What Is an Organizational Chart?
An organizational chart is a diagram showing the structure of roles and responsibilities within an organization. It illustrates the relationships between employees, often establishing a chain of command in hierarchical companies.
Typically, each employee has an icon on the chart with their:
- Position in the company
- Contact information
These icons are then connected by lines, showing how every team member fits into the organization as a whole. It’s a lot like a family tree, just for a business instead of a family.
(Although, it doesn’t have to be a business — nonprofits and government organizations make good use of organizational charts, too.)
This layout makes it easy to understand how a company is structured by departments, teams, and ranks. At a glance, you can see who reports to whom, who’s on the same level, and who is ultimately responsible for various duties.
Organizational charts also are known as:
- Org charts
- Organization charts
- Hierarchy charts
No matter what you call it, it’s all the same thing.
What Are the Most Common Types of Org Charts?
Depending on how the organization is designed to operate, org charts can come in a few different models.
1. Hierarchical Org Charts
Hierarchical org charts are the most common type, since many companies and organizations have a complex hierarchy. These charts represent the levels of power within a company, usually with the CEO at the top, the executive team beneath them, then middle management, and so on down to the receptionist.
Hierarchical org charts are also used by governments to demonstrate the chain of command within their political system and military — just swap out the CEO for a president or general.
2. Flat Org Charts
Flat org charts, also known as horizontal org charts, are best suited to organizations that don’t have a lot of middle management or are owned by a group of equal partners. You’re most likely to see flat org charts used by small businesses, startups, and law firms.
With these kinds of organizations, there are very few levels of hierarchy, perhaps only one or two. Team members usually hold several roles, and almost everyone has a greater involvement in decision-making.
3. Matrix Org Charts
In some organizations, individuals work across multiple teams and under multiple managers.
For example, you might have a team of graphic designers who all report to the head of the graphic design department. But those same team members might also be involved in other projects headed by other project managers, meaning that they’re reporting to at least two people in the company.
For that kind of convoluted business structure, a matrix organizational chart is priceless.
What Are Organizational Charts Used For?
Organizational charts have several uses, each of which can make life a lot easier for everyone in a company. Here are a few of the areas where an org chart might be useful.
1. Promoting Transparency and Productivity
One of the primary benefits of an org chart is transparency. Employees and external professionals working across different departments or companies will be able to see the layout of the organization and find coworkers in business areas they aren’t familiar with.
That’s a surefire way to boost productivity.
For example, if someone in sales is trying to find a legal executive who works with their department, they may need to contact multiple people before they find the one they’re looking for. That will inevitably interrupt their workflow and take up time. With an organizational chart, the entire legal department is laid out with every employee’s specialties and contact details, meaning staff can go directly to the right person.
This is especially useful for employees who work:
- In large organizations
- In companies with multiple offices
And because org charts make reporting structures in a hierarchical organization clear, employees will always know who to report to.
Greater transparency is also helpful for any projects with multiple internal stakeholders. Not only can employees track down these stakeholders, but having a visual representation of the people and departments within a company can help employees recognize who might be a stakeholder in a particular piece of work. This reduces the chances of any stakeholders being forgotten.
2. Onboarding New Employees
The onboarding process for new employees can be slow. Learning your way around an office is hard enough, but keeping track of who’s who is another matter entirely. If the new hire doesn’t know (or can’t remember) who to talk to about something, they may end up wasting valuable time trying to figure it out.
Since organizational charts operate as a visual employee directory, it makes it easy for new hires to put names to faces and understand exactly who does what. At the click of a button, they can see who’s on their team, who they report to, and who they should contact with a specific question or need.
This is good news for any company, because they’ll be getting a more productive employee right from day one.
3. Strengthening Social Connections
It isn’t just new hires that can benefit from having their coworkers’ names, photos, and professional profiles at their fingertips. Even veterans at a company may struggle to recall who everyone is and what they do. That makes building team unity a real challenge.
Having an org chart handy to refresh them on the details of their coworkers will open better channels of communication.
Plus, org charts don’t have to be limited to professional information. There’s no rule saying a company can’t let employees include personal details, such as their families, interests, and backgrounds. A quick “about me” attached to each icon will go a long way to fostering deeper connections.
And the better employees know each other, the better they can work together.
4. Engaging Remote Employees
These days, more and more companies are hiring remote employees, a trend that has only increased since the COVID-19 pandemic. These remote employees may rarely set foot in an actual office, making it harder for them to feel like they’re truly part of a team.
This can create distance between colleagues and stunt productivity.
With an org chart, remote employees have easy access to their coworkers’ public information. They can see photos, look over profiles, and learn details about their colleagues that help them connect on a more personal level.
It isn’t quite the same as sharing an office, but it’s still a great way for companies to bring a virtual team together.
5. Giving Everyone a Better Understanding of Their Role
By providing a blueprint of an organization’s structure, every employee can see exactly how they fit into the grand scheme of things. Then, as the org chart evolves, they’ll know how their own skills are contributing to the success of their immediate team and ultimately driving the business’s growth.
Naturally, this will improve morale and create a deeper sense of purpose.
Studies have also shown that employees are much more motivated when they have a reliable path to promotion in their workplace. Org charts help there too.
A visual representation of the company’s hierarchy makes it easier for employees to see what positions they’re interested in and plan how to get there. Because of this, they’ll be more likely to diversify their skills and form stronger relationships with the teams that appeal to them.
6. Planning and Restructuring
Org charts are great for getting a firm grasp on how resources are currently allocated and how the overall strategy might be improved.
For example, an org chart can include an employee’s responsibilities, current workload, and upcoming projects. This helps managers assign tasks more efficiently and estimate deadlines with greater confidence.
Org charts are also useful for assessing areas that are under- or over-resourced.
By looking over an org chart, managers can spot inefficiencies or redundancies in the workforce, then solve them by rearranging personnel to put everyone’s talents to better use. They can also spot holes in the workforce that need to be filled through hiring initiatives.
And when it comes to a total restructure, merger, or acquisition, an org chart makes it much easier to plan out the new shape of the business. By showing every employee’s strengths and expertise, business leaders can make an informed decision on how they might fit into a new organizational structure.
7. Showing Off
Who doesn’t like to brag a little? Companies can use public org charts to show the world exactly how they’re put together and who works for them. This transparency is an excellent step in building credibility.
Plus, showing off impressive team members to potential clients and customers certainly can’t hurt.
Organizational Charts Bring Out the Best in Everyone
Having an org chart in place can make a world of difference for any company’s productivity, efficiency, and growth. By getting a transparent, bird’s-eye view of an organization’s structure, everyone wins — CEO, employee, and customer.
If you think an organizational chart could help you or your company, you can get started on creating your own org chart. We’ll guide you through the process and see to it that you get the full benefits an org chart has to offer.