Whether your business has 5 employees or 5,000 employees, organizational charts are a vital visual representation of your company’s internal structure.

It’s easier to understand the benefits of an organizational chart, colloquially known as an org chart, when you imagine your business as an upside-down tree. A startup business might resemble a small birch tree with a few branches and an enterprise might resemble a large redwood tree with an abundance of large and small branches.

Org charts, like trees, spread out into supplementary branches and leaves that define each individual’s role in a company. An org chart paints a detailed picture of the internal structure of a business. If you’re restructuring roles or if you just want to give your employees added transparency, org chart software is an easy opportunity to map each employee in a straightforward view.

What is an organizational chart?

Let’s start by covering the basics of an org chart.

There are no hard and fast rules for making an org chart. As long as the chart is organized by rank with clear branches exhibiting employee relationships, the diagram itself is open to many creative possibilities depending on the industry, the number of employees, and the number of rankings.

Types of organizational charts

While the hierarchical org chart structure is the most well-known, there are other notable org charts to mention, as well. These include the following:

Hierarchical organizational chart

Typically in the shape of a pyramid, a hierarchical org chart features the first-in-command, or the highest-ranked employee or collectively ranked group, at the top of the chart. Some common first-in-command examples include a managing board or a CEO (chief executive officer). Lower-ranked employees are featured below the highest-ranked employee or group on the chart. Each employee is connected to another employee or group that they report to.

Matrix organizational chart

Matrix org charts are similar to hierarchical org charts, except they’re ideal for employees or teams that have multiple managers that they report to. For example, if a marketing team often collaborates with a sales team, they may need an org chart that visualizes the connection between separate project managers and project members.

Flat organizational chart

Flat organizational charts, also known as horizontal organizational charts, reflect a hierarchy with little to no middle management. Small companies typically benefit from using a flat org chart where employees report directly to the top department executives.

Organizational chart relationship visualization

While each org chart type differs slightly, they each require the same visual representation of the chain of command (line relationships) and same-level connections (lateral relationships). These connections visually tell a story about each employee’s status in the company.

Line relationship visualization

An example of a line relationship visualization is someone with a higher ranking than another employee being placed above the employee, with a line directed toward the lower-ranking employee.

Lateral relationship visualization

An example of a lateral relationship visualization is simply employees located next to each other on the chart due to their having the same rank.

Lines are the most common symbol used to identify employee relationships, but feel free to get a little creative with the symbol you use. For charts that are more complex, it’s not out of the ordinary to use dotted lines and solid lines with different meanings. As long as the symbols you use in your org chart map the journey of authority in a clear way, there are no hard-set rules to follow when creating your org chart. Feel free to use photos and unique shapes when creating yours!

Why should you use an organizational chart?

There are a multitude of benefits to creating an org chart for a business of any size. First and foremost, it establishes authority and strictly enforces the expected communication routes within the organization. This prevents miscommunication and helps employees understand where they are in the hierarchy of the company. Additionally, companies that restructure their hierarchy owe it to their current employees to be transparent and upfront about changes in communication and authority by illustrating those changes with a new org chart. Above all, it helps everyone in the company to be on the same page in terms of who is responsible for what.

Disadvantages of an organizational chart

While the benefits of org charts are clear, there are a few drawbacks. For example, org charts require a lot of upkeep. Promotions, resignations and general title changes happen all the time in all industries, making org charts out of date very quickly. However, using a template that is easily changed can prevent editing headaches. Additionally, org charts can be frustrating for organizations that are highly collaborative. Even though matrix org charts help mitigate this, it can be rather difficult to portray the formal communications between employees that collaborate with many different departments. This can be remedied to an extent; for example,  detailed symbols can help visualize the nuances.

How to make an organizational chart

Before starting a company org chart, it’s important to take some time to figure out everyone’s position in the organization and how each position interlinks with others. Once this information is attained, the next step is to decide whether a hierarchical, matrix or flat organizational chart fits your needs. Next, take a look at our free templates to get started on making your very own org chart!

Free organizational chart template

If you have access to PowerPoint, you can download this PPT template. This will give you a good base for your org chart. Feel free to expand on it!

You’re ready to create an organizational chart!

Businesses thrive when transparency and accountability are available to all employees involved. By sharing the inner workings of individual branches and connections within a business, employees have a collective sense of who they report to, who they communicate with, and who oversees specific operations. Even if your company is considered to have a “small tree,” there are endless opportunities to showcase the ever-growing branches and leaves in an organizational chart.

Interested in learning about more charts for your organization? Check out these articles on Gantt charts and PERT charts.