An effective organizational chart serves as the go-to place to find out who is who in a company. It delineates the hierarchy, shows core responsibilities, and makes it easy to understand the relationships. Yet, just as a family tree can stem lots of branches, some connections of an org structure may turn out to be tangled or hard to perceive. And it's no surprise since mapping out all the roles correctly to reflect the existing team dynamics and ensuring the structure isn't outdated could be problematic.
If you're not sure how to create an org chart, we've collected the best practices, tips, and must-knows. Moreover, we'll share a couple of tricks on how to keep your org chart evergreen and up-to-date at all times.
What Is an Org Chart?
An organizational chart diagram is a schematic representation of the company's hierarchy and team structure. Also referred to as an organigram or organogram, it visualizes the key roles and chains of command, showing teams, departments, and who reports to whom.
In its simplest form, it can be a chart that looks like a hierarchy tree or web, depicting employee superior-subordinate relationships using lines and text boxes with names and roles. In a more detailed format, it may be a dynamic unit that also features photos, contact details, and other core information.
What Is the Purpose of an Organizational Chart?
Such structure diagrams can come in different shapes, yet they serve various-sized organizations for multiple purposes. So, what is an org chart used for?
For starters, a visual representation of everyone onboard may free up lots of time. Once you create an org chart, you'll have an explicit source of data at hand, so there will be much fewer cases of vague wandering when you have no clue who to contact if some issue comes up. It simplifies communication, provides clarification, and helps people make better decisions regarding restructuring, staffing gaps, additional hire needs, resource allocation, and so on. And the best part, it can be used in different ways by different roles and levels within a company.
- New hires — use it as a directory during onboarding to figure out who their colleagues are in the company, their roles and responsibilities, as well as chains of command to get approvals;
- Current employees — may apply it for communication purposes, such as to find contact details or the right person to address when a question arises;
- HRs — are often the ones responsible for creating an organizational chart and managing it, the structure provides them with an overview of the hires and relationships within the organization;
- Management roles — leverage it to allocate inconsistencies in management and make better calls regarding which additional workforce is needed, how to distribute resources, task delegation, who to promote, and so on;
- Executive roles — may make use of it to overview the various levels of authority, communication flow, key players, and reporting relationships, to monitor performance, as well as for strategic planning and budgeting.
Why Do Companies Need an Organizational Chart?
Before we go into the details of making an organizational chart, let's review why their creation is worth spending time on and why it's worth having them. Plus, we'll mark a few things you should know about the possible obstacles and common tough spots with org charts.
Organizational Chart Benefits
Ensuring that team data isn't scattered in easy-to-lose spreadsheets, complicated CRMs, or other systems can be more important than you might think. Companies of any size can benefit from making an org chart.
For starters, accessibility and an organized approach help avoid miscommunication, confusion, and wasted time on unnecessary questions regarding who's the right person to contact and how to find them. When all the key information on the teams, hierarchy, structure, roles, and chains of command are carefully lined out in a logical structure, there's less fuss around who's responsible for handling certain issues. This smooths out many operational processes and workflows, laying the groundwork for more efficient collaboration and better decision-making.
Having a neat employee reference to turn to is twice as important when onboarding new employees, especially if the company is large. Org charts can make it easier for newbies to get acquainted with new colleagues. This facilitates quicker adaptation since they'll have a better understanding of the roles and "faces".
Transparency is also a strategic advantage, as an organizational chart can help with workforce planning and resource allocation. Additionally, it might provide an overview of areas that need restructuring. For example, it can hint at the necessity to add another manager or layer to unburden a specific employee or, on the contrary, may show that there are too many supervisors.
Org Chart Challenges
However, creating an org chart could be a challenge in itself. Drawing one that'll clearly depict the hierarchy and ascertaining that all relations are correct is generally a tedious manual task that can take hours. Sure, it might seem simple when the company is small and the reporting lines are evident. Yet the bigger the web, the tougher it is to make something consistent, even if you're customizing some organization chart template.
It's also hard to strike a balance in terms of not overcomplicating the diagram. You must stick to a consistent design and make sure the org chart is scalable for future changes. Moreover, you have to avoid uncertain "gray areas", loopholes, and gaps that require clarification (for instance, role overlaps when a couple of people perform similar duties or when one person is in charge of several areas). All of this may lead to confusion, and yes, do-overs are time-consuming.
Speaking of which, lots of teams make do with a simple Google Doc, Google Spreadsheet, or Excel. Of course, there are many customizable templates for PowerPoint, Google Slides, or even online builders with drag-and-drop blocks (take the free ones provided by Canva as an example). They can simplify the process for those who don't know how to design an organizational chart with little effort. But because no two structures are the same and an organizational chart implies a tailor-made approach, if you rely on such solutions, you will likely hit the ceiling at some point. And though it might seem like an easy way to make an org chart, their biggest drawback is lack of automation, meaning loads of manual work in the future either way.
Even if the chart is at least partially interactive, maintaining and keeping it up-to-date at all times is a common headache for HRs or those responsible for its upkeep. Data relevance is one of the pillars of such charts and why they bring value. But companies tend to grow and scale, and staff is often a "living and constantly changing organism". People get hired, promoted, or laid off, they change departments, roles, leave the company, and so on, and this happens all the time. Thus, removing outdated information, making edits, altering the roles, adding newly employed people, and sustaining the accuracy of the information is a frequent hassle if handled manually.
What Kinds of Organizational Charts Are There?
You can approach an organizational breakdown structure in various ways. Here are a few different types of org charts, and the best option depends on your specific needs and the size of the company.
1. Hierarchical Organizational Chart
Plenty of companies settle on this traditional type when they create an org chart. It's sometimes called a functional chart and generally implies a top-down graphical representation of authority. For example, the roles from the leading ones like the C-level executives to high- and mid-ranked roles and then all the way down to the junior staff. An organization hierarchy chart is usually simple to grasp, as it breaks the entire company down into departments and presents a panoramic view of the seniors and their subordinates.
2. Divisional Organizational Chart
An analog of the previous type, a divisional org chart can be a good fit if you want to show the company's structure divided geographically or by products or services. That is, if you have a specific division working on a certain product line, the chart could be completely devoted to it, although you have more employees within the organization. In this case, each division may be considered an autonomous and standalone one.
3. Flat Organizational Chart
Another commonly used type is horizontal representation. It's often the best match for companies with a small staff or early-stage startups. This is the time when there are very few management tiers, typically without the middle layer, just the top management and employees. Each specialist is more autonomous due to less bureaucracy and rather short chains of command.
4. Matrix Organizational Chart
On the contrary, consider making an organizational chart that's multi-dimensional if you need not only a bird's eye view of the company but want to include some other factors as well (e.g., when you'd like to capture who's working on a specific project). For instance, a company might have large in-house web design and development teams, but employees could be assigned to different or even multiple projects. So the chart could also feature a grid, marking the projects each specialist is involved in with a dot on corresponding lines and showing the managers they report to (i.e., their functional manager and project manager).
