A New American Economy study found that Fortune 500 companies have, on average, 60,000 employees.
Whether you’re a long time manager or a brand new employee, you’re going to struggle to keep up with all the names, faces, and departments within an organization that big.
So, how do you figure out who to talk to when opportunities or issues arise?
Your company’s organizational chart, that’s where.
An organizational chart might not feel like the most important tool in your arsenal, but it’s far from your weakest.
In fact, the org chart probably has more benefits than meets the eye.
In this article, we’ll not only define what an organizational chart is, but we’ll dig into the benefits, different types of org charts, and how you can create a little structure of your own in no time with monday.com.
What is an organizational chart?
An organizational chart, often called an org chart, is a visual representation of the structure of an organization that shows the relationships and ranks of each person.
Such relations often include leaders and their relationship to individual contributors. It will also show you each department director, the executive officers, and sometimes even the board of directors.
A great org chart will give your team clear insights and direction when they need it most. If it is done poorly, or not at all, you’ll cripple your organization’s communication and collaboration abilities.
The general idea is that the organizational chart will provide a clear, all-encompassing picture of the entire organization. Sometimes an organization grows so large that the org chart is split into smaller charts for specific departments within the organization.
A brief history of the organizational chart
A Scottish-American engineer named Daniel McCallum gets the credit for creating the first organizational charts for American business back in the mid-1800s.
Here’s a closer look at the original.
McCallum created the organizational chart to better illustrate the hierarchy over the day-to-day operations of a divisional railroad.
Like today’s organizational charts, McCallum modeled his after a tree and included a board of directors as the roots, himself and other chief officers as the trunk, and each railroad division leader and their departments as branches.
Ultimately, it was used much in the same way it’s used today, as a means of relinquishing control and delegating authority to leaders and individual contributors who can use their knowledge and skills in real-time to make decisions and collaborate more effectively.
What are the benefits of creating an organizational chart?
Knowing who’s who is a big deal in any growing enterprise, but that’s far from the only benefit of creating an organizational chart.
Some other benefits include:
- Shows a crystal clear reporting structure and hierarchy, so both employees and leaders know who to contact at a moment’s notice.
- Makes the onboarding process more efficient by building connections from new employees to important contacts they may have never met or don’t even know exist.
- Manage workloads more easily by providing a clear understanding of the entire organization’s human resources.
- Experiment with hypothetical scenarios such as a change in reporting relationships throughout the organization, a potential acquisition, or potential downsizing or reshifting.
- Encourages wider collaboration by providing an easy to read visual of who works in other departments you may not cross paths with quite as often.
It really boils down to better communication. An organizational chart will always boost transparency and keep your team connected no matter how many cubicles or continents away.
Other uses for organizational charts
Naturally, org charts conjure up images of a large multinational company with tons of employees. However, that’s far from its only use.
Here are just a handful of the other uses an org chart makes possible:
- Genealogy, since the family tree is more or less identical to a business org structure. This could include birth dates, death dates, and notes or family trivia attached.
- Resource planning that executive leadership might use to rearrange roles to reduce inefficiencies, clear up bottlenecks, or drive a new innovative strategy.
- Restructuring or workforce planning to fulfill the needs of a new hiring campaign or to switch up roles and responsibilities to better use people’s talents.
- Non-profit organizations for a myriad of reasons since they’re tracking the flow of responsibilities and team roles the organization must take to fulfill their mission.
On that last one, religious institutions are a perfect example. The Catholic church would have the Pope at their top spot in a hierarchical pyramid org chart with all of his Archbishops and Cardinals filling the branches below.
The 7 types of organizational charts
Every organization or corporation has its own unique needs and will naturally require a specific organizational chart to satisfy them. In some cases, they’ll need more than one.
Now that you have a better understanding of the benefits and uses of organizational charts, it’s time to explore the wide range of types and their unique uses.
1. Hierarchical org chart
Shaped much like a pyramid, the hierarchical organization chart is the most common org chart.
With it, you connect people with a simple line to show a relationship, and it flows from the top down to the frontline employees.
Here’s an organizational chart example in monday.com.
The unique trait of the hierarchical org chart is that every person in the organization is subordinate to a single other person, except one.
That lone person who isn’t subordinate is typically the person with the greatest authority.
In a public company, that might be the Chief Executive Officer (CEO), and in a private company, they may wear a different title like President or simply, Owner.
2. Matrix org chart
A matrix organizational structure’s unique trait is that some individuals may report to more than one leader.
Here, relationships are identified with a solid or dotted line. The meaning of solid versus dotted lines will vary, but dotted lines typically indicate relationships of lesser importance.
A good example of a less important relationship might be a project manager. While their function is important, it’s a temporary position that carries less weight than their permanent functional manager who gets a solid line.
A matrix org chart works best for cross-functional teams that don’t maintain a strict vertical business unit.
A matrix org chart is popular in project management because they provide greater visibility into the company’s available personnel resources, break down the flow of information, and ultimately provide greater transparency.
3. Flat org chart
Also known as the horizontal org chart, a flat org chart has very few levels or no levels of middle management between the staff and the executive team.
These charts are especially popular among startups and small businesses because they operate with a smaller staff and haven’t grown large enough to warrant larger departments and middle managers yet.
Flat org structures give employees more responsibility, foster more open communication streams, and improve the speed and coordination of implementing new and innovative ideas.
The downside is they can create confusion since not all employees have a clear supervisor to report to and often reward employees with more generalized skills and knowledge.
As a company grows, it’s difficult to maintain a flat organizational structure, and they typically switch over to more of a pyramid structure.
4. Divisional org chart
A divisional org chart groups the organization by the greater activities, market, geography, or product and service groups.
Large multinational corporations tend to favor a divisional structure since they’re too large to fit on a traditional organizational chart.
Ultimately, it provides flexibility because each division operates independently and focuses on issues relevant to them versus a central authority’s commands.
Often, you’ll see a divisional structure for accounting, development, sales, advertising, and so on.
5. Project org chart
Many org chart types have commonalities and will overlap. The project org chart is no different. It could be a flat chart or a hierarchical one. The structure itself matters less than its purpose.
For example, if you’re running your project management on top of monday.com’s Work OS, then you might have a project org chart for each one.
Since projects are unique and have an end date, it’s common that these will change or expire with time.
6. Committee org chart
Similar to the temporary project org chart, sometimes you need an organizational chart for ongoing needs, like a committee.
A committee consists of a group of people who may have more complex reporting needs and who meet regularly to discuss ongoing issues, opportunities, or to realign the company’s strategy with its actions.
Committees are unique because they often include a wide range of people from all parts of the company. The idea is to gather a crowd full of unique perspectives to help make better decisions about the organization’s future.
7. Line and functional org chart
The line and functional org chart applies to most organizations since most have individual’s direct authority and more situational authority.
A great example is a legal advisor who may not be a direct line supervisor, but they do have authority over most of the company’s actions, since they want to ensure the company is adhering to compliance laws and regulations.
Another example is when a subject matter expert has greater knowledge of a specific matter or project and has functional authority over individual contributors or even leaders.
How to structure your org chart
Org charts should be simplistic in nature and easy to navigate.
At a minimum, an organizational chart should include:
- Photos to help people connect a name with a face.
- Titles so you know exactly who you’re reaching out to and have a better understanding of what their role and responsibilities entail.
- Uniform fonts, shapes, and colors to more easily identify job levels, departments, and cross-functional teams.
- A search function to quickly find the person or position you need information on.
Ultimately, it’s up to you. If you’re a startup, then a flat org chart may work best, but as you grow and hire mid-level managers, it may need to shift into a hierarchical one.
There are no right or wrong answers, and if you choose the right software to build one, you’ll find making changes is easy.
How to create an org chart with monday.com
Creating an organization chart shouldn’t be difficult, and thanks to monday.com, it’s not.
We built our org chart tool right into the software you already use to manage projects, keep up with tasks, and collaborate with your team.
Since it’s integrated, you may already have all the people from different departments neatly organized and ready for sorting into the digital diagram.
As you can see below, you have a clear visual of people’s faces, names, and titles. All you have to do from there is assign a management relationship.
From there, monday.com will create a neat box under their supervisor that’s easily expanded or collapsed so you can zoom in and out at will.
In monday.com, the org chart is a widget that fits neatly onto the dashboard, so you always have easy access and visibility when you need it most. Your team will benefit from greater clarity, transparency, and collaboration right away.
Getting started
We’re willing to bet that you learned quite a bit about organizational charts today. The benefits are immense, and their simplicity makes them one of the greatest tools in your arsenal.
With monday.com, an org chart takes mere minutes to set up and launch, since all your employees are in the system and the system provides an easy to use template that pre-fills itself for you as you assign reporting relationships.What more could you ask for?
If you’re not a monday.com user, we’d highly recommend giving the Organizational Plan Template a try, since it provides the framework needed to set your company’s strategy into motion.
As you expand your reach and your employees come online, you’ll find creating an organization chart is one of the many easy wins monday.com provides.
With a 14-day no credit card required free trial, you’ve got nothing to lose and everything to gain. Get started today.
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