What Your Org Chart Reveals About the Health of Your Business: OrgChart CEO Tom McCarty

Tom McCarty (00:00)

This is one of the questions I get asked the most is like, hey, how should we be thinking about workforce planning now in light of AI? And look, as we're talking about workforce planning, you know, I think sometimes we think that this is all just larger organizations, but if you have 50 or 60 or 70 people and you're not thinking about what your team needs to look like in three years and over the next few years, like, you need to be, right? Like, because it's changing rapidly.

Announcer (00:29)

Welcome to THRIVE, a Paychex Business Podcast. Your blueprint for never navigating everything from people to policies to profits. And now your host, Gene Marks.

Gene Marks (00:39)

Hey, everybody, it's Gene Marks. And welcome to another edition of the Paychex THRIVE podcast. Very, very happy that you are joining us today. I am speaking today with Tom McCarty, who is the CEO of OrgChart, a Paychex partner and a platform that provides a very, very important service for businesses, which is allowing them to create org charts for their companies. If you don't have an org chart for your company, it's definitely something that you want to have. So, first of all, Tom, all the way from Denver, thank you very much for speaking with me today. I'm glad you took the time.

Tom McCarty (01:10)

Yeah, thanks so much, Gene. It's a pleasure to be on and looking forward to our discussion.

Gene Marks (01:14)

Yeah, you know, org charts, we were just talking before we started recording about the importance of having an org chart in your business. And I just have to say I was telling you the story. I have a client of mine in, you know, in Texas. I have like, Tom, like a couple dozen times a year, I do a lot of speaking, I do a lot of writing, and then people ask me to come and visit their companies and make recommendations. I do some consulting work. Right. I'm a CPA, by the way. So, it's, you know, so... Nobody has org charts, you know, and the people that are like, you know, asking me to visit, you know, they're. qualified candidates. I mean, this is like a, you know, these are companies that have 100, 200, sometimes 5, 600 people. And, you know, they've got like a rudimentary kind of thing built on Excel, but they don't, they don't have anything formalized, and it kind of blows my mind. So, I've got my thoughts on the matter, but I mean, really, people are not listening to hear me. Let's hear your thoughts. You know, tell me about why, I mean, you know, why are org charts so important? And how does your company play into helping companies create org charts for themselves?

Tom McCarty (02:19)

You know, I think that it comes down to, it's like, hey, look at almost any company in the world, and like, where are we making our biggest investment, right? Like, well, you know, like where are we spending the most money as a company, and it's our people. And you start to think about, well, okay, well, how are you doing on that? Like, how are you, how are you measuring yourself? How are you thinking about where you're deploying those resources, how they're structured, the work that they're doing? And like that comes down to your organizational structure. And you don't really connect the dots and see your team and see the way things work by looking at a spreadsheet. Like, you just, you just don't. And there's a reason we've always had organizational charts and structures. And when you're trying to explain your team and your company, and you use these org charts to someone outside the company because it's the most logical representation of how your team is structured and done. But we need to be using them more internally, and we need to be thinking about different lenses of which we look at those org charts, right? Not just the name, title, and reporting structure, but, you know, who are you? What's the role you do, what's the skills you have, you know, what's the budget, the department, the contractor versus full-time status, or the skills that you might have? Are you a critical skill or a key talent indicator? These are all different lenses you can put on those charts to like really look at how well you're structured, how the work is getting done, and if there's opportunities for improvements within that environment.

Gene Marks (03:48)

You know, I, all of that is great, and you're absolutely right. Some other reasons why I think org charts are so important is that it gives a path for advancement for an employee, you know? I mean I have another client who has a pretty good org chart but, and he's like, they, they're like a manufacturer and they have like production workers, and when they hire people, you know, there's, you know, there's, there's assistant production, you know, there's staff production, there's senior production, there's manager production. And when, and they all come commensurate with like, you know, increases in hourly pay and other benefits. But when they, when they hire somebody, they show them the org chart right away and they're like, this is your path to succeed. Is that, I mean, assuming it's a big benefit, right?

Tom McCarty (04:32)

Yeah, no, absolutely. I mean, you know, transparency of the organization, and like, where do you sit? Where could you go? Not just that, too, but like, where does someone else sit and what are they working on? And so, like, it's, yes, you can see your path. You can see the different places that you could end up in the organization. Like, if you just assume that path is vertical and you're like, okay, well, my next role is my manager's role. And then their role. It's more than that, too, though. Like, well, I'm really curious about what's happening in the marketing department. You can kind of see the roles and the opportunities that sit in there, too. So, yeah, absolutely, transparency, where collaboration and work overlap, all of that can come to life when you actually have a good visualization of your org.

Gene Marks (05:16)

I'll also ask you to comment on this comment as well. We have a lot of companies, and by the way, that's been in the news of late, yet. This goes in waves about the whole silver tsunami, you know, and how all business owners are getting older and looking for succession plans and exit plans and all that. I mean, talk to me a little bit like, about the value that this provides to a company. I mean, when you're looking to sell your company or if you want to, you know, say you have private equity that's interested in you or an investor that's interested, or another company. My experience is when there's a potential buyer coming in that knows what they're doing, one of the first things they ask for is an org chart. Like they...

Tom McCarty (05:54)

Most definitely. Yeah, yeah, yeah. And they're not just going to want to just see the org chart. They want to know about each person on that chart. They're going to know about the role they do. How committed are they? Are they a flight risk? Are they a key talent? Like, what's the, like they want to understand that. Right, like, because they're not just buying your P&L, right? Like that, P&L happens because of the people in the company and the way that you execute. So, no, absolutely. A buyer, whether it's private equity or whether it's, you know, someone, you know, that's wanting to buy it, to run it just like you have been, yeah, they're gonna, they're gonna absolutely want to see it. It'll be one of the first things they look at, and they're going to want to have you take them through it and talk through your organization, and the team, and the people in the company.

Gene Marks (06:40)

And if you don't have one, not only is, you know, a potential buyer is missing out, but I don't know, it just doesn't give a good perception. I mean, you know, I have clients that don't have org charts or the org charts aren't very good. And a potential buyer is like, what kind of company are we buying here? I mean, you don't have an org chart.

Tom McCarty (06:58)

Yeah. The more buttoned up and documented and disciplined you are in all aspects, the better your valuation ends up being, the better your outcome ends up being in situations like that.

Gene Marks (07:08)

Who's in charge of this at a company? Where does the responsibility usually lay?

Tom McCarty (07:13)

You know, it varies by size. You know, what we find is once you start getting into, like, organizations of like 100 people, which, you know, you generally have an HR professional working in your team at that point. Right? Oftentimes, I think, especially in the U.S., once you're north of 50, you really need HR in your organization and someone kind of helping to pay attention to the health of the organization and all the compliance things you need to be doing, and like that. And it generally falls on HR. Like, the first person you're going to ask for is like, hey, it's people data. Right? So, you're generally coming to your HR team to do it. Sometimes, you know, like in large organizations, executive assistants might be getting asked to do that, but what we find is, you know, probably well over 90% of the time, it's HR professionals. It's someone in the HR department, and then they're going and manually creating that in PowerPoint or Visio or Lucid or just saying, we don't have it, right?

Gene Marks (08:07)

You know, when you have it, and you give that responsibility to HR, it's like this first step that then drives so many other things. Every position obviously has their title. There's compensation and compensation benchmarking that needs to be done. You want to start with where people are in the pecking order on an org chart. Same thing with job description. I was just talking with an attorney. I wrote a piece just recently for the Philly Inquirer about discrimination, you know, and how to avoid it. And this attorney was saying, he's a labor attorney, said, if you really want to avoid discrimination, one of the biggest steps you want to take is make sure you've got really good, detailed job descriptions for every single job in the company. So if somebody isn't, you know, qualified for a job and you turn them down for the job, you, you know, you reduce the chance of being sued because of it. Because they're, you can you show them the job description. You're like, you can't, you know, you're not, you know, you won't be able to fulfill the requirements of this job. But like, even that ties into having an org chart because each title and each level needs to have their own. It just drives everything from an HR perspective.

Tom McCarty (09:11)

Yeah, well, I mean, look, I mean, certainly there's, you know, things like compliance and you know, risk reduction for doing things like that. Absolutely. You should have really good job descriptions and really good kind of skills and work inventory, or job to be done inventory for each role. Because like, again, you're deciding to put a full-time person on that, and like, hey, what's the work that needs to be done? How do I know that that's the right role in the right place like that? Not just that I need that role, but I have that role on the right work and in the right place of the organization. And so, like, when I think about really great job descriptions and like the work you're doing, it's really around like organizational design and structure and like how do I optimize my team and how I'm investing and how I've structured everybody to make sure we're doing the right work to like be as successful as possible in our organization.

Gene Marks (10:01)

Got it. All right, let me give you a chance to do some selling here. I want to, you can tell me about OrgChart. I'd like to know about the platform. I want to know about your relationship with Paychex. This is a Paychex podcast. I want to know if you can share with me pricing the different kind of levels. Walk me through what your product does.

Tom McCarty (10:20)

Yeah. So we will connect into your HR data and any other HR data you might have. So obviously we partner with Paychex. We connect directly into Paychex. We're going to feed all of your data into our platform and what we're going to allow you to do is have that direct connection and you get to customize your org chart to look any way you want it to. Right? So, you may not just want name, title, reporting structure. You might also want their location. You might want the department that they're in. You might want how long they've been at the company. And I'll talk about some different lenses you can use when you're looking at your team. And then it's always connected. So, if you're ever needing to share that, one, we can give you an intranet link, so you can just publish it on your internal page. So it's always there. Your internal team can always instantly look and see it. You can export it to PowerPoint. It's going to come over as an object, not just an image. So, you can actually move it around if you need to move it to a PDF, if you need to submit it. So if you work in an area where you might need ISO or SOC compliance or SOX compliance or HIPAA compliance, all of those require org charts in your compliance packages, right? We can export them in the format you need. And so, we allow you to always have that real-time. Somebody changes roles the next day, the data feed is instant with Paychex to us, and you just click refresh and export it again, and you've got your accurate one. No more ever manually drawing and creating any of these things again. And so that gives you sharp visibility into your organization, but then it will also let you put it more insights in. So maybe you've got, you're planning your budget for next year, and you have a budget roll-up. So, you have your people, but the cost per roll, the total roll up of the total cost by department. Like you could see all of that in an org chart, and like you're really seeing where am I putting my dollars at work, right? You could have, instead of, you know, like a lot of times in HR, we'll do nine blocks, right? We all kind of know, like the nine-block indicators. So instead of just seeing names on a nine-block, maybe you're looking at the org chart, you see their nine-block grid, you see how long they've been enrolled, their last performance review, and whether or not they have a critical skill, right? Like that's a much richer conversation now about the team. And then the last thing we do is we allow you to start to design the future state of your organization. So, let's say you just acquired another small company, and you want, you need to bring them together and design what the team needs to look like now. You can do that in our software. Let's just say you're looking at where you're putting three more headcount next year. You can design that in the software. So any of your future scenario planning that you're doing, you can do. Which I think in today's world, especially with how much things are changing with AI, is like incredibly important to be intentional about looking at your organization and what you believe the future of that structure needs to look like.

Gene Marks (13:05)

That's great. How long has the company been around?

Tom McCarty (13:07)

So, we were founded in 2013, and our original product founder had been in the HR space, in the HR visualization space, for, you know, probably 15 years before that. So, we've been doing this for a long time, and yeah, we're certainly excited to continue helping Paychex customers as well, and you know, really solving this problem for them so that they're not having to manually do these again.

Gene Marks (13:35)

This should be an easy question, but it's an important question to ask because people I'm sure gonna are asking of you already and you know, you mentioned AI, so it's really a two-part question. The first question is like, hey, you know, an org chart, why can't I just go into ChatGPT and you know, upload this information, have ChatGPT create an org chart for me? So respond to that, first of all, like, why, you know, OrgChart, your product is, you know, is better, you know, it's more value than just using a standard AI chatbot right now?

Tom McCarty (14:07)

Absolutely. You know, well, first of all, it depends on what all you want to actually show, right? So, like I talked about doing a budget chart. You might not want to put all of your payroll data into that right now, and showing all of that. So we do have sensitive data where we have security compliance standards. We are, you know, SOC 2 and ISO and all of that good stuff. We are able to mirror the, you know, the security settings you use within Paychex. So only the right people are going to see the data that you want them to see. Right? So you may not want everyone in your organization to have access to what everybody makes, right? Or whatever someone's performance review was last year. So, we're dealing with pretty sensitive data. So, I think the security level of that. Also, it's just as you get into, look, if you have 10 people and you just want name and title, give it a shot, you're probably going to be okay if that's all you need, but if you're starting to get into this sensitive data, if you need to control who has what access to what, if you want to bring in larger sets of data and visualize that and structure it the way you want, that's where this really isn't what the, you know, like OpenAI or Claude is as great at on that today. So, right? And then, and then like the workflow of actually planning your future state, that's really where you're designing inside of our software as well, and not something you're going to do with the, with the AI.

Gene Marks (15:21)

Which brings me to, you know, step two. So clearly, I mean, you know, the AI chatbots, you know, in their current state, and I think for the foreseeable future, they are not a replacement for a tool like this. But I'm assuming you guys are leveraging AI. So talk to me a little bit about what you're doing now, what you're planning on doing.

Tom McCarty (15:38)

Yeah. So, I think there's two things. One, I'm going to start first with how we're helping people start to think about and plan for AI. And like, this is one of the questions I get asked the most is like, hey, how should we be thinking about workforce planning now in light of AI? And look, as we're talking about workforce planning, you know, I think sometimes we think that this is all just larger organizations, but if you have 50 or 60 or 70 people and you're not thinking about what your team needs to look like in three years and over the next few years, like, you need to be, right? Like, because it's changing rapidly. And so, you know, the building blocks of how you need to think about this are the same. It's like, you have to first start with, like, a clear understanding of your current state of your organization. And that's really what we do is bringing you the visibility and like, the clear lenses of what you need, which is more than just, you know, the names of the people that are there. Right? And then you need to think about, like, where are you going, and like, what's the goals that you have? What are the investments you want to make, and what does it need to look like to get there? And then that's when you start to, then design kind of, okay, well, here's the things that we think, the work that's being done that we think could be automated, and how we need to think about that. Here's the team structure that we think it needs to look like next year and then the next year. And well, do my, does my team have the skills yet? And like, how am I starting to think about that? How am I tracking those skills on that? Right? So, like, I firmly believe literally every company in the world should be thinking about how am I equipping my team in order to use AI tools in the future. Right? It is going to become, and you know, in the years ahead, as reflexive, instinctive as we use a computer or our cell phones or Google to search something. Right? Like, it is just going to be a standard tool that we use, and we need to be thinking about that. And that's part of that organizational design thing that we need to be doing.

Gene Marks (17:34)

Yeah, it is, it's definitely going to be a challenge for a lot of leaders to adapt to this stuff. It's good to see that these capabilities are coming out. But, you know, it's also just really important that people are, you know, when we take a step back, and we look at the people I feel are most successful in running their businesses, a lot of my clients and people I interview, they're just constantly obsessing about their teams, you know, and their people and their organization. I mean, they're, you know, they divide their time between products and customers, but then also just their organization. And I don't even know how you get started doing that without an org chart. It's funny, I remember, I read years ago, remember Jack Welch, he was like the CEO of GE. Yeah, the guy was like an iconic CEO, and he wrote in his book as well, when he, his autobiography. I mean, he, you know, succeeded at GE because he spent 20 years being sent to different divisions and subsidiaries of GE and then spending time there and basically hiring and firing people, moving people around in different roles. Like, he just had a genius for understanding where people would perform the best, you know? And if you read his book, he will reference the fact that he, you know, he asks for and demands org charts when he goes out to different places, because how else does he get started? You know, and he looks, you know, how an organization is organized, and it just makes changes to it. So, I think we've gotten that message across. It is definitely something that's really needed. How do you get started, though, Tom? You know, I mean, say, you know, when you go, when companies do reach out for you, first of all, the companies that come to you, at least they recognize there's a need. That's good news, you know?

Tom McCarty (19:08)

Yeah, yeah.

Gene Marks (19:08)

What do I do, like when I go to a client and they don't have it, they never heard of you, and we haven't talked about your pricing yet, which whatever you're willing to share would be great, but I mean, like, they're like, I don't know, you know, I can do this on a spreadsheet or whatever. Like, you know, it's like, what do I tell this client about the importance of building this and using like a platform like this? Yeah, you know, and how do they get started with it?

Tom McCarty (19:33)

Yeah, I mean, you know, obviously, a lot of people come to us because they're already trying to figure out how to do it. They're doing it manually, and we're like, we'll make your life easier, right? Like, we'll take this away from you. You know, if you're starting to get to a certain size, and let's say you're 30, 50, now you're getting towards 100, like, you really, you need to be doing this. It's not hard to get started, by the way. Like, just give us a call. We'll connect your data and we'll, you know, we can have you up and running very fast to where you actually see that. I think the next question, though, is, what do you start to do with that? Right? Like, so, like, actually producing this is easy. Like, that's the easy part. And it's easy because you can just, like, we'll automate all of that so you're not manually doing it, but now you need to start thinking about, okay, what are the, what do I need to be answering? What are the things I need to think about in how I use this? And it's really, like, look, like, take a moment to step back and look, if you, I don't care if you have 10 people or 50 people or 500 people, you are spending a lot of money as a percentage of your total spend on people. And are you being intentional about that? And are you really optimizing that? And are you thinking about what you need next year or next in six months? And, like, these are the things, and what we do is allow you to have this visual representation so you can see, sit in a room with your leaders, you can sit in a room with your managers, and you can do what Jack Welch did at a much larger level and say, okay, do I have the right people? Do I have the right people in the right places? Do they have the right skills for the work we need to do tomorrow? If they don't, what do I, what can I do differently, and how do I get them there? Right? Like, these are the things that you need to be thinking about. But to really have those conversations, you need this visual representation of your current state. Right? Best way to do that is, you know, just give us a call, and we can sync that up with your data, and you're off to the races on that part. But it's this intentional thought process, the evaluation of your team, the structure of the people, do I have the right people in the right places? That's the work you need to be doing. I don't want you to get started with doing what many have always done and manually creating this. I want you to get started on the conversations and the decision-making you need to do about your organization.

Gene Marks (21:44)

Makes sense. Tom, what does this cost? I mean, just round numbers. If I have a company that's got, say my company's got, you know, between 100, 200 employees, just as an average, you know, what would they expect to pay for?

Tom McCarty (21:59)

Yeah, depending on what all you're wanting, whether or not you have like multiple data sources, the complexity of your data, if you're just, you know, hey, I've got 100 employees, I've got everything on Paychex and I just need, like a clear representation of my reporting structure, you know, you're probably looking like around, you know, $1,300 a year or so, right? So, a little over $100 a month. If you're a couple hundred people and you want to do, and you really want to do your workforce planning, and you have three, maybe you've got three or four data sources, you're probably like looking at five, you know, $6,000 a year to be able to do this. So, it's, we try to keep it pretty light and pretty easy for relative to the size and the value you're going to get out of it.

Gene Marks (22:40)

All right, that is great. Tom, it's been a great conversation. I really appreciate you joining me. You know, the platform that you have is great. I'm glad that you're partnering with Paychex on this stuff. So, thank you very much for spending the time.

Tom McCarty (22:52)

Absolutely appreciate you having me. Yeah, look, appreciate it.

Gene Marks (22:55)

Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit payx.me/ThriveTopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR, payroll, benefits or insurance services, see how Paychex can help. Visit the resource hub at paychex.com/Worx. That's W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive. I'm your host, Gene Marks, and thanks for joining us. Till next time, take care.

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