What Is an Org Chart and Why Is It Important?

Most companies have an org chart. And most people, at some point, will wonder about the purpose of that chart, which HR often tucks away a digital folder to collect digital dust.

In reality, a well-designed and accessible org chart can help your organization increase productivity and collaboration and add transparency and accountability to your structure and processes. In this post, you’ll learn about the value of an org chart and how to create and manage one yourself. 

What is an org chart?

An org chart is a diagram that visualizes the reporting relationships within an organization. An org chart can go by different names, like organizational chart, organogram, and organigram. 

Org charts have many structures and formats, but their underlying function is always to facilitate the understanding of an organization’s structure and relations.

Why is an org chart important?

An org chart helps employees understand the company's different departments, teams, projects, and reporting structures. This is important because a company’s chain of command becomes blurry and confusing as it grows and evolves, eroding accountability and efficient communication. 

Miscommunication and blurry divisional lines can be painfully evident in large organizations, where direct contact is limited. One great example of this is the infighting, lack of communication, and unclear reporting structures that plagued Microsoft before Sathya Nadella pushed for a massive reorganization in 2014.

A well-managed org chart can act as a map to help project managers launch complex projects. But an organization chart is equally important in startups and small businesses, as it can help structure workflows and decision-making in a more efficient way.

An organization chart is also extremely important for human resources teams. It can highlight inefficiencies in the structure of an organization and the need to revise job titles. They can also use org charts to make contact information accessible and give new hires a lay of the land during onboarding.

History of the org chart

Many sources will credit Daniel McCallum as the creator of the first modern organizational chart for a US business in 1854. But human beings have structured their knowledge in a visual representation for centuries before that, in forms such as genealogical trees.

In fact, an org chart resembles ancient data structuring formats, like the genealogical tree or any of the many different forms of taxonomies, or even ontologies.

Structuring and restructuring data helps human beings learn about the world around us. We create taxonomies, or even ontologies to classify and organize our knowledge or to map our understanding of reality. Similarly, organizational charts are the tool that describes and classifies the reality of a company and the relations within them.

Most common types of organizational charts

There are three main types of organization charts. Each differs slightly from the others, to adapt to specific organizational needs, and each has its own pros and cons.

Hierarchical: For traditional top-down teams

The hierarchical organizational chart represents structures in a top-down layout with clear reporting lines. It is similar to a family tree. The organizational structure will stem from the C-suite with dotted lines connecting each subsequent layer to their manager.

This form of org chart is most helpful to describe a top-down structure. However, many organizations are striving to move away from this structure. 

Matrix: For large teams with complex reporting structures

A matrix org chart is a representation that captures multiple reporting lines. Matrix charts work best when the company structure allows for employees to report to more than one manager. A developer, for example, might report both to the IT lead and to the Product lead. A matrix chart will help visualize this complex reporting structure, especially in larger organizations.

The drawback is that if these relations are not prioritized or clearly structured, they can lead to confusion or conflict. Imagine new employees having to navigate multiple reporting lines in their first weeks of work, for example.

Flat: For small teams with simple reporting structures

This org chart template is perfect for any company that has a simple internal structure with reduced middle management. The flat organizational chart usually has two levels, with upper management (chief executive officer and similar) and employees who report to them directly. This will often be the organizational structure of a small business.

A flat organizational chart is simple and clear. It’s ideal in the startup phase of a project. But it can quickly become outdated as organizations grow, causing conflict between teams as the whole internal structure might report to just a handful of people.

The most important elements of an org chart

Certain elements of organization charts transform a bland visualization of a company’s internal structure into a powerful human resources tool—you can find more ideas to boost your HR success with our employee handbook examples. If you are in the process of designing an org chart, make sure to include as many of the following elements as possible:

• Photos: Turn a list of names into a personable cast of characters 
• Contact information: Facilitate internal communication by making contact information visible and available
• Core tasks: Don’t just focus on the official role, mention what everyone’s key tasks and responsibilities are
• Coverage info: Designate the person to contact when each team member is out of office
• Starting dates: Identify people who have the most hands-on experience
• Locations: Clarify each person’s time zone, especially when a company works remotely

Create an org chart without leaving Slack

Not a designer? Not a problem. Even though creating an org chart is intimidating, you don't have to do it alone.

At Roots we offer an org chart software plugin that will enable your human resources team to create and manage your entire organizational chart template from the comfort of your Slack workspace.

Our plugin features all the classic fundamentals that make an org chart successful. From the ability to add location, start date, and role of every employee, as well as a traditional visualization with your dotted lines for reporting. 

And it does much more too! 

It enables you to search for people directly in Slack, with different filtering options, including department and tags. It will also automate updates to the whole company about new hires, role changes, as well as anniversaries and departures.

And the best feature of all? The Roots org chart plugin is completely free. Forever!

It’s clear that a well structured org chart that is built to fit your needs is a tool that will help your organization thrive, provide guidance to its leaders spot development opportunities and map your team’s skills and resource allocation, so what are you waiting for? Get started with the Roots Org chart plugin, and implement all the fundamental improvements to your org chart in a matter of just a few clicks.

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