Organizational charts, also known as an org chart or organogram, is essentially a diagram that offers organizations a simple way of defining their internal structure. They are used to illustrate business hierarchies, reporting structure, leadership structure, and can even include more information, such as contact details, for each individual.
Visually, organizational charts represent employees using a variety of different boxes, shapes, or colors. The relationships between each employee and different seniority levels will also be shown through hierarchies or connecting lines.
Organizational charts, while appearing simple, are an important part of your organization’s suite of company information. They offer a way to visually represent, organize, and manage different hierarchies (such as reporting, department, and leadership structure). Having a clear internal structure often brings efficiency to other areas of your business by improving communication and streamlining decision-making.
You might find that as your organization grows and evolves, so will your internal structure. The original relationships between employees might have diversified as your team and organizational capabilities expand - so having an organizational chart handy to refer back to will remove potential confusion among employees. This is especially true for smaller organizations that use less traditional leadership styles, or where employees contribute to various roles simultaneously.
Organizational charts are also a helpful tool for employees within an organization. For example, if you work in a large organization and regularly have new starters, org charts are a reference point that show different employees and department heads - highlighting who someone might need to communicate with when completing a specific task or project - enabling cross-functional collaboration and removing potential bottlenecks. For HR departments, organization charts give a quick view into employee headcounts and for which departments they need to focus recruitment efforts.
If you are beginning to build your business, there are many different organizational structures available to choose from. Or, on the other hand, you might have an established business but haven’t quite pinned down your internal structure. Your internal structure should not follow a one-size-fits-all approach and will depend on your business ethos and how you approach operations.
Functional top-down
The most traditional organizational structure, functional top-down begins at the ‘top’ of the business with the C-Suite. Employees are then coordinated by seniority levels as you look down the chart, and into their respective departments or functions.
Divisional organizational chart
Divisional charts organize employees into different business areas, such as product type, or geographies. Each function will then sit within their defined area. This type of structure is best for organizations who have distinct divisions who are independent from one another.
Matrix organizational chart
A little more complex than the other structures, matrix organizational charts divide employees into different teams or projects, led by both their project and line managers. Matrix structures are most common in organizations that are cross-functional and require more flexibility in their operations.
Flat organizational chart
Flat organizational structures, also known as flat management, are the most simple of the four. Often mostly used by smaller organizations, flat organizational charts do not usually highlight the different levels of management or seniority among employees.
Before creating your organizational chart, first identify your current internal structure and ultimate purpose of your org chart. This will guide how you visually build your company organizational chart. Keep in mind that, for your org chart to be effective, you must keep things simple. Org charts work best when they are not overly complex and can be understood at a glance.
Decide the visual elements of your organizational chart. Which shapes will you use to represent different employees, departments and level of seniority? Will you use a variety of colours to also highlight the differences? Having clear distinctions will make it easier for readers to quickly observe who is who within the chart without having to spend time reading about each individual employee.
Choose key information about employees to include within the chart. Make sure all the information you include is relevant and doesn’t add unnecessary complexity. This can include:
Once you’ve decided on what to include in your chart and have started building it, there’s a few smaller visual elements to consider.
There are many different organizational chart tools and templates available, both free and paid, for you to design an organizational chart.
These are just a few to look at. It might take some trial and error to find the software that works best for you.
Different industries will all have a slightly different take on how their org charts will look like. Remember, no two businesses are the exact same so what works for one business, in terms of structure, might not work exactly the same for another.
In manufacturing, organizations tend to follow a more traditional hierarchical structure. This is so employee roles are clearly defined to improve efficiencies and keep the production line and chain moving. Healthcare is better suited to a different organizational design as hospitals (as an example) work within their own departments. For tech and SaaS organizations, the reporting structure will likely be more complex - such as a matrix that provides more flexibility - as employees will need to collaborate and adapt more often on projects to achieve business goals.
There’s so many different ways of defining your business and reporting structure. Don’t be afraid to change direction if you’ve outgrown what was previously working for you. Having an organizational chart to refer back to will keep a sense of clarity throughout periods of change and growth.