An organization chart (or org chart) is a visual diagram that illustrates the structure of an organization. It's like a family tree for your business, showing the hierarchy of roles, departments, and reporting relationships. Org charts are designed to help everyone understand who reports to whom, how teams are organized, and the overall structure of the company.
Organizational charts typically use boxes or shapes to represent different positions, with lines connecting them to indicate reporting relationships. The chart may also include names, titles, and sometimes even photos of the people in each role.
How do org charts work?
Organizational charts work by visually representing the hierarchical structure and relationships within an organization.
Basic components:
Boxes or shapes: Each box represents a role or position within the company.
Lines: Lines connect the boxes to show reporting relationships. A line from one box to another typically means that the person in the lower box reports to the person in the higher box.
Levels: The chart is usually organized in levels, with the most senior positions at the top (e.g., CEO, executives) and lower-level positions cascading down.
How the information is organized:
Hierarchy: The most common type is a hierarchical organizational chart, meaning it resembles a pyramid. The top-level shows the highest-ranking individuals, and each subsequent level displays their direct reports. This continues down to the most junior positions.
Departmental divisions: Organizational charts (especially in a matrix organizational chart) often group employees into departments or divisions (e.g., Marketing, Sales, Finance). These can be represented as separate branches or sections within the overall chart.
Additional information: Some organizational charts include more details within the boxes, such as names, titles, contact information, or even photos of the employees.
By looking at an org chart, you can quickly grasp the following:
Chain of command: Who reports to whom, and how authority flows within the organization.
Span of control: How many people each manager or supervisor is responsible for.
Departmental structure: How the company is divided into different functions or areas.
Overall hierarchy: The levels of seniority and the relative positions of different roles.
Types of org charts
While hierarchical charts are the most common, there are other types of organizational charts as well:
Matrix org chart: Used when employees report to multiple managers (e.g., in project-based organizations).
Flat org chart: Have fewer levels of middle management, promoting autonomy and collaboration (also called horizontal org chart).
Divisional org chart: Organized by product lines, geographic regions, or customer segments.
How do you create organizational charts?
There are several ways to create org charts, depending on your needs and resources:
1. Manual creation
Pen & paper/whiteboard: This is the simplest method for small teams or initial drafts. It's great for brainstorming and visualizing the structure before creating a formal chart.
Basic drawing software: Tools like Microsoft PowerPoint, Word, or even Google Drawings can be used to create basic org charts using shapes and lines.
2. Org chart software
There are numerous dedicated organizational chart software solutions available, both free and paid. These tools offer features like automatic layout, templates, data import, and collaboration features, making it easier to create and maintain complex org charts.
Many HR software platforms (e.g., BambooHR, Namely) include built-in org chart functionalities. These charts often integrate with employee data, making it easier to keep them up-to-date and access relevant information.
Steps to create an org chart:
Gather information: Collect information about all roles and reporting relationships within the organization. This may include names, titles, departments, and contact information.
Choose a format: Decide on the type of org chart that best suits your organization (hierarchical, matrix, flat, divisional).
Start with the top: Begin with the highest-ranking position (e.g., CEO) at the top of the chart.
Add direct reports: Add the boxes for their direct reports below, connecting them with lines.
Continue down the levels: Continue adding boxes and lines for each subsequent level of reporting, moving down the hierarchy.
Group by department: If applicable, group employees into departments or divisions using colors, shading, or separate sections of the chart.
Add details: Include names, titles, and any other relevant information within the boxes.
Review & refine: Double-check the accuracy of the chart and make any necessary adjustments.
Share & update: Share the org chart with employees and stakeholders. Make sure to update it regularly as the organization changes.
What are the benefits of organizational charts?
Org charts offer numerous benefits that contribute to the smooth functioning and success of organizations:
Clear roles & responsibilities: Org charts clearly define who reports to whom, helping employees understand their position and responsibilities within the company.
Easier onboarding: New employees can quickly grasp the company structure and identify their team members, enabling a smoother onboarding process.
Transparent communication: Org charts promote transparency by visually illustrating the company's hierarchy and communication channels. This can improve communication flow and reduce misunderstandings.
Streamlined workflows: By clarifying reporting lines, org charts help streamline workflows and decision-making processes. Employees know who to approach for approvals or information, reducing bottlenecks.
Resource allocation: Org charts can aid in resource allocation by identifying areas where additional support or personnel may be needed.
Identifying gaps: They can highlight potential gaps in the organizational structure, such as missing roles or redundancies, allowing for adjustments.
Visualizing growth: Org charts provide a visual representation of the company's growth trajectory. As the organization expands, the chart can be easily updated to reflect new hires and structural changes.
Succession planning: Org charts can be used to identify potential successors for key roles and plan for future leadership transitions.
Organizational design: They can aid in redesigning the organizational structure to optimize efficiency, collaboration, and innovation.
Increased employee engagement: When employees understand their place within the organization and how their work contributes to the bigger picture, it can boost morale and engagement.
Enhanced collaboration: Org charts can facilitate cross-functional collaboration by showing how different teams and departments are connected.
Improved accountability: Clear reporting lines promote accountability as employees know who they are responsible for and who is responsible for them.
What are the issues with org charts?
While org charts offer valuable insights into a company's structure, they are not without their limitations and challenges. Here are some common issues to be aware of:
Quickly becoming outdated: Organizations are dynamic, with roles, responsibilities, and reporting relationships constantly evolving. Org charts can quickly become outdated if not regularly maintained, leading to confusion and miscommunication.
Not reflecting informal structures: Org charts depict the formal hierarchy but often fail to capture the informal relationships and networks that exist within a company. These informal organizational structures can be critical for collaboration and decision-making, yet they remain invisible on a traditional org chart.
Oversimplification in complex organizations: In large or complex organizations, org charts can become overly complex and difficult to interpret. They may not fully capture the nuances of cross-functional teams, matrix reporting structures, or dotted-line relationships.
Focus on hierarchy over collaboration: Traditional org charts emphasize hierarchy and top-down authority, which may not reflect the collaborative nature of modern workplaces. They can inadvertently reinforce silos and discourage cross-functional communication.
Misrepresenting individual contributions: Org charts primarily focus on roles and titles, not necessarily the value or contributions of individual employees. This can lead to a misunderstanding of who holds the most influence or expertise within a team.
Potential for demotivation: Some employees may feel demotivated or undervalued if they perceive their position on the org structure as lower than their actual contribution or potential.
Resistance to change: Org charts can create a sense of rigidity, making it difficult to implement structural changes or reorganizations. Employees may resist changes that disrupt their established positions or reporting relationships.r
