What is an Org Chart

An orc chart is a diagram that visualizes reporting relationships and employee structure within an organization.

Other common ways to refer to an org chart are organization chart, organizational chart, organogram, and organigram.

Org charts can take many forms, from simple Excel and PowerPoint files to dedicated org chart software.

If you’re familiar with the layout of a family tree, org charts have a similar design. Instead of revealing family relationships, an org chart shows lines of reporting and the structure of departments.

For larger companies, organizational charts are sometimes drawn up for specified departments. This helps clarify roles within a team. It also avoids confusing what could otherwise become an intricate document.

Another approach is to show the relationship between departments or teams, rather than roles or individuals. In this way, it becomes possible to create a single org chart for enterprise level companies.

Software has made org charts more accessible by allowing users to “zoom in” to a specific team. They can then see how one group of employees fits within the larger company structure.

Why is an org chart important?

A well-designed org chart creates transparency and accountability by showing company structure. It can also increase productivity and collaboration among employees.
An org chart should be helpful to all members of an organization. Here are a few use cases:

• New employees get an overview of the company’s departments, teams, projects, and reporting structures.
• Strategists can spot areas where communication suffers and ambiguous divisional lines, making laying out roadmaps easier
• Project managers can navigate complex company structures and approach project planning with ease
• Managers can structure workflows and approach decision-making more efficiently
• Human resources teams can identify inefficiencies, the need for new hires, and revise job titles if needed
• Leaders can handle crises in situations requiring quick decision-making. An organizational chart can clarify roles and responsibilities, improving communication and response time.
• Managers can use the org chart structure to identify opportunities for promotions, training, or mentorship programs.
• Legal teams can use org charts to better grasp reporting structures, essential for compliance and internal or external audits.

The most important elements of an org chart

At their heart, org charts are rather simple. The core elements of every org chart are:

• Employee name
• Role/title
• Reporting or delegation lines

In a typical org chart, like a family tree, horizontal lines show employees on the same level of seniority. Vertical lines depict lines of reporting or delegation.

As well as these elements, you can turn an org chart into a powerful human resources tool by adding more information.

If you are in the process of designing an org chart, consider adding new elements to enhance its value to your company:

• Photos help turn a list of names and roles into a community overview of coworkers and team members
• Contact information, such as email and phone number, facilitates internal communication
• Core responsibilities give a better understanding of each employee’s expertise
• Coverage information makes it immediately clear who to refer to when someone is not available
• Employee start dates help find employees with the most experience within the company
• Employee location helps clarify each person’s working time zone, especially in a remote company
• Department metrics, including key performance indicators (KPIs) can align teams with company goals.
• Unique skills highlighted within teams improve collaboration and resource allocation.
• Role clarification should be provided if the employee’s title is ambiguous (i.e., Head of Improvement).

Most common types of org chart templates

There are three main types of organizational charts. Each is designed to adapt to specific types of organizations and needs.

Hierarchical - For traditional top-down teams

Hierarchical organizational charts’ purpose is to represent company structure. It does so by using a top-down layout with clear reporting lines, like a family tree.

The org chart structure will stem from the C-suite. It follows the company’s chain of command. Dotted lines connecting each subsequent layer of management.

Pros of a hierarchical org chart

• Clear reporting lines that run from top to bottom of the organization are clearer than other chart structures.
• A hierarchical org chart is stable, as individual changes do not impact the system as a whole.
• Each employee knows who they report to, minimizing confusion about responsibilities.
• Disputes can be escalated along clearly defined reporting lines, leading to quicker resolutions.

Cons of a hierarchical org chart

• A hierarchical org chart may be rigid and need restructuring when significant changes occur
• Hierarchical structures can become overwhelming for bigger organizations
• Communication between departments can be restricted, reducing opportunities for inter-department teamwork.
• Decision-making may slow down as approvals must pass through multiple management levels.

Matrix - For large teams in complex environments

A Matrix org chart explains structures with multiple reporting lines. Large organizations may have employees reporting to more than one manager in different departments.

For example, a developer can report to both the IT and Product lead. A matrix chart will show this complex reporting structure better than a hierarchical one.

Pros of a matrix org chart

• Cross-department connections are more clear
• An interconnected structure reveals opportunities for knowledge and resource sharing.
• Employees can work on diverse projects, using skills across multiple departments.
• Cross-department collaboration inspires creative problem-solving and idea-sharing.

Cons of a matrix org chart

• Unclear reporting hierarchies make it hard to identify decision-makers.
• Multiple reporting lines can cause confusion or miscommunication.
• Employees may receive conflicting instructions from multiple managers and struggle to prioritize tasks.
• Supervisors in matrix structures must coordinate across departments, increasing workload complexity.

Flat - For small teams and startups

A flat organizational chart is perfect for startups or small businesses with simple internal structures and reduced middle management.
It usually has only two levels: upper management (C-suite and similar) and employees who report to them directly.

Pros of a flat org chart

• It’s easy to keep up to date.
• A simplified org chart structure means that communication lines are streamlined. Decision-makers can be identified quickly.
• With fewer layers of management, employees have more freedom to make decisions and innovate.
• Direct access to leadership fosters openness and trust within the organization.

Cons of a flat org chart

• It’s not scalable and can quickly become outdated as the organization grows.
• It can lack detailed responsibility overview.
• Fewer middle managers mean executives may be overwhelmed with strategic and operational responsibilities.
• Limited hierarchical structure makes it harder to develop expertise.

Functional - providing a focused approach

Functional org charts group employees by specialization or expertise. This is a common type of org chart for enterprises and larger companies.

Pros of functional org charts

• Expertise is consolidated, leading to higher efficiency and innovation.
• Training and resource allocation become simpler within departments.
• Career paths are clearly defined within departments, clarifying growth opportunities.
• Managers can focus on their area of expertise, improving decision-making within their function.

Cons of functional org charts

• Silos may form, reducing cross-department collaboration.
• Decision-making can become slower as issues are escalated through departmental heads.
• Communication gaps between functions can lead to missed teamwork opportunities.
• Employees may not understand organizational goals outside their department.

Dynamic - adapting to modern needs

A dynamic organizational chart’s purpose is to build flexibility into traditional structures. This allows teams to adjust quickly to change.

• Real-time updates: With cloud-based solutions, org charts can reflect rapid changes in personnel or structure.
• Project-specific adjustments: Dynamic charts support temporary teams working on cross-functional projects.

Pros of dynamic org charts

• Automatically update to reflect organizational changes, staying accurate.
• Improve collaboration through interactive features and integrated tools.
• Enhance onboarding by providing a clear, real-time view of team structures.
• Adapt easily to growth or restructuring, remaining useful over time.

Cons of dynamic org charts

• Require reliable technology and software, which could prove costly for start-ups.
• Can be overwhelming for smaller teams or simpler organizational structures.
• Depend on consistent data input to remain effective and accurate.
• May raise data security concerns if sensitive information is not protected.

Leaders benefit from clearer insights into resource allocation and decision-making. New employees experience smoother onboarding by quickly understanding team dynamics. Also, these charts are scalable, adapting to organizational growth or restructuring. When using this type of org chart, organizations should ensure regular updates. They should educate employees on their use and implement data security measures.

How to maintain an effective org chart

Keeping an organizational chart updated ensures it remains a useful tool rather than an irrelevant document.

• Scheduled reviews: Regular updates make sure the org chart reflects current roles and responsibilities.
• Feedback integration: Incorporate input from employees to capture informal relationships and practical workflows.
• Technology upgrades: Use advanced org chart software to automate updates and provide analytics.
• Role clarification: Regularly review job titles and responsibilities to ensure alignment with organizational goals.
• Scalability planning: Prepare the org chart to allow future growth or structural changes with more flexible frameworks.

Never assume that your org chart is up to date without checking with ALL teams and departments. Sometimes subtle internal changes in lines of reporting or delegation can make a big difference.

Limitations of org charts

While org charts are essential and powerful tools every organization should have and leverage, they have limitations.

• Org charts are only visual representations of formal relations. They don’t capture the dynamism of informal interactions that are at the heart of any creative environment.
• They only provide a high-level overview of an organization’s structure, and risk oversimplification.
• Org charts can easily be misinterpreted as describing a structure of power and decision-making rather than communication and relations.
• While org charts are good at showcasing the presence of authority and ownership, they don’t explain their extent.
• Org charts need constant maintenance, especially in rapidly changing organizations, to be effective tools.

Are there alternatives to the traditional organizational chart?

As disruptive start-ups look to do things differently, some companies prefer to avoid hierarchical org charts.
Instead, these companies prefer to work in flexible, agile teams. They may choose to chart skills, decision-making rights, or other aspects of their workforce. Some create temporary structures on a project-by-project basis.
Even in such cases, a project can’t succeed if lines of responsibility and not clearly defined. Even if it is not given that name, something like an org chart must be agreed for a project team to function.
The ten commandments of organizational charts

Here are ten considerations to bear in mind when constructing, editing, or referring to any kind of org chart:

1. Clarity above all: Ensure the chart is easy to understand, with clear reporting lines and logical groupings. Avoid unnecessary complexity.
2. Keep It up to date: Regularly update the chart to reflect new hires, role changes, and structural adjustments.
3. Use standardized formats: Maintain consistency in design elements such as fonts, colors, and shapes, for better readability.
4. Highlight key roles: Emphasize leadership positions and main points of contact to help viewers navigate.
5. Include relevant details: Add to basic information (name and title) with contact info, department, and responsibilities where appropriate.
6. Adapt to the audience: Tailor the level of detail to the intended audience. For instance, create a high-level overview for executives or offer detail for HR teams.
7. Plan for scalability: Design the org chart with future growth in mind. Ensure it can accommodate new roles or departments without needing a big overhaul.
8. Leverage technology: Use software tools that provide real-time updates, collaboration, and integration with other business systems.
9. Show cross-functional relationships: Include dotted lines for roles that interact across departments to promote collaboration.
10. Avoid overemphasis on hierarchy: Ensure the chart invites communication and collaboration rather than just illustrating power dynamics.

Let Deel help populate your org chart

There’s little as demoralizing as an org chart full of empty boxes. Let us help you fill those vacant roles with international talent by adopting our HR & payroll platform. Why not request a demo today.