Organizational charts, also known as “org charts,” are practical business tools that show a company’s staffing hierarchy. Org charts, which are frequently depicted in a hierarchical format, aid in identifying who does what in an organization, how many people work there, and what the chain of command is. Internal staff, HR departments, stakeholders, and board members will find this information useful.
What is the purpose of an organization chart?
Organizational charts serve more than just as a visual representation of the relationships between different roles within an organization. The following are some additional reasons why an organization might create organizational charts:
Budgeting
Executives involved in budgeting can more easily create a budget that works for the organization by using an organizational chart. They will see every employee in the business, their various responsibilities, any equipment they might need to finish their tasks, and more. This is crucial when estimating healthcare costs, planning company outings and social gatherings, awarding raises, bonuses, and promotions, and allocating a department’s operating budget.
Staffing
Managers and human resources professionals can use organizational charts to help them determine what additional staffing requirements are required to ensure that the business runs as it should. These people can adjust or hire new associates to fill roles by looking at the chart and the various skills an employee has.
Motivating staff
Employees can use a company’s organizational chart to understand what their responsibilities are and who they report to, but they can also use it to learn more about their opportunities for advancement within the company. For instance, a marketing assistant with entry-level experience might realize that they can pursue careers as marketing specialists, social media marketers, digital marketing supervisors, marketing managers, and eventually marketing directors. If an employee wants to know that they have a career path within an organization, this is a great motivator for them.
Communicating
When all staff members have access to the organizational chart, communication is more efficient. Employees can view the organizational chart and know who to contact with any questions or concerns, resulting in increased productivity and success for the company. An employee will spend less time trying to find the right manager to ask for information or approval when the chain of command is clearly communicated.
Additionally, the organizational chart aids managers in better understanding how to communicate information to staff members. They’ll be able to see precisely who reports to them and how they should inform employees of company news or new policies.
What is an organizational chart?
An organizational chart shows the relationships between various employee roles within a company. An organizational chart can show all of the roles and responsibilities for the entire company or be broken down by department, showing the relationships between positions within units, depending on the size of the business. Employees and stakeholders are better able to understand the organizational hierarchy thanks to this graphical representation of the roles found within the company. Symbols such as lines that help illustrate the relationship between positions are included in the chart.
Examples of an organization chart
There are various organizational chart types that a company can use. Explore these three most popular types with examples for each:
Hierarchical structure
Businesses typically use a hierarchical structure to organize various levels of employees. The CEO and other executives are typically at the top of a hierarchy, which also includes middle management and entry-level employees.
In a company with a hierarchical structure, for instance, the organizational chart will show the chief executive officer (CEO) at the top, followed by other c-suite executives immediately below them who appear together on the same horizontal line. These executives frequently have subordinates reporting to them and may have titles like president or director. Senior managers, middle managers, supervisors, and categories of employees like specialists, associates, and assistants may be listed in that order below the executives list.
The hierarchical chart in a larger organization will likely be extensive to cover all of the departments and hierarchies within those departments that are present at the business.
Flat structure
Because middle management positions are typically nonexistent, there is less of a vertical hierarchy within a flat or horizontal chart. Companies that want to give their employees a certain amount of autonomy, creative control, and empowerment frequently use a flat organizational structure.
A small advertising agency, for instance, might use the flat structure for their organizational chart, with the CEO at the top, followed by a few managers and their respective staff members. In this case, there might be two managers—one in charge of traditional forms of advertising like billboards, magazines, and other signage, and the other in charge of online advertising on websites and social media pages. Their staff may consist of graphic designers, material coordinators, event staff, social media experts, videographers, and other professionals.
Matrix structure
Compared to the other two, a matrix organizational structure can be slightly more complex, but it also improves communication between departments and specific employees who might be working on a project together. Depending on the status updates they need to provide, one employee may report to multiple managers in a matrix structure.
A sales representative, for instance, will most likely report to a sales manager and go over their sales quota and any other important performance data. The same salesperson, however, might concentrate on selling credit card accounts in a given month and then be required to report any typical customer issues or inquiries to the director of lending.
