Most businesses need a hierarchy that clarifies to every employee where they belong within the organization. Management can set up workflows to ensure the company runs smoothly by assigning each role a certain level of responsibility.
When a business gets big enough, owners or executives usually create an organization chart to illustrate its structure graphically.
This post defines a company organization chart, its purpose, and the different types of organization charts.
What is a Company Organization Chart?
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An organization chart is also called an organizational chart or org. the chart represents a company’s management structure and division between management and staff. It appears on corporate websites, in annual reports, and is often included in corporate brochures and other employee communications materials.
A basic organizational chart consists of a circle or squares representing positions or departments, with lines connecting the positions to show the hierarchy of responsibility and authority.
The organizational chart can be a simple or complex graphic composed of layers or sub-charts.
How Do They Help a Company?
A well-constructed organizational chart can be a useful visual tool for helping employees understand a company’s overall structure and hierarchy and making fundamental management decisions such as promotion or assignment of projects.
Organization charts depict an employee’s hierarchy in relation to others within the company. For instance, an executive director will fall directly under the CEO in most companies, and an associate manager will be directly under a principal manager or supervisor in a company.
Some companies have a more detailed organizational chart where you can view each staff up close, like this employee profile that highlights the working style and responsibilities of the staff member.
Org. charts can be invaluable when restructuring a workforce or changing management responsibilities, regardless of an entity’s structure.
The most crucial benefit of org charts is that they show employees how their roles fit into the company’s overall structure.
When it comes to budgets, an organization chart can help executives tasked with budgeting understand what each department requires to function correctly and allocate resources for projects accordingly.
An org chart can be vital to streamlining communication between different departments or branches to make critical decisions in larger companies or corporations.
What Are the Different Types of Organization Charts?
Hierarchical Structure
The hierarchical structure is the most traditional type of organizational chart and shows each employee’s position in the company vertically. Hierarchies usually include executive-level employees and middle management, and entry-level personnel.
Flat Structure
The flat organizational structure is also known as a “horizontal” chart. In flat organizational charts, individuals are on the same level, indicating more equality of power and autonomy than is typical in hierarchical corporations.
Matrix Structure
Matrix organizational structures tend to be more complex than the other two. However, they are also helpful in improving communication between departments and employees who may be involved in the same project.
If an employee needs to provide status updates to more than one manager, they may report to multiple managers.
Divisional Structure
The structure shows that the company is organized according to specific criteria. The criteria may include product lines offered or geographical regions.
A company that organizes by product type, for example, might be an auto manufacturer. Each division would have a certain amount of autonomy, but the overhead costs would likely increase.
Who Creates an Organization Chart?
A company or organization’s CEO or other C-suite executives typically creates an organization chart.
Conclusion
An organization chart helps clarify a company’s structure, hierarchy, and primary functions. They are vital in assigning tasks and responsibilities to staff members, promoting them, and assigning projects.
A good company or organization chart should be easy to understand and communicate the company’s overall structure to employees.
