What is a job hierarchy chart? 

An employee hierarchy chart is an organizational tool that outlines your company’s structure and shows the relationships between positions and departments. This visual representation helps everyone in the business see where they fit in and how they contribute to the company’s goals.

Components of a job hierarchy chart

Job hierarchy charts include all levels of management and staff, defining distinct responsibilities and roles. Here are the main components:

• Senior management: Executives such as the CEO, CFO and other C-suite officers who make strategic decisions for the company
• Middle management: Managers and directors who oversee departments and lead their teams to meet organizational goals
• Team Leader: Supervisors and team leaders who directly manage employees and day-to-day operations
• Employees: Staff members who carry out the business’s essential functions and report to lower-level managers or supervisors

Benefits of job level charts

Implementing a job hierarchy chart can bring significant benefits to your organization. Let’s look at the main advantages:

1. Clarifies roles and responsibilities

A job hierarchy chart provides an outline of who’s responsible for what tasks, reducing confusion and overlap in duties. Clarity helps employees better engage with their roles, leading to increased efficiency and productivity.

2. Improves communication

Defining reporting lines facilitates better communication across the organization at every level. Well-defined communication channels help prevent misunderstandings and make sure important information flows smoothly throughout the company.

3. Enhances accountability

When everyone knows their role and who they report to, it fosters a sense of accountability and task ownership. Employees may be more likely to take responsibility for their work, leading to higher quality outcomes.

4. Supports career development

A job hierarchy chart allows team members to see potential career paths within the organization. Visibility can motivate them to develop their skills and aspire to higher positions, promoting a culture of continuous improvement.

5. Boosts organizational efficiency

A well-structured hierarchy helps streamline decision-making processes and facilitates appropriate task delegation. Efficiency often leads to better resource management and faster achievement of business goals.

6. Facilitates strategic planning

With a clear organizational structure, leaders can effectively plan for the future. They can identify talent gaps, plan for succession and align teams with the company’s strategic objectives.

Types of employee hierarchies 

There are several types of organizational charts, each with advantages and disadvantages. Being aware of them helps you choose the best one for your organization.

1. Hierarchical organizational chart

A hierarchical organizational chart presents a traditional business structure with a top-down hierarchy. It’s the go-to structure for large corporations and many companies.

Companies with large-scale operations tend to use a hierarchical structure with a chain of command from the CEO down to employees. Clearly defined hierarchies support larger more complex company structures by helping them maintain consistency across numerous locations with similar roles.

In a hierarchical structure, decision-making is centralized and instructions flow from top to bottom. Centralized decision-making can underpin uniformity and control, but it may also slow down innovation and responsiveness to change.

Pros:

• Clear chain of command
• Easy to implement
• Defines specific roles and responsibilities

Cons:

• Can be inflexible
• May stifle creativity and innovation
• Communication can be slow due to the rigid structure

2. Matrix organizational chart

A matrix organizational chart shows employees reporting to multiple managers, typically a functional manager and a project manager. Organizations that work on various projects simultaneously favor this structure.

Companies with global operations and diverse product lines tend to use a matrix structure to manage their diverse product lines and global operations. Employees in one country or location report to product and geographical managers, facilitating collaboration and resource sharing.

The matrix structure can enhance flexibility and collaboration. However, managing dual reporting lines effectively requires open communication channels and conflict resolution mechanisms.

Pros:

• Encourages collaboration across departments
• Efficient use of resources
• Flexibility in staffing for projects

Cons:

• Can lead to confusion over reporting lines
• Potential for conflict between managers
• Requires strong communication skills

3. Flat organizational chart

A flat or horizontal organizational chart has few or no middle management levels between staff and executives. It’s common in smaller companies, startups and businesses that encourage creativity.

Companies may opt for a flat organizational structure to promote innovation and autonomy. This structure can provide employees with significant freedom to choose projects and contribute ideas.

Flat structures can foster a culture of empowerment and rapid decision-making but may struggle with scalability and role definitions as the company grows.

Pros:

• Encourages employee involvement in decision-making and creativity 
• Reduces overhead costs
• Promotes faster communication 

Cons:

• Can lead to role confusion
• May be less scalable as the organization grows
• Increased workload for managers and more responsibility for employees

4. Network organizational chart

A network organizational chart has a fluid, flexible structure and is often used by companies that outsource many functions or work with external partners.

A network organizational structure can help large companies remain agile and responsive to market trends. For example, a global sportswear company can use a network structure to outsource manufacturing while focusing on design and marketing in-house. 

Network structures offer agility and innovation, but they require robust coordination and management to maintain consistency in quality and performance.

Pros:

• High flexibility and adaptability
• Can quickly adjust to changes in the market
• Encourages innovation and collaboration

Cons:

• Can be complex to manage
• May lead to unclear roles and responsibilities
• Reliance on external partners can be risky

5. Divisional organizational chart

In a divisional structure, the company is divided into semi-autonomous divisions, each with resources and objectives. Large multinational corporations tend to prefer this structure.

For example, a company operating in a divisional structure would have divisions that focus on a product line, including pharmaceuticals, medical devices and consumer health products.

Divisional structures can enhance focus and accountability but require careful management to avoid silos and resource duplication.

Pros:

• Facilitates focus on specific markets or products
• Divisions can operate independently
• Easier to measure performance by division

Cons:

• Can create silos within the organization
• Duplication of resources across divisions
• Competition between divisions may arise

How to create a job hierarchy chart

Here’s a guide to get you started with your job hierarchy chart:

1. Identify core roles: Start by listing all the positions in your organization, from top-level management to entry-level employees. Include job titles and descriptions for clarity.
2. Define reporting relationships: Determine who reports to whom, creating a chain of command. This step is crucial for establishing clear communication lines and accountability.
3. Organize departments: Group roles by departments or functions to illustrate how different parts of the organization are connected. 
4. Use a visual tool: Employ a visual tool such as a flowchart or organizational chart software to create an easily understandable hierarchy chart. 
5. Review and update: Make sure your chart remains accurate and relevant by reviewing and updating it regularly as your organization grows or changes. Regular updates help keep everyone aligned with the organizational structure.

Tips for implementing your job hierarchy chart

Once you’ve created your job hierarchy chart, the next step is implementing it within your organization. Here are some tips:

• Communicate to employees: Share the completed job hierarchy chart with all employees so everyone understands the structure and their role within it. Use team meetings or internal communications to explain the chart.
• Integrate it into onboarding: Use the hierarchy chart as part of your onboarding process to help new hires grasp the organizational structure. 
• Leverage it for performance reviews: During performance reviews, use the hierarchy chart to discuss career progression and potential moves within the company. It can be an excellent tool for setting career goals and expectations.
• Use it for succession planning: The chart can be used to identify potential candidates for key positions, ensuring a smooth transition when vacancies occur. Succession planning supports business continuity and prepares the organization for future growth.
• Encourage feedback: Request feedback from your employees regarding the hierarchy chart and make adjustments as needed. This ensures that the chart remains a useful and accurate tool for everyone.

Organize your workforce for success

A properly implemented job hierarchy is more than just a tool—it’s a roadmap to help you enhance communication, accountability and efficiency within your company. Knowing about the types of organizational charts and their implications empowers you to choose the best structure for your business. Plus, regularly updating your job hierarchy chart will help your organization align with its goals while supporting continuous growth and development.