While the organisation chart is an important tool of management, its existence alone does not ensure effectiveness of organisation because of the following limitations :
i) Organisation chart shows only the formal relationships and fails to show the informal relations within the organisations. In modern enterprises, informal relationships significantly effect the functioning of organisations.
ii) It shows the lines of authority, but it is notable to answer questions like the degree of authority that can be exercised by a particular executive, how far he is responsible for his functions, and to what extent he is accountable.
iii) It introduces rigidity in the relationships. Updating is not possible without disturbing the entire set up.
iv) Faulty organisation chart may cause confusion and misunderstanding among the organisational members. Moreover, it gives rise to a feeling of superiority and inferiority which causes conflicts in the organisation.
v) It does not show the relationships which actually exist in the organisation, but shows only the ‘supposed relationships’.
