What are organizational charts?

Organizational charts aka org charts are visual representations of an organization's structure or hierarchy. It clarifies who reports to who, who all work together in the same team, people’s designations,reporting managers and more.

Organizational charts have a variety of uses. They are used for succession planning, onboarding new hires and even serve as a simple, reliable people directory for employees’ reference. Visually, they are a bunch of boxes and lines, boxes representing people, lines representing reporting relationships and operating levels.

organizational-charts

Who can use organizational charts?

Recruiters /Hiring managers

Foreseeing staffing needs, leadership needs, training needs, identifying ready-for-promotion employees, skill gaps, talent gaps, etc and acting on them to achieve or align with company’s goal and vision are some of the ways in which recruiters and hiring managers can use organizational charts. This empowers   to proactively plan and respond to the  upcoming workforce needs.

New hires

During employee onboarding, new hires can get a quick peek into what the organization’s structure looks like, who reports to who, where they fit in the whole organizational tree, their colleagues or team, their reporting manager and more.

They can look up the contact information of any colleague if necessary until they get familiar with the place and the team.

Employees

For your employees, it is where they turn to when they quickly need a colleague’s contact or any other information. Self-service is a great add in org charts - if employees can update their own profiles, employee database management would be less tedious for the HR.

Org charts are  also a quick way to learn about how the organization is fleshing out, the colleagues who joined them recently and what they do.

Benefits of using org charts

Workforce planning

Org charts, also called organograms give you the ability to anticipate skill and talent gaps, future staffing needs, leadership/ management needs, teams or functions that require training, etc. Your recruitment and management teams can hence be proactive and plan hiring or training with much better planning.

Communicating reorgs

Any growing company will face structural reorganization from time to time. During such times your org charts can be the single common point of structural reference for all your employees. What’s even better is if your org chart software automatically recontructs the team organizational structures when you update reporting relationships in your employee database.

People relationships

The ability to add people profiles to your organizational charts puts faces and sometimes even a personality to names. So your people can learn about each other, find friends with similar interests, find conversation-starters and more.

It also strengthens and optimises collaboration because people can quickly look up who’s responsible for what and their contact information. Meaning, they can reach out to the right people the very first time without having to ask around or shoot random emails.

New hire onboarding

Organizational charts are a great way to show your new hires what your company’s reporting structure looks like, who the leaders are and what they do, who’s who, who to reach out to for what, who their colleagues will be and more. They are really helpful in quickly assimilating the new hire into the organization.

What makes your org charts powerful?

Being backed by a layer of data

Simply names and titles won’t do. Your org charts can do better than that - add photos, a small employee bio, fun facts, common interests, professional history, certifications etc. When a name and face is backed by a strong in-depth profile, it turns more rich and valuable both to employees and the HR team.

Being available on the go 

When someone needs to contact a colleague quickly, say from a remote location, or assume they are on the go, imagine having to open their laptop, connect to the internet to look a teammate up. It would be frustrating. It’s one thing to have all the powerful information and another to make it available to your employees at the right place, on the right device.

Search 

Skimming through the company’s organizational chart can be quite interesting especially if you are collecting fun facts about your employees. However, it's important to remember that in most situations people are trying to find someone or their contact information, and to make that easy your org chart needs to have an excellent in-built search function and not have them scroll through an entire database  of files.

Being shareable 

Static org charts made on spreadsheets and lost under a pile of files are long gone. The changing organization needs and the modern workforce demand a more dynamic org chart. One that can be updated frequently or automatically based on other systems, charts which can be updated with ease and shared with all.

What are the different types of organizational structures?

Very few organizations rethink their organizational design or structure as often as they rethink or realign their strategy or ways of operation. Organizational structure is vital to execute company goals and achieve company targets and have to be thought about intentionally and holistically. It’s not enough to just shift a few teams and realign just them.
As needs, processes and market demands change it becomes the company’s responsibility to support their employees by rethinking organization design.
The structure is what holds everything else together just like in any other case. Org design, 

Functional organizational structure

People are grouped under their managers or leaders based on their functions or specializations. For example, all marketers are grouped under the marketing head.
The leads of each function then report to a common manager who manages and integrates the efforts of these functions to create value for the customers.

Hierarchical organizational structure

This structure relies on a vertical chain of command. In this type of organizational structure every employee has a clearly assigned supervisor or manager. People are grouped based on function, location, or the product/service they work on. Hierarchical organizational charts will have multiple levels of management.

Matrix organizational structure 

When two lines of command are vital and equally important to the organization’s way of functioning, matrix is the way to go. Say for example, a software engineer may be reporting to the engineering head and the product manager.

People with similar skills working on a same project/assignment are grouped together in teams. Most often teams in a matrix have people reporting to multiple managers which can lead to more thought through and discussed decisions. At the same time, it can get a little complex if people report to more than two managers.

Horizontal organizational structure

This chart type eliminates multiple middle management levels. It’s flat. It’s suitable for small companies or startups and cannot be embraced by bigger organizations.
The flat hierarchy helps everyone take ownership, stay accountable and partake in decision making. Meanwhile, it also ensures that people have superiors to report to - the ones who hold things together.

Network organizational structure 

It’s a slightly a chaotic yet flexible structure that accommodates informal relationships and social networks within the workplace.
Organizations that are focused on growing rapidly, evolving exponentially in a constantly changing environment adapt this structure - people are empowered with autonomy, leaders manage, facilitate and coordinate all internal and external relationships. These structures rely heavily on rapid communication and mutual trust in relationships.

Geographical organizational structures

When organizations span across multiple geographies they need localised teams that function independently. Such organizations embrace geographical organizational structures. In this type, each location will have it’s own marketing team, research team, sales team, HR team, etc.
Food chains are a classic example of this structure. They spread their franchises across countries and need local teams to understand and customize their recipes to the local market, they need marketing teams to understand what makes the locals tick and align their strategies alongside those trends and emotions.
A central global team lays out policies, values and principles to which everyone else aligns. The global management team directs teams and helps lead decisions and align with the vision.

Product organizational structure

When a company has multiple product lines, people working on the same product line are usually grouped together as a team or a department. They report to an executive who heads the product line. This structure allows the freedom to create a more specific team based on the product line’s specific needs. For example if a certain team needs 5 people with skill A they can go ahead and hire them or move them in from other teams. Each product line can perform independently and the failure of one does not affect another.
This structure becomes even more useful and vital if the product lines of a company are very different from each other and require exclusive or highly-specific skills, and expertise. Most often the product teams are supported by a few common central teams such as the legal team, HR team, finance team, business development team, etc. 

Customer organization structure 

Some organizations like healthcare, banks or governments, structure themselves around the customers they serve. This helps them tailor their service for specific customer needs. For example,  A bank can have different teams which handle loans, credit cards, wealth management or insurance.
This structure helps group specialists to deliver the best customer service.

 

Choosing an organizational design

Before choosing an organizational design, here are a few questions to ask yourself.

1. What’s you USP, or competitive advantage?

The answer to this question will give you the base on which your design should be built - for example it will highlight your competitive advantage which could be technological innovation, diversification, low cost production, niche solution for highly-targeted market and so on. When you understand what it is that will help compete in the market, it will be easier for you to understand who to hire, what processes are critical, what your team objectives should be, etc.

2. Which business processes are significant to achieving it?

Once you have stated your strategy to compete, the next thing to do is identify what business process will be critical or directly affect it. This will help you create teams and prioritize resources for them and sometimes even help you decide what should be built in-house and what can be outsourced.

3. External environment

What does the external environment look like for your business? Do you procure materials from external vendors, outsource services? How thick is the competition for your product or services in the market? Does the nature of your business involve any uncertainties?
The answer to these questions will lead you to understand how to structure your teams to manage costs, beat the competition, handle procurement and contracts and more. It will also clearly show if you should go for a rigid or flexible organizational design.

4. Organization size

The size of the company is detrimental in choosing an organizational structure. For example, a rapidly evolving startup can choose a flatarchy but the same would turn chaotic for an enterprise. Bigger companies lean to functional, divisional or matrix structures. That’s because as the company size increases, the need for more complex teams and divisions increases. Without which it might be difficult to achieve synergy. 

5. What technology are you considering?

Technology affects how resources are transferred, stored or shared. It affects everyday communication, quality of workplace, etc. For example, a company with robust communication tools or technology can boldy choose a network organizational structure. Understanding where you stand in terms of technology is important before you choose an organizational structure.

 


More in detail about Freshteam  

Freshteam is powerful HRMS software for growing businesses. It covers everything in between when your HR first contacts a candidate to when an employee decides to quit and pursue a different venture - applicant tracking, candidate management, interview scheduling, offer management, new hire onboarding, organizational charts and employee database, and paid time off management. For a complete list of our plans and features head to our pricing page.