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Why is an org chart important?

The most important elements of an org chart

Most common types of org chart templates

Limitations of org charts

What is an Org Chart

An org 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.

Why is an org chart important?

A well-designed and accessible org chart is used to add transparency and accountability to company structure and processes. 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 have a clear overview of the company’s departments, teams, projects, and reporting structures from the moment of their onboarding
  • Strategists can spot areas of miscommunication 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 

The most important elements of an org chart

The core elements of every org chart are:

  • Employee name
  • Role/Title
  • Reporting lines

However, you can transform 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
  • A list of core responsibilities gives 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

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 represent company structure in a top-down layout with clear reporting lines, similar to a family tree.

The organizational structure will stem from the C-suite, following the company’s chain of command, with 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 offer increased clarity compared to other chart structures
  • A hierarchical org chart is stable, as individual changes do not impact the system as a whole

Cons of a hierarchical org chart

  • A hierarchical org chart may be rigid and, in some cases, need complete restructuring when significant changes occur

  • Hierarchical structures can become overwhelming for bigger organizations

Matrix - For large teams in complex environments

Matrix org chart visualizes structures with multiple reporting lines. For example, 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 help visualize this complex reporting structure better than a hierarchical one.

Pros of a matrix org chart

  • Cross-department connections are more clear
  • An interconnected structure makes opportunities for knowledge and resource sharing more visible

Cons of a matrix org chart

  • Unclear reporting hierarchies make it hard to identify decision-makers

  • Multiple reporting lines can cause confusion or miscommunication

Flat - For small teams and startups

A flat organizational chart is perfect for startups or small businesses with simple internal structures and smaller 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 structure means that communication lines are streamlined, as decision-makers are identified quickly

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

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