An organisational chart has become a must-have tool to understand how a company is structured. Not only does it give everyone an idea of their place in the corporation, but it also allows us to make better decisions when it comes to distributing resources and tasks.
Below, we explain the advantages of using this tool and how you can make your own.
What is a company organisational chart?
An organisational chart, or organogram, is a hierarchical plan that shows the internal structure of a company. That is, a diagram that gives us an overview of the hierarchy, the teams or departments, and the managers for each one, etc.
In other words, it is a graphical representation of a company’s structure, showing the different hierarchies and levels within the organisation.
To be useful, it must fulfil certain requirements:
- Clear: anyone should be able to understand or interpret it.
- Brief: it should be a summary, so it can’t reflect all management levels.
- Ordered: it should represent the real structure of the organisation. Therefore, if this is vertical, it should form a chain from top to bottom.
The advantages of an organisational chart
The staff organogram is a very useful internal tool. The advantages it offers include being able to:
1. Clarify the structure of the organisation
The organisational chart allows us to easily define the chain of command and clarify the responsibilities and tasks for each member of the team. It also obliges us to assign a specific position to each employee.
Having a well-defined structure avoids, for example, a worker reporting to more than one person or there being more than one manager per department.
2. Avoid overlaps
On occasion, when a company grows quickly, it can create duplicates or imbalances in the size of the departments. An organogram helps to divide and organise work better. And in this way, the talent management department can allocate the available human resources better.
3. Facilitate decision-making
Seeing the company structure graphically makes it much easier to make decisions relating to the staff or the human resources required in the company. It is possible to identify any areas with a larger workforce, and surplus or badly allocated positions.
Types and examples of organisational charts
Depending on the structure of the company and what we want to show, we have the choice of different types of organisational charts.
Type 1 - Hierarchical organisational chart
This is the most common type of company organisational chart. It shows the hierarchy; that is, the people at the top have more authority and responsibility than those on the lower sections. It usually takes the shape of a pyramid or tree.
They are very simple organograms to understand and allow employees to easily comprehend their role within the organisation and who they report to.
Type 2 - Matrix organisational chart
This plan is useful for organisations where the structure has become complex, and one worker frequently reports to more than one manager. For example, a team of designers who work for one primary manager but who often take part in additional projects led by other people.
Type 3 - Flat or horizontal organisational chart
This organisational chart is characterised by having few middle management levels. In general, there are only directors and employees. This type of structure is typical of companies that view decision-making as a horizontal and participatory process.
This model works well in small companies or businesses in the initial stages, especially where there is a highly qualified workforce.
Type 4 - Vertical or linear organisational chart
This organisational chart starts with the CEO at the top, from where a series of lines stretch down, representing relationships with the rest of the employees. The remaining professionals are ordered in a top-down hierarchy of importance; therefore, the higher someone is, the more influence they have in decision-making.
Type 5 - Circular organisational chart
This is by far the most unique company organisational chart. However, it simply represents the hierarchy in a different format. The internal rings of the circle contain the most important positions, while the lower-level employees are placed in the outer rings.
The difference between this structure and a hierarchical organogram is that it does not view the directors at the top of the organisation sending orders down the chain of command; but rather that they are located at the centre, extending their vision outwards.
6 steps to make an organisational chart
When you decide to create an organisational chart, you can pick up your pen and paper to draw, or you could use HR software that lets you digitise the whole process.
Kenjo’s organisational chart function will let you create plans automatically and modify them easily whenever you need to. In this way, it will be much simpler to keep it updated. What’s more, from the organisational chart itself, you can directly access every employee’s information and identify what requirements there may be in each department.
These are the steps to bear in mind when creating one:
1. Define the purpose and scope of the organisational chart
Before starting work on your organisational chart, try to answer the following questions: are you going to do a plan for the whole company or just one department? Will it be for internal or external use? What do you want to show clearly? This will help you address the following steps more easily.
2. Review the chain of command
Establish the company’s hierarchy and reporting structure. That is, who leads, who makes decisions and who reports to whom. Even if the organisation has a horizontal structure, there are always roles with more seniority than others.
3. Count the different departments
Once you have a clear idea of the top-down structure, it is important to see how it is divided horizontally. Note what departments there are in the company and which people are part of them.
4. Define each department’s responsibilities and tasks
An organisational chart is not simply an outline of the structure; it also exists to recognise which role each team or person in the company performs. Therefore, once you have counted the departments, review what tasks or responsibilities each one has, to check there are no duplicates.
5. Establish the management scope
With management scope, we are referring to the reach of each worker’s decisions and how these influence the work of others. This helps to define, above all, the dependence or independence of each worker.
6. Work top down
Once you have gathered all this information, it is time to draw. Our recommendation: start at the top and work your way down the chain of command. The first to appear should be the CEO, followed by executive directors, department managers, middle managers, etc.