KPMC

Organization Chart & Stakeholder Network

Published on 2025-03-09

Introduction

One of the most critical tasks in project management is the creation of an Organization Chart and a Stakeholder Network. Particularly in EPC projects, where numerous individuals, corporations, and organizations are involved, various relationships—both within and outside the organization—affect project operations. These influences can stem from financial interests or even personal preferences.

Moreover, clearly defining authority and reporting lines within an organization is essential for smooth operations. Visualizing these elements through an organization chart is a fundamental responsibility of project management.

The Role and Proper Design of Organization Charts

The primary purpose of an organization chart is to clarify decision-making structures in project management. Typically, organization charts follow a pyramid structure, where the number of individuals decreases as the hierarchy ascends, while authority increases accordingly. The level of authority is usually defined by approval rights, often based on monetary thresholds.

Proper Allocation of Approval Rights

A structure where multiple layers exist without approval rights poses a significant risk. If upper management lacks decision-making authority, approvals are endlessly passed up the chain, causing severe delays. In such cases, subordinates bypass their direct supervisors and seek decisions from higher levels, leading to a loss of communication and trust within the organization.

Elon Musk once stated: "Contact the right person when needed. Do not waste time following unnecessary routes."

His statement is entirely valid—there is no need to follow inefficient reporting chains. However, when it comes to approvals, the correct hierarchical process must be followed, with decision-making authority assigned at appropriate levels.

Building a Stakeholder Network

A stakeholder network visualizes the relationships and commercial flows between organizations. Properly structuring these networks ensures efficient information flow, security, and risk mitigation.

Managing Communication Channels

When defining communication channels between organizations, it is best to limit them to a few key points of contact. This helps in:

• Ensuring clear and structured information flow
• Preventing data leaks
• Avoiding unintended agreements

However, limiting communication channels excessively within an organization can significantly reduce the speed, volume, and quality of communication. Overly controlled environments often lead to informal "backdoor" discussions and frustration among field personnel.

Establishing an Effective Communication System

To avoid such issues, the following measures should be implemented:

• Providing feedback to information providers
• Keeping stakeholders informed about actions taken
• Ensuring that designated personnel expedite responses
• Setting up separate channels for cross-organizational discussions with clear rules on decision-making authority

Guidelines for Creating Organization Charts

When designing an organization chart, simplicity is key. The following principles should be adhered to:

• Use a format that anyone can update
• Select software that is accessible to all relevant personnel
• Define and maintain a clear update schedule
• Ensure the organization chart is simple and easy to understand
• Clearly specify reporting lines and authority levels
• Announce and explain updates to stakeholders

Essential Components of an Organization Chart

Mandatory Information

• Name: Use full names, with phonetic guidance if necessary
• Position: Avoid abbreviations and use full titles
• Reporting Line: Clearly define who reports to whom

Optional Information

• Photo: Can be included if standardized (consistent background and attire)
• Contact Information: Consider data privacy policies before including phone numbers or emails
• Legend: Always include a key to ensure accurate interpretation

Key Considerations

When creating an organization chart, various opinions may arise, especially in dysfunctional organizations. Therefore, it is essential to maintain a clear rationale and adhere to a well-structured, transparent approach.

Conclusion

Properly designing and maintaining organization charts and stakeholder networks is vital for successful project management. By focusing on visibility, decision-making efficiency, and optimal information sharing, organizations can enhance project performance and prevent operational inefficiencies.