An organizational chart, also referred to as an org chart, organigram, or organogram, is a diagram showing the structure of an organization and the relationships and relation ranks of its parts and positions. In simple terms, an organizational chart is a graphical representation of the different relationships between functions, departments, teams, along with individuals. An organizational chart paints a clear picture of the flow of authority, chain of command, and communications from the top-level employees to the bottom-most employees in the organization.
Importance of Organizational Chart
Whether it is a start-up with 10-100 employees or a larger organization with more than 4000 employees, an organizational chart not only helps the managers to manage the staff effectively but also helps increase visibility across the entire organization. Having a clear visual picture of the organization’s structure has the following benefits:
Organizational charts help your employees in understanding the reporting structure of an organization. It maps out how the work is to be done by each individual and the process required to make sure that the information is accessible to everyone in the company.
Impact on long term planning
An organizational chart helps identify if an employee or a team is allocated more responsibilities than they should. It also helps in identifying if an employee or a team has become a bottleneck in the long run. This helps the manager in setting up contingencies and backups in case of a systemic breakdown, which in turn comes in handy as it helps in business permanence planning.
For any business that is well managed, growth is inevitable. As they go through the different life cycles in their growth, they are bound to make specific changes that are crucial for the business. Employees can be moved from one department to another or from one team to another, based on their skills and expertise. An organizational chart helps the manager make these changes with much ease.
Alignment of goals
Having a clear breakdown of all the tasks and responsibilities helps each individual to work towards achieving their set duties and responsibilities, which in turn ensures the company objectives are achieved.
An Employee Reference
An organizational chart provides a reference for new and existing employees to help them understand the overall net and their role in the organization. With an organizational chart, one can easily see who his supervisor is and who their colleagues are without having to bother other staff members.
Types of Organizational Charts
Hierarchical organizational charts are one of the most used organizational structures. In the hierarchical structure model, the employees are grouped in a team, with each team reporting to one manager. Different groups can be formulated depending on factors such as the functions, geographical location, and the various products and services that the individuals are working on.
Unlike traditional hierarchy, the matrix structure model of reporting is set up in the form of a grid. In this model, all the employees with comparable skills or expertise are grouped for common or similar tasks. The employees may, however, report to more than one manager depending on the functions and the various products and services that they are working on.
A flat structure is also known as a horizontal chart, is one where the middle-level management are eliminated to speed up decision making in the workplace. This model helps reduce officialdom and enable employees to make decisions independently. i.e., without having to wait for the manager to approve of the decisions they make as crucial time may be lost. This model also helps in improving their overall throughput while at the same time, allowing them to be more accountable towards their work.
Limitations of an organizational chart
There are several limitations with organizational charts:
- It doesn’t show anything about the executive style adopted
- It becomes out-of-date quickly, particularly in large organizations who regularly change their staff
- It only shows the “Formal relationship” and says nothing about the human relations which are formed.
Although there are different types of organizational charts, such as flat, hierarchical, or matrix, etc., the primary goal of creating an organizational chart is to illustrate the reporting relationship in an organization. Organizational charts not only explain the structure of an organization but also explains the structure of an organization. Therefore, having an outstanding organizational chart is important to make planning much more accessible and defining the organizational culture, structure, and style, consequently showing the line of authority and the responsibility of everyone in the organization.