Org Chart

What Is an Org Chart?

An organizational chart (also known as an org chart) is a document that visually depicts a company’s internal structure. How the chart is organized depends on the specific structure of the business.

However, most charts use labeled boxes, straight lines, and 90-degree angles to show relationships or chains of command. In some cases, the boxes may include names, photos, or contact information.

4 Types of Org Charts Used by Businesses

Not every business has the same internal structure. Because of this, there are different types of organizational charts to represent these varied business structures. Here are four of the most common types of org charts businesses use to show how the organization works.

1. Hierarchical

A hierarchical organization is still one of the most common internal structures that companies use. Typically, the highest-ranking roles are at the top of the chart, while the entry-level roles are at the bottom. Each role in between sits at a different level based on seniority.

For example, the CEO of a corporation would likely occupy the top box, followed by the C-suite executives who report to the person in that role. SVPs, directors, managers, full-time employees, and part-time employees would then follow.

2. Flat

Sometimes referred to as horizontal org charts, flat charts are mostly used in companies where middle management is minimal or nonexistent. Some organizations, including companies like Facebook, are moving to a flat structure to decentralize decision-making and empower employees.

These types of organizations tend to regard employees as equal contributors who have lots of autonomy and responsibility. This means that the org chart will usually have only one or two levels.

3. Matrix

This structure is much more complex than the others and usually applies to cross-functional teams with multiple managers or businesses with employees who work on multiple projects. The CEO and senior management officials will still appear at the top of the chart.

Managers will appear below them, and team members will appear below those managers. Vertical lines will then connect those team members to the other managers they report to.

4. Divisional

As its name implies, this type of org chart is used for organizations that operate with different corporate divisions. These divisions may be geographic or based on different businesses under the same legal entity.

Some organizations also divide teams by the product they are responsible for. In a divisional org chart, the CEO will still appear at the top. Then, each division will be arranged hierarchically in its own separate column.

How to Create an Org Chart in 5 Steps

Creating an organizational chart doesn’t have to be difficult. However, it does require a bit of preparation. Here are five steps you should take as you seek to create a helpful org chart for your company.

1. Determine the Purpose

What (or who) you intend to use the org chart for will determine how it’s structured and what gets included.

Here are a few questions to ask:

• Is this something you want to give to new hires during onboarding so they’ll know who to contact with questions?
• After restructuring, do you want each individual department to know how the new internal structure works?
• Who will be responsible for maintaining and updating the org chart?

The answers to questions like these will determine the number and type of charts you need.

2. Figure Out Who’s Who

Before you can create a practical org chart, you need to know who’ll be included and what role they play in the organization. If you have old org chart examples from previous years (and the internal structure hasn’t drastically shifted since they were published), you can use those as a starting point.

If not, you may need to sift through all the employees in the system and include their roles or ask someone for help. If you plan to include specific names, photos, and contact information, you should gather that information at this stage.

Make sure all names are spelled correctly and contact information is updated, especially if a particular employee has recently moved roles or divisions.

3. Pick a Platform

Creating an org chart using an app is much easier than drawing it by hand. If you use an HRIS application like BambooHR, it’s best to go with a platform that allows you to import and synchronize your HR data.

These types of software integrations will ensure your chart is easy to make and accurate. They also make it much easier to include photos and contact information in each box.

4. Consider a Template

Using an org chart template can be a great way to help you figure out how to structure your document. When looking for the best template to use, make sure you choose one that’s aligned with how your organization operates. For example, you wouldn’t want to use a flat org chart template for a company with a hierarchical structure.

5. Update as Needed

All organizations change. Sometimes, the entire internal structure shifts due to changing employee or CEO sentiment. Other times, it’s simply a matter of people getting promoted, making a lateral move, or retiring from the company. No matter the reason, you need an easy way to keep the organizational chart updated.

Creating org charts on a digital platform can help you do this easily. If the software integrates with your HR management software, you may be able to generate automatically updated charts you can then share with your employees when things change.

Using Org Charts Effectively

Organizational charts aren’t just nice to look at—they have a variety of functional uses in just about every company. Here’s what they can do for you:

• Assist with internal communication, especially when charts include contact info.
• Help new hires get familiar with their team and know where to go for support.
• Improve operational efficiency by showing employees how teams work together.
• Provide a visual representation of roles to assess skills gaps and hiring needs.
• Demonstrate how changes (such as a promotion) will affect the organization.
• Provide information about roles and chains of command to regulatory bodies.
• Assist with succession planning to know who’s ready to move into leadership.
• Identify collaboration or cross-training opportunities.

You don’t have to let your org charts sit in a binder, never to see the light of day again. Put them to good use to help your employees connect with each other, gain support, and better understand your organization.

Limitations of Organizational Charts

Organizational charts are excellent for facilitating communication and helping people understand how all of the different pieces of the organization work (or should work) together. However, they do have a few limitations. There are several issues that you should be aware of when creating your org chart:

• Accuracy over time: Org charts will quickly become outdated if employees frequently shift roles. Org charts require frequent updates or finding an automated solution that offers automatic updates based on your HR data.
• Missing context: Informal reporting structures will not be captured on a data-based org chart.
• Social nuances: Employees must still develop a nuanced understanding of team and company culture to know how to communicate and collaborate well.

While you should keep these org chart limitations in mind, they’re still excellent tools for communication and organization, regardless of the structure of your company or chart.

Why Org Charts Matter for Businesses

Org charts are important because they provide a visual snapshot of the organization that holds real value for many employees. They help new employees get used to the environment and get help when they need it. They also help veteran employees collaborate and connect their roles to the company’s greater mission.

For HR professionals, org charts are an indispensable tool to understand what resources you have, what you’ll need later, and how even the smallest changes can affect your strategic goals. In this way, org charts are so much more than lines, boxes, and job titles—they’re a window into how your organization works and a way to help you make plans about how it could work in the future.