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organisational charts

Organisational Charts: What They Do and Their Importance [free template]

In this post, we will look at the various types of organisational charts and discuss the benefits of creating one for your company. We will also discuss what you need to keep in mind when you design your company’s chart, and how software and templates can help you get the most from your hierarchy diagram.

✅ Download Factorial’s Free Organisational Chart

What’s an Organisational Chart?

An HR organisational chart, also known as an organogram, is a visual representation of the internal structure of an organisation. Organisation charts detail all the positions and ranks within a company, and how each role relates to the organisation as a whole. Job titles and employee names are usually included in boxes or circles, and lines are used to illustrate how employees relate to other positions within the organisation. This enables employees to get a clear overview of how the various levels of a company are organised, and how they fit into the structure of the company.

Organisational charts are usually managed by HR and shared with other business areas. Once you have designed and distributed your chart, it is important to keep it updated. This includes adding new starters during the onboarding process, removing leavers, and updating roles in accordance with promotions and departmental changes. This way, all your managers’ employees will have access to real-time data at all times.

Organisational Charts Benefits

Organisational charts:

  • Provide clear lines of authority and business reporting. Employees know who to report to, and who to contact if a work-related issue arises. This saves time as employees are able to quickly access information instead of asking questions and sending emails.
  • Enable a clearer understanding of employee roles and responsibilities.
  • Improve employee relations. By adding photographs and personal information you can help break the ice between employees. It can also help employees connect faces with names.
  • Help new employees to learn the names and roles within the company. This is especially useful as new starters can often feel overwhelmed with information when they first join the company. A chart can help them understand how they fit into the company, and who they will be working with.
  • Illustrate clear lines of growth opportunities and give employees something to aspire to.
  • Make it easier to plan and allocate resources as you have a clear visual of the structure of the company.

Organisational Charts Disadvantages

Although there are great benefits to implementing an organisational chart in your company, it has to be well-managed. Traditional static organisation charts require regular updating which can involve a lot of work. This is especially true if your company is growing rapidly or you have high turnover or attrition rates. More often than not, time restraints make this impossible and companies end up with an outdated chart that doesn’t reflect the reality of the company.

Traditional organisational charts are also focused on more of a flat hierarchy structure. They do not take into account modern organisational structures that are more focused on innovation, creativity and collaboration.

Types of Organisational Charts

The standard, traditional org chart is shaped like a pyramid. Senior management and executives are at the top of the chart, management is in the middle, and all other employees are at the bottom. However, there are a number of alternative styles available too. It is important to consider all options before designing your chart.

Types of organisational charts include:

  • Hierarchical org structure
  • Functional org structure
  • Horizontal or flat org structure
  • Divisional org structures
  • Matrix org structure
  • Team-based org structure
  • Network org structure

Let’s take a look at the three most common types: hierarchical, matrix and flat org charts.

Hierarchical Org Charts

The most common design is the traditional hierarchical org chart. As we mentioned above, it is shaped like a pyramid with a clear top-down chain of command. The CEO is at the top, followed by executives, management, low-level and entry-level employees. With traditional hierarchies such as this, employees usually only communicate with those directly above and below them on the chart.

Hierarchical org charts provide employees with clear guidelines about who they should report to and what the specific roles and responsibilities of each role are. They also provide employees with a clear, straight path for promotion. However, traditional charts can also lead to increased bureaucracy and hinder inter-departmental communications as the structure is so rigid.

Matrix Org Chart

A matrix org chart is shaped more like a grid. In a matrix there are usually two chains of command, one along functional lines and the other along project, product, or client lines. If you operate with cross-functional groups instead of vertical silos (i.e. an employee has more than one manager) you might want to consider this type. For example, you might choose to use this chart for specific projects and tasks.

A matrix organisational structure allows multiple departments to easily communicate and collaborate on a project. They provide a more dynamic view of the company and allow managers to select employees according to the needs of a specific project. However, they can lead to conflict between managers and departments and they require more regular updating than traditional org charts.

Flat Org Chart

A flat org chart, also known as a horizontal chart, is used in companies with a non-hierarchical structure. In other words, organisations where there is not as much of a distinction between senior management and lower-level employees. This structure is commonly used for startup businesses or those that do not have many employees. The majority of employees hold the same level of responsibility and there is less of a focus on chains of command. This encourages ownership and personal responsibility and fosters more open communication.

Some companies choose to maintain this structure after they have grown large enough to define specific departments. This is because it encourages coordination and innovation. However, it can be difficult to maintain once a company grows and it can lead to confusion if lines of command and reporting are not clearly defined. A lack of middle-management can also result in potential conflict.

How to Plan and Draw a Basic Organisational Chart / Organogram

There are a few things to consider before you design your organisational chart. Firstly, you need to define your purpose and scope. What benefits do you want to gain from your organogram? Will you include roles only or personal information relating to each employee? Will you use one chart for the entire organisation, or just a specific department or project?

The next step is to gather information. You will need to conduct a full audit of all your staff so that you include all roles in your chart. Are you clear on all lines of command? Is there a defined line of reporting for each position? If you are including personal information, will you be adding individual employee photographs too? If you chose to include personal information, be mindful of data protection regulations.

Once you establish the “whats” and “hows”, you need to think about how you will manage your organisational charts. Will you use software to maintain them? Or will changes need to be updated manually? Will you use an org chart template? How will you distribute your chart so that employees have access to up to date information at all times? You might also want to consider using different colours, logos and animations to make it more visual and bring it to life. The easier it is to understand, the more useful it will be for your employees.

Factorial’s Organisational Chart

The best way to define and manage your organisational chart is to use software or a template for org chart. You can use it to create, distribute and maintain your chart so that information is available in real time. Aside from being an effective and reliable tool, the right software and template can also save you time, effort and money in the long run.

With Factorial’s free template and HR software solution, you can generate your own organisational charts at the click of a button. Just enter a few simple details and you will get a visual and intuitive org chart based on your company and departmental structure which you can then share with your employees. With our easy-to-use software, you will have a unique and customised space to manage your org charts so that they are up to date at all times. This will help you better understand the structure of your company, improve communications, and help you identify any gaps in the company.

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Written by Cat Symonds; Edited by Carmina Davis

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