PeopleOps Playbooks

The Ultimate Guide to Organizational Charts for Businesses

A good organizational chart can improve communication, decision-making, and efficiency in an organization. Understanding how to build a visual representation of your organization's structure, roles, and responsibilities is essential.
Samyak Ramteke
Samyak Ramteke
Content at Numans
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Organizational charts, or "org charts" as they are known today, have been around for centuries. The Roman empire maintained such charts detailing the hierarchy of the empire and the functions of dukes, burgraves, landgraves and other officials. In addition to establishing rank and authority, these charts gave common people and serving officials a sense of how communication was meant to flow within the empire. In this post, we examine how org charts are useful thousands of years later today. We also look at the different types of org charts and how they're meant to be used.

With all the different roles and responsibilities in a business, it can be hard to know where you fit in. But just like a detailed map can help you navigate a city, an organizational chart can help you understand the structure of a company. Organizational charts are especially important for large companies, where it can be difficult to keep track of who reports to whom. These charts are created by company leaders and show the hierarchy of the company, from the CEO down to the lowest-level employees.

In this blog post, we'll take a closer look at organizational charts, including what they are, why they're important, and some examples of different types of charts.

What is an Organizational Chart

An organizational chart is a diagram that visually conveys a company's internal structure by detailing the roles, responsibilities, and relationships between individuals within an entity. It is one way to visualize a bureaucracy.

In its simplest form, an organizational chart or "Org Chart" as most people like to call it, is a visual guide depicting the structure of a company. They:

  • Outline the internal structure and hierarchy within the firm.
  • Show how each function is connected and how leadership is organized.
  • Visualize the flow of power and control within the company.

Importance of organizational charts

Organizational charts are very important in a company. Here are some reasons why they are so important.

Understanding the organizational structure.

Organizational charts help employees understand the structure of the organization and their place within it. This can be especially helpful for new employees who are just starting out at the company. By looking at the chart, employees can quickly get an idea of the company's structure and how it works.

Streamlined accountability

Organizational charts can help to clarify roles and responsibilities within the company. Everyone in the company will have a clear understanding of who they report to and who they are responsible for. This can help to avoid confusion and ensure that everyone is on the same page.

Better Decision Making

Organizational charts can also be useful for decision-making purposes. By looking at the chart, managers can quickly and easily see who is responsible for what and make decisions accordingly. They can also identify potential areas for improvement within the company's structure and make adjustments to address any issues.

Increased communication

When everyone has a clear understanding of the company's structure and their place within it, they can communicate more effectively and work together more efficiently.

How to make an organizational chart

To create an org chart, you’ll need to gather team member information and decide how you’d like to build the chart. As you think about who reports to whom in your organization, you can start planning your org chart from the top down.

1. Define scope

Treat your organizational chart like any other project you work on. Defining the scope of your org chart will help ensure it clearly represents your team structure. The scope will determine the overall purpose of your organizational chart.

Ask yourself these questions to get started:

  • Will your org chart be a resource for team members to know who's who within the company?
  • Will you share your organizational chart with external stakeholders or partners?
  • Will you need multiple charts for different levels of the company?

Answering these questions from the start can help you gather the right information and map out your chart.

2. Gather information

The next step to making an organizational chart is to gather information. This is the most important step because you can't make a chart without the right information.

You can gather information by surveying individual team members through email or by working with your HR department.

You'll need up-to-date information about the people in your company, including employee names and their latest job titles.

You'll also need to understand reporting relationships throughout your company, like the hierarchy between managers and direct reports.

You might also want to gather headshots of your team for added personalization.

3. Decide how to build your chart

Deciding how to build your organizational chart is key, as different tools can make the process easier. Drawing it out by hand is not time-efficient and will make it hard to share, so consider using a tool. An editable PDF can save you time, as the template is pre-built with placeholders.

You can then easily share the PDF with the rest of your company.

Types of Organizational Charts

  • Functional charts
  • Hierarchical charts
  • Matrix charts
  • Horizontal charts
  • Network charts
  • Divisional charts
  • Hybrid charts

Functional charts

A functional organizational chart is a visual representation of a top-down company structure that splits the teams into various departments.

It groups together employees with similar skill sets under a separate umbrella.

Essentially, the C-suite is at the top, followed by organizational functions such as Finance, Sales, Marketing, HR, etc.

Each unit has a functional head.

For example, all marketers are grouped under the marketing head.

The leads of each function then report to a common manager who manages and integrates the efforts of these functions to create value for the customers.

Hierarchical charts

A hierarchical org chart is a representation of a company structure where every employee, except for the CEO, is subordinate to one other employee.

It shows the organization in slabs of power with the top row having the highest decision-making authority which wanes down the hierarchy. 

Most large organizations - biggest corporations and governments - can be represented through this chart type. They follow the vertical chain of command.

In this type of organizational structure, every employee has a clearly assigned supervisor or manager. People are grouped based on function, location, or the product/service they work on.

Hierarchical organizational charts will have multiple levels of management.

Matrix charts 

A matrix org chart is the diagrammatic representation of an organizational alignment in which reporting relationships are set up as a grid - a matrix in which employees can report to more than one department head.

It highlights the fact that the flow of information is not only vertical, like in a hierarchical structure, but horizontal too.

Essentially, reporting is aligned both under the project and functional verticals.

Matrix chart is especially useful when there are two lines of command - both vital and equally important to the organization’s way of functioning.

For example, a software engineer may be reporting to the engineering head and the product manager.

People with similar skills working on the same project/assignment are grouped together in teams.

Most often teams in a matrix have people reporting to multiple managers which can lead to more thought-through and discussed decisions.

At the same time, the chart can get complex if people report to more than two managers.

Horizontal charts

A horizontal organizational chart shows the alignment of an organization which is structured based on a process.

Each employee is associated with individual steps of a process that leads the company to a common goal in a sequential manner.

It is also known as the flat organizational chart. Each process is owned by a process manager to whom the team reports.

This chart type eliminates multiple middle management levels. 

It’s adopted by small companies or startups and cannot be embraced by bigger organizations as they have multiple processes that interact with each other.

Network charts 

Network org chart represents a slightly chaotic yet flexible structure that accommodates informal relationships and social networks within the workplace.

Organizations that are focused on growing rapidly, evolving exponentially in a constantly changing environment can be mapped through this chart.

This chart focuses on a system where people are empowered with autonomy, and leaders manage, facilitate, and coordinate all internal and external relationships.

These structures rely heavily on rapid communication and mutual trust in relationships.

Divisional charts

Divisional organizational charts, also known as market-based structures, represent a company divided into divisions, where each division operates as a standalone organization under the overall corporate umbrella.

This structure allows each division to stay focused on different market segments or geographical locations, delivering customized products tailored to particular user segments efficiently.

Divisions usually possess all the functioning departments they need, such as HR, marketing, and operations, and have extensive flexibility in decision-making.

Hybrid charts

Hybrid Organizational Charts blend the best features of functional and divisional structures into a resilient unified structure.

In a hybrid structure, employees are grouped across multiple departments driven by similar skills, tasks, or expertise even while working on different projects.

It represents a type of unity of functionalities across unique tasks/assignments.

For example, consider a hypothetical company adopting a hybrid structure.

The divisional structure may animate making and manufacturing leather permanently based on different kinds of animals therein.

Simultaneously, a functional structure could exist for each animal division with specific teams working on research, procurement, design, quality assessments, marketing, and customer support.

How to use an org chart

Organization charts are used in different ways by different organizations. But those who use modern org chart software can do more than they thought possible.

Here are a few ways org charts can benefit organizations today.

New Hire Onboarding

Onboarding new employees is often slow and painful. They need to learn the ropes, including who does what. This can be overwhelming and frustrating. 

An org chart can help. It shows new employees the company structure, who works where, and who they need to know. 

This can save time and help them get up to speed quickly.

Engaging Remote Employees

Today, more employees work remotely than ever before. This can make it difficult to feel connected to co-workers. 

Org charts can help by providing detailed employee information on mobile devices. This makes it easy to find and connect with co-workers on a personal level. 

Remote work doesn't have to mean being alone.

Increase Employee Productivity

Employees waste 2.5 hours per week searching for people and information. Org chart software helps people find who they need quickly and easily, without sending emails or interrupting others.

Improve Employee Happiness and Productivity

Studies show relationships and health are key to happiness. 70% of people say having friends at work is crucial to happiness. 

CEOs can help by providing a platform for employees to connect. Modern org charts can help with this by including personal info. 

This can lead to friendships and a happier workplace.

How Numans Automates Organizational Chart Creation

Creating an organizational chart in Numans is a breeze, and you don't have to lift a finger to maintain it.

Numans automatically creates your org chart based on who an employee reports to and also updates it real time, if someone joins or leaves the organisation.

This removes all dependencies, on slides, excel or figma, which require manual intervention everytime there is a change.

It includes everyone's name, team, and profile; all the information you need to undertake your employee engagement activities easily.

To update an organizational chart in Numans, simply add an employee using the following steps:

1. Go to the People tab and click Add Employee to add the basic details:

Add the basic details of the employee

2. Voila, it's done, you can now view the updated information in your org chart, without the need to maintain it separately:

Employee details once added, automatically reflect in the employee directory and org chart

3. That’s it! The organizational chart will be displayed with every detail you need

A Numans Org Chart

Click on any employee to view their entire team, a single click also enables you to change the reporting manager, moving them under the manager instantly.

Click on any manager to view their entire team

Numans also has an employee view which allows the employees to also see the organization chart. 

This is a great way for employees to see who their team members are and who they report to.

If you are looking for a simple and efficient way to create an organizational chart, Numans is a great option.

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