Why you need a company org chart

If you already know what positions you have, why do you need a company org chart? Putting it all down on paper can come in handy for many reasons. Uses and benefits of creating an organizational chart include:

• Transparency: By creating a chart that all employees can access, you create transparency in how the jobs relate. It gives team members a better understanding of how they fit within the business’s structure.

• Career planning: Employees can use the organizational chart as a guide when planning their careers. They might be eyeing future promotions they want to pursue so they can start planning how to get there.

• Chain of command: When a staff member has an issue, they can see the chain of command and know who to go to. For example, if they have a problem they can’t resolve with their immediate supervisor, the company org chart can help them decide where to go for help.

• Restructuring: Having a clear view of your current framework helps you make changes to roles and relationships. You might realize you have a management problem. Looking at the chart helps you pinpoint the issues and decide how to change the way you arrange people and departments.

• Dividing functions: You can use the chart to decide how to assign functions or duties. It can help you make logical changes to work duties based on how the positions work together.

• Hiring expectations: When hiring a new employee, you can use your organizational chart to help identify key qualifications for candidates. This will help you write your job descriptions and evaluate your applicants.

• Reduce conflicts: If workers or departments are unclear on how they fit into the overall team, they could complete tasks incorrectly or go to the wrong people for help. Having the chart as a reference can reduce confusion and conflicts.

Types of organizational charts

Understanding the types of company org charts helps you decide which one will work best for your needs. The following options are common methods:

1. Hierarchical organizational chart

Also referred to as top-down or vertical, this style is the traditional method of depicting a hierarchy of employees. The top of the chart lists the C-suite executive team members who make up the leadership team.

Below them, you find the next layer of leadership, which includes directors and managers. The remaining, non-managerial employees fill in the chart vertically. You loosely end up with a pyramid shape, with direct reports branching off below their superiors.

2. Flat organizational chart

A flat organizational chart, sometimes called a horizontal chart, represents a team with very little middle management. This type of business has a few distinct levels, but most people fall within those levels and have a similar amount of power. It’s often more casual, with each team member taking full ownership of their responsibilities and decision-making.

3. Matrix organizational chart

You can think of a matrix organizational chart as a combination of a horizontal and vertical chart. However, it’s more complex, illustrating in-depth relationships between employees.

This style still uses a hierarchical arrangement, but it also groups people by departments or shared skill sets. Use this method when you have team members who report to multiple managers. It can depict those various relationships to highlight how the different departments and team members work together.

What to include in an organizational chart

Your company org chart is an internal resource that helps you understand the business structure better. That means you can include as much or as little information as you want. Consider what would be helpful when making decisions and using the chart. Details to add to the chart include:

• Position name

• Person currently filling that role

• Lines to indicate relationships

• Contact information for each position

• Backup staff when the employee isn’t available

• Start dates or length of time in the position

• Brief overview of the job duties

Tips for creating an organizational chart

How do you create an organizational chart? The following tips can help you get started:

• Choose your chart type: This gives you a basic outline for how you want to arrange your chart.

• Use a template: This makes it easy to plug in the names and details of each position on the payroll. Use organizational chart software for more flexibility and customization.

• Get input: Working with your managers and supervisors helps you gain a better sense of the current team structure. It’s possible that roles have changed over time and people now answer to different colleagues. Talking to the people in those departments helps improve accuracy.

• Keep it simple: Organizational charts should include enough detail to be useful, but you don’t want them to be too complicated or cluttered. Including too much information makes them difficult to read.

• Consider the visual aspects: Paying attention to spacing, box sizes and other design elements helps you create a professional-looking document that’s easy to read. Adding visual codes may also help make the chart easier to decipher. Use different types of lines to represent relationships, such as solid for direct reporting relationships and dotted for indirect.

• Make it accessible: Your management team might use the document more than anyone else, but other team members also benefit from seeing it. Placing it online and letting team members know about it gives them access to the data. Online versions allow for additional features, such as hyperlinks to more information or contact pages for employees.

FAQs about a company org chart

How often should you update your company org chart?

It’s a good idea to review your organizational chart at least once a year or any time you change your infrastructure. For example, if you add a new position, restructure your management team or cut positions, change the company org chart.

How do you choose the right type of organizational chart for your company?

Look at the overall framework of your business. If you have multiple levels of leadership with distinct supervisory duties, a traditional vertical chart is likely a good match. If everyone has similar levels of power, a horizontal approach better represents the relationships. Complex relationships could benefit from a matrix chart. Because an organizational chart is an internal document, you can arrange it in any way that works well for you.

What are the limitations of organizational charts?

It can be challenging to capture all the connections among your employees. Many departments collaborate in some aspects of their work but not others. Since the chart is a high-level view of your staff, it can over-simplify what happens within teams and departments. It might also fail to fully depict decision-making within the ranks. Individual contributors might have more power and influence over their own work than is depicted in the chart.