Organizational Structure

Why Org Charts Are So Important for Startups

By Iterate Team

Last updated: Feb 15, 2023

As your company begins to take root and grow, an org chart helps give your organization structure. As a result, employees in your company can be effectively managed, and newcomers can get a clear picture of what your organization is all about.

Employees in a startup often think that an org chart is something that can be put off until several years down the line. There’s only a handful of people working anyway, so why put a hierarchy in place for four team members?

However, as your company begins to take root and grow, an org chart helps give your organization structure. As a result, employees in your company can be effectively managed, and newcomers can get a clear picture of what your organization is all about.

Benefits of Org Charts for Startups

Creates an Efficient Company Structure from the Start

One of the best things you can do for your company is to create a healthy company structure right from the beginning. Even though your startup may be small in the beginning stages, making efficient processes now will pay off in the long run.

To learn more about organizational charts and what they accomplish, see here:

What Is an Organizational Chart?

Of course, startups don’t plan to employ only five people forever. Ideally, you would love to have hundreds of people working to take your company to new heights every year. Starting a company org chart for your startup makes it easier to add new employees to your chart as it grows. It’s much easier to add two people every few months to a chart than to add 130 people all at once.

To see how your startup company culture can benefit from an org chart, see here:

How an Org Chart Helps You Build a Better Company Culture

Streamlines the Hiring Process

Bringing on high-quality talent to your startup right from the start can set you up for success down the line. But hiring the right people isn’t that simple. So while top-notch workers aren’t going to show up on your doorstep, you can take steps to make your search easier.

If you want to learn more about how to weed through the masses and find good employees for your startup, give our hiring guide a read:

How to Find (and Hire) the Right Candidate for a Job

Org charts help startups streamline the hiring process in three ways:

  1. Attracts high-quality talent: When searching for jobs, talented people have the privilege of being picky. With an org chart that gives them all the information they need to know at first glance, you make it easy to see if they would be a good fit for your company.
  2. Shows advancement in the company: No one wants to remain stagnant forever. Org charts show potential candidates where they fit into your organization and lets them know how they can move up. Providing new hires with the opportunity of advancement can give your company an edge over others during a job hunt.
  3. Promotes equality: The amount of diversity and equality found in a company can directly affect the type of talent you attract. Your org chart gives current managers and future hires the chance to see your company in its most accurate form. Then, if needed, you can see areas where it may be necessary to improve diversity in the workplace.
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Improve Communication with Partners

It’s no secret that startups can be a bit chaotic at times. Startups often work with partners to grow and make a name for themselves within the industry early on. When working closely with outside partners, clear and consistent communication is a must. It may be okay to get back to your team member in three business days, but your partners may not understand.

With everyone in the company wearing ten hats at once, it can be difficult for partners to know who to contact for what. Having an org chart from the very beginning gives these partners insight into the inner workings of your company. In addition, it removes the need for digital games of tag to find out who they need to contact when moving forward with decisions.

Outlines Duties With the Organization

As mentioned earlier, startup members are forced to wear several hats throughout the workday to get their company up and running. Your COO may oversee the hiring process for new talent. The CEO could have been very hands-on with marketing campaigns.

Although it might have worked for some time, this method of handling duties isn’t sustainable. Instead, you’ll need to begin visibly outlining responsibilities within your organization to prevent dysfunction in the company. With an org chart, you can clear up any confusion within your startup by outlining a person’s titles and what they do within the company.

Defining responsibilities for each member of your company works to improve communication between team members and across departments.

Creates an Easy to Follow Growth Formula

As with any startup, the main goal is growth. So naturally, you want to scale up your business and see what you can achieve. However, before you do that, you need to have a growth formula in place.


A sudden round of funding from investors can suddenly catapult you into hiring dozens or even hundreds of new employees. However, new hires may be onboarded without an idea of where they fit into your ever-growing company without a growth formula in place. Time is money, so you don’t want to waste it by floundering without a concrete plan.

A startup org chart works as a cheat sheet for new talent during the onboarding process.

They’re equipped with information such as:

  • The current organizational structure
  • Who they report to
  • What team they belong to
  • What duties/responsibilities they have

By minimizing the number of questions they have at this time, you’ve empowered them to find their footing in your company.

To find out more information on why your organizational design matters, see our guide here:

Why Organizational Design Matters

Create an Org Chart for Your Startup

Creating an org chart for your startup is beneficial for your employees, partners, and future clients.

As your company grows and onboards more employees, you’ll find it easy to update your org chart due to the excellent foundation you’ve already put in place.

If you’re ready to see how your startup can benefit from an organizational chart, click here to sign up on The Org.

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