The Organizational Chart

What is an Organizational Chart?

An Organizational Chart is a visual representation of the employees of a company and the way they relate to each other within that organization. The Organizational Chart - or Org Chart, as it is sometimes called - shows the hierarchical structure between managers, supervisors, and their subordinates.

Types of Organizational Charts

An Organizational Chart is a very flexible document that can be used to show the relationship between employees in a variety of ways.

A Hierarchical Organizational Chart is probably the most popular type of chart and is likely the type of chart most people instinctively think of. It shows the boss at the top of the chart and each subordinate underneath. The benefit of this type of chart is that it shows clearly the reporting structure of each employee. The drawback is that employees positioned near the bottom of the chart can feel that they are of less value than the employees closer to the top.

A Functional Organizational Chart is like a hierarchical chart in that it is vertical, but employees are grouped by function (or possibly department) rather than by manager. Typically, the employees with the most responsibilities are listed higher on the chart.

A benefit to this type of chart is that it helps encourage teams to work together toward a common goal. A drawback, however, is that it can create an us versus them attitude between different departments.

A Flat Organizational Chart is the type of chart that works best for organizations where one or a few managers oversee a lot of employees. It lays out most of the employees regardless of their roles and responsibilities on the same level. An advantage to this structure is that it breaks down walls and encourages all employees to work together. A drawback is that it avoids showing a clear reporting structure for employees who have questions or need direction.

The Purpose of an Organizational Chart

Ultimately, the Organizational Chart is a useful tool that employees and managers can use to work together to get things done. Managers and employees can clearly see which employees are responsible for different tasks, and, in larger organizations, outsiders can pick out an appropriate communications path to an employee.

From a financial perspective, an organizational chart can show how many resources are or should be dedicated to department or function, and it can reveal which areas of the company may be under or over staffed.

Building an Organizational Chart

The first step to building an organizational chart is to understand the type of structure that exists within an organization. Is the company tightly managed by a few people or are there multiple layers of management within the organization? No single structure is right for all companies; therefore, it is important to look intentionally at how the company operates and build the organizational chart to mirror the structure currently in place in the company. Over time, you can modify the chart and the structure to accommodate changes within the company, but it is better to initially build the chart to fit the company than to force an existing company to fit into an arbitrarily drawn organizational chart.

Conclusion

Owners and managers should use organizational charts as a tool to understand the operations of the business and not to allow them to be used to promote a class structure or to assign value to an employee based on his or her spot on the chart.  Employees should be able to use the organizational chart to plot career paths for themselves and use it to better understand their role and expectations within the company.