HR Glossary  /  Organizational Chart
Organizational Chart3 min read
Table of Contents:

What is an Org Chart?

Overview: What Organizational Charts Are for Business

An org chart is more than a pretty picture of a company’s structure; it’s a vital tool that shows roles and reporting relationships across an organization so everyone can manage and communicate effectively. Using org charts online means you can share and update them without having to reprint and redistribute them. In today’s fast-paced business world, these charts are important for new employees and seasoned executives to know how teams fit together in the bigger corporate picture.

What is an Organizational Chart?

An organizational chart, also known as an org chart, is a diagram that shows the structure of an organization. The most common type is a hierarchical organizational chart, which is a pyramid shape. It shows the hierarchical relationships between employees and departments and the various roles that contribute to the organization’s purpose.

The Chart’s Functionality

The main purpose of an organizational chart is to show the management structure from top to bottom. Good organizational chart design is key to clarity and readability so everyone can understand the chart. It’s a roadmap that helps employees understand supervisory relationships and simplify communication and decision-making.

The Parts of an Organizational Chart

Organizational charts are made up of rectangles or other shapes that represent different positions in the company, connected by lines that show relationships and reporting paths, different organizational structures.

Roles, Levels and Reporting Relationships

Each box on the chart has the employee’s name, title and sometimes department, showing clear lines of accountability and authority within the business. Each division, like marketing, should have its own marketing team so there is clear accountability and focus.

Hierarchical Structure

The most common type of organizational chart is a hierarchical chart. It’s a pyramid shape with one person at the top and increasing numbers of employees at each level below.

Flat or Horizontal Structure

A flat structure, often shown as a flat org chart or horizontal org chart, is good for small companies or start-ups. It has few or no middle management layers between staff and executives.

Matrix Structure

A matrix organizational chart, which combines functional and divisional structures, is used in project—or product-based companies. In this chart, employees report to more than one manager or team.

Step-by-Step Creation

Creating an organizational chart involves gathering information about every role in the company, including the hierarchy and relationships between positions. To make this easier, you can use organizational chart templates that are easy to create and customize.

Design

The reporting structures should be clear and organized so anyone can see them at a glance. Use the same shapes and lines, and color code different departments for better visibility.

Tools

Many tools are available to create org charts. Even in its free version, TalentHR automatically creates org charts and keeps them updated in real-time based on the data available to the HR platform. This can be a big help, especially for larger companies.

Regular Updates

Org charts should be updated regularly, especially after major changes like reorgs, onboarding new employees or after significant company changes.

Design Mistakes

Don’t fill the chart with too much information. Stick to the essentials, such as names, titles, and departments, to make the chart readable and useful.

What software can I use to create an org chart?

Many options are available. TalentHR, for example, allows you to create an organizational chart automatically by adding your employee information and report lines to the portal. This feature helps maintain an up-to-date view of the company structure, which is helpful for HR processes.

What is a dotted line in an org chart?

A dotted line in an org chart indicates an indirect, secondary, or less formal reporting relationship. This is often seen in matrix structures, where an employee reports to multiple managers for different parts of their work.

How to include contractors in an org chart?

Contractors should be included in the org chart with a clear indication of their role and who they report to in the company. This helps with clear communication and project management, especially when contractors are part of crucial operations or teams.

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