Guide to understanding organizational charts

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What is an organizational chart (org chart)?

An organizational chart is a visual diagram that shows how work flows through an organization by outlining the hierarchy and reporting needs. You may also hear this type of chart referred to as an 'org chart.' Some key elements in organizational charts include job design, departmentation, delegation, the span of control, and the chain of command.

As organizations become increasingly flexible, it's becoming more common for organizational structures to change quickly. Organizational charts are often used in businesses, government agencies, universities, and other organizations to visually represent these changing structures.

They can also help leaders understand the characteristics, benefits, and limitations of different organizational structures and allow them to continually review the hierarchies and roles of employees within the business. For example, organizational charts are regularly used to show current staffing numbers, make hiring decisions, and to help onboard new employees.

Types of organizational charts

Here is an overview of some of the different types of organizational chart structures:

Hierarchical charts

Hierarchical org structure

This is a pyramid-shaped chart that defines the chain of command. The highest level in the chain (for example, the CEO or managing director) is at the top of the hierarchy, and entry-level employees are at the bottom.

Functional org structure

This is a functional chart that defines the chain of command and organizes employees based on their organizational skills and function. Like a hierarchical organizational structure, the highest level in the chain goes at the top, and entry-level employees are at the bottom.

Horizontal or flat org structure

Horizontal or flat org charts are designed for organizations with few levels between upper management and standard employees. This structure is often used by start-ups or small companies that are not large enough to have many different departments.

Divisional org structures (market-based, product-based, geographic)

This is a chart designed for organizations with divisions that have control over their own resources within the organization. A market-based divisional structure separates divisions by market, industry, or customer type. A product-based divisional structure separates divisions by product line, and a geographical divisional structure separates divisions by region, territories, or districts.

Matrix org structure

The matrix org structure features a grid-like chart showing cross-functional teams created for special projects. This allows supervisors to easily identify who is suitable to work on specific projects and provides a dynamic view of the organization.

Team-based org structure

A chart that groups employees according to which team they are on. This helps provide more transparency within the organization and focuses more on employees' experience instead of their seniority.

Network org structure

A chart that visualizes the complexities of onsite and offsite relationships within an organization includes third parties such as vendors, subcontractors, and freelancers. This puts less focus on the organization's hierarchy and more on facilitating open communication.

Examples of when to use an organizational chart

An organizational chart can be used to show how work flows through an organization and to show the organization's reporting needs.

Some specific examples of when to use an organizational chart include:

New hire onboarding

Organizational charts are useful in new hire onboarding because they let employees know who their manager is and who else is on their team. For example, organizational charts can be used for:

  • Showing reporting responsibilities between managers and employees.
  • Helping employees understand their role within an organization by showing them the organization's overall structure.

Staffing decisions and resource planning

Organizational charts improve the efficiency of resource planning and making staffing decisions because they provide a clear overview of an organization's structure. Some of the ways organizational charts can do this include:

  • Improving communication between employees by giving a clear overview of who else is in the organization, which department they belong to, and how these different departments fit together
  • Helping HR departments to clearly see whether the organization is appropriately staffed and whether any adjustments need to be made.

Finding career opportunities for current employees or restructuring

Organizational charts can help managers restructure departments more efficiently and identify new opportunities for current employees excelling in their roles. Some ways that organizational charts give managers more control include:

  • Giving leaders an overview of how their workforce is growing or changing over time so that they understand the roles and responsibilities of employees and can make adjustments as necessary. It also helps them to review employees' performance by providing a simple way to track their duties and accomplishments.
  • Providing an extensive, visual directory of the organization's employees that can be made available to anyone who wants to contact the organization or understand the purpose of different departments or the roles of employees.
Organizational chart

How to make an organizational chart

Below is a list of steps you can follow to create an organizational chart:

  1. Decide what the purpose and scope of your organizational chart will be. As explained in the previous section that covered the different organizational charts, there is no 'one-size-fits-all' organizational chart. The type of chart you use depends on whether you're planning to chart out your entire organization or just a specific department. It would help if you also considered what you plan to use the chart for and who will access it.
  2. Figure out what information you will need. The five key elements typically included in an organizational chart are job design, departmentation, delegation, the span of control, and chain of command. Once you've figured out what you'll use your chart for, you can work on gathering the information you need.
  3. Start drawing your diagram. You can use different colors and shapes to define different roles and departments and add your company logo to align your diagram with your brand.
  4. Once you have finished creating your chart, it is important to review it regularly to ensure it remains up-to-date.

Why use MindManager to make organizational charts?

You can make an organizational chart by hand or use a program specifically designed for diagram making. MindManager, an industry-leading organizational chart-making software, allows you to create complex, detailed organizational charts with ease.

MindManager's key benefits include:

  • User-friendly, intuitive interface
  • Extensive image library—over 700 topic images, icons, and symbols to add to your organizational charts
  • Premade organizational chart templates
  • Convenient file storage, retrieval, and sharing
  • Powerful integrations with file storage apps like Box and OneDrive
  • Google Docs integration via Zapier
  • Various tools and features to facilitate brainstorming and strategic planning
  • Google Chrome extension—MindManager Snap—to easily collect and import text, links, and images from the web

MindManager helps you synthesize ideas and information by providing a simple, intuitive framework for organizing your thoughts. With MindManager, you and your team can clarify complexity and collaborate in new and unexpected ways.

Organizational chart templates

MindManager comes pre-installed with many templates. To use these templates:

  1. Open MindManager
  2. Click NEW in the navigation menu
  3. Select the template you want to use
  4. A preview screen will appear - check to see if you'd like to use your selected template
  5. Select 'Create Map'
  6. Customize the template for your specific project
Gantt chart templates

Organizational chart FAQs

What is the importance of an organizational chart?

An organizational chart is designed to show the internal structure of an organization and provide a clear visual picture of the hierarchy within the organization. It shows information about employees, such as their photograph, telephone number, email, role and department within the organization.

What type of organizational chart should I use?

Here's a brief recap of the different types of organizational charts and when you should use them:

  • Hierarchical structures are used to define the chain of command.
  • Functional structures are used to define the chain of command and organize employees based on their skills and function
  • Horizontal structures are used for organizations with few levels between upper management and standard employees.
  • Divisional structures are used by organizations with divisions that have control over their own resources.
  • Cross-functional teams use matrix structures for special projects.
  • Team-based structures are used to group employees according to which team they are on.
  • Network structures are used to visualize the complexities of onsite and offsite relationships within an organization.

What are the important elements of an organizational chart?

The important elements that should typically be included in an organizational chart are job design, departmentation, delegation, the span of control, and chain of command.

Using organizational charts to outline the hierarchy of your organization

Organizational charts are a simple way of viewing an organization's hierarchy and reporting needs. Any organization can use them for purposes such as showing managers the responsibilities of employees within the organization, helping employees to understand their roles, and providing a clear directory of an organization's employees.

Visualize more with MindManager

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