do once you've made the initial draft, so be diligent in keeping it current by conducting routine audits and updating whenever necessary.

How Different Departments Benefit from Org Charts

Management - Having an organizational chart can help managers keep track of their employees, making it easier for them to make decisions about things like compensation.

Finance - The finance department can also benefit from creating an organizational chart because they'll be able to report on the company's structure more effectively. This makes it easier for them to provide information about things like revenue and expenses.

Marketing - Marketing teams often work with employees across multiple departments, which is why they should create a clear org chart that everyone can reference. It'll be easier for marketing employees to share resources and stay on the same page.

HR - The human resources department can also benefit from creating an org chart because it will be easier to track the company's structure and who is responsible for what. This makes it a lot more difficult to hide payroll changes or create fake job titles, which protects both your employees and your organization as a whole.

How Org Charts Benefit Different Organizations

Government -  Government organizations are known for their extensive use of organizational charts. The reason is that the government has many unions governed by strict rules and regulations, so they need to follow them through an org chart. This also makes it easier for them to manage professionals contracted by the federal, state or local government.

Nonprofit -  Nonprofits can also benefit from an org chart because they often work with multiple departments. An organizational chart will allow everyone to stay on the same page and share resources more effectively. This is especially important if your company relies on volunteers or interns because it will be easier for them to understand what they need to do.

Business - Businesses benefit from org charts, too, especially when you have a team that has multiple employees in different locations. You should make sure everyone knows exactly who reports to whom and how their responsibilities fit into the company's overall structure. 

Startups - Startups should create an organizational chart as soon as possible to prevent internal problems from arising in the future. It is better to lay out your org chart initially because it will be easier for everyone involved to understand how they fit into the company's structure.

It may be more difficult to make changes and get people on board with your new organizational chart if you wait too long.

Healthcare -  In a hospital, each department has different responsibilities and reporting structures. This is why it is so important for hospitals to have an org chart that everyone can reference when they need help or information from another department.

For example, the nursing team may be able to provide a lot of useful insight about patients' conditions, while the accounting team may know a lot about insurance coverage.

Technology - In a technology company, employees may be able to help people in different departments with their projects. This is why it's so crucial for tech companies to create an organizational chart that everyone can use. It'll make your firm run more smoothly and reduce the risk of creating duplicate efforts across teams.

Construction - Construction companies can benefit from org charts because they often work with subcontractors when the project is underway. Everyone needs to follow a clear structure to avoid gaps in communication or quality. This will ensure your company gets the best results possible and keep projects moving forward without any setbacks.

Final Words

Whether you are an employee or a business owner, it is important to understand how the organizational structure will change when your company goes through mergers and acquisitions.

The org charting process starts before any changes happen, with mapping out what departments need to be merged for them to function well after the merger. This way, there are no surprises that cause problems down the line.

If you want more information on this topic or need help putting together an effective organization chart, reach out! perfectly optimized content goes here!