Organizational Chart: What it is & Breakdown

Understanding how your organization is structured is often an informal initiative, but as you grow your business it’s important to formalize this structure in an organization chart. In this article, we will define what an organizational chart is, walk through why they’re important, and outline the different kinds of templates you can use.

What is an Organizational Chart?

An organizational chart, or org chart, is a template that displays the internal employee structure of a business. It is meant to highlight the individuals and positions within each part of the organization. These people are represented by boxes and contact information that can be used to easily identify them. Similar to a UML diagram, these elements are linked by elbowed lines.

The overall goal of an organizational chart is to create a visualization of the hierarchy and structure within an organization and how the various roles and departments within the business are structured.

An organizational chart is more than just a pretty template, however. Its goal is to both visualize the hierarchical relationship of people within an organization and display important information about their job positions and the overall work culture.

Despite their scope, org charts don’t have to be company-wide and can simply organize a single department or team. This is helpful especially during the hiring process to gain a clear understanding of the role that needs to be filled and how that job will relate to the department at large.

Organizational Chart Benefits

Organizational charts only really serve a single purpose, but within that narrow function, they can have a ton of benefits for your business. Here are some of the biggest benefits of integrating an organizational chart.

Document a Reporting Structure

Creating an org chart is easy when using a visual collaboration tool, and doing so makes business documentation much more transparent.

Creating a public organizational chart provides your employees with clear references as to where they stand in the organization, who their peers are, who their bosses are, and what their relationship is with everyone else. This documentation makes reporting and management much easier as everyone has the same shared understanding. As departments grow in size this becomes increasingly important because there will be an exponential number of relationships and roles to take note of.

Clarify the Hiring/Onboarding Process

One of the best ways to provide incoming employees with a clear overview of where they fit in the organization is by showing them an org chart. When you have a visual structure that shows everyone’s name, face, position, and contact details, the entire onboarding process becomes more human and everyone feels much more approachable. 

Provides a Clear Hierarchical Structure

Similar to the first point, having a documented structure of the business is important not only to display relationships but to translate ownership. When looking at the org chart, there is no question who is the owner of a certain product, who is the leader of the team, and who is the head of the department. Having these very clear guidelines makes taking responsibility much easier and provides every one a very clear endpoint for any reporting they need to do.

Encourages Workplace Collaboration

Creating an org chart on an online whiteboard means it doesn’t just have to be a fixed document, but it can change and maneuver based on people’s preferences. This can simply change the design and layout of the board or can reflect an organizational change. Either way, it encourages people to rethink the organizational structure and collaborate on one that is more efficient.

Different Types of Organizational Chart

The hierarchical model of an organization chart is very popular, but it isn’t the only one that exists. Here are three of the most popular org charts out there.

organizational chart types

Flat organizational chart

Flat org charts, or horizontal org charts, structure companies on the same plane, indicating increased equality between owners and members. There are two levels to this chart: administrators and workers. The goal of this is to remove the idea of “middle management” and have responsibility travel straight from an executive to a development team. In flat organizations, the workers are typically granted more responsibility and ownership over their work & decisions.

Matrix organizational chart

The matrix org chart is built to accommodate more complex business structures and especially ones that don’t fit a strict hierarchical model. An example of this would be a content creation business where each employee is creating content for a series of different managers in different locations. This chart is structured purposefully to provide freedom for workers to have multiple managers, and managers to have multiple workers.

Hierarchical organizational chart

The hierarchical org chart is the most familiar and the most common, and its structure is derived directly from the hierarchy of the business. Not every business will fit in this model, but considering that most hire positions and work towards a linear model of organization, this will usually do the trick.

Division organizational chart

The divisional chart is basically an org chart that is organized by additional factors besides hierarchy. This could be location, age, departments, interests, etc. It is essentially a way to subdivide a company into multiple different sections, each with its own unique elements.

Conclusion about organization chart

Org charts are not always necessary, especially for smaller businesses, but as your company grows they can provide some essential assets that are hard to come by. If you want to learn how to build your own org chart, make sure you check out Fresco.

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