Every company, regardless of its size or area of activity, has several processes, obligations and demands. For everything to occur in an appropriate, harmonious and structured manner, it is essential to have control and organization.
The business organizational chart is a very essential document in this regard. However, are you aware of its nature, purpose, types, and significance? Therefore, before utilizing it, it is worthwhile to study more about the topic.
Therefore, if you are interested in learning more about the corporate organizational chart and how to create it, check out the information below!
What is a corporate organizational chart and what is it for?
An organizational chart is a graphic representation of an organizational structure describing departments and roles. An organizational chart provides quite a bit of insights into how the company operates, who reports to whom, as well as each department’s and individual’s responsibilities and expectations.
This way, it is possible to have a clear and easy view of the company’s operational levels. In other words, the document will help identify who the leaders are and who the subordinates are in each area.
What are the types of business organization chart?
There are five main types of business organizational charts. See below the characteristics and how each one works!
Classic (vertical) organizational chart
At the top of it is the company’s owner, president, or chief executive officer. The other departments and roles within the company are ranked behind him. For instance, managers, directors, salespeople, interns, assistants, etc.
This organizational chart is the most used by traditional companies and is structured by level of hierarchy. Its representation follows a pyramid idea.
Horizontal organizational chart
Many companies, especially the more contemporary ones, have been concerned with the issue of hierarchy. Their idea is to convey a different image in relation to leadership, which involves the connection and collaboration of teams and employees.
In this sense, these organizations have chosen to build a horizontal organizational chart, valuing everyone’s work and giving more autonomy to professionals. Here, there are still operational levels, but the representation is made from left to right.
Thus, hierarchy ceases to be the focus and gives way to shared responsibility. That is, everyone involved works side by side, in harmony and partnership.
Circular organizational chart
Another way to create a business organizational chart without emphasizing the issue of hierarchy, as occurs in the vertical type, is through the circular format.
This creates an understanding of the organizational structure in a more nuanced manner since everyone is within a circle. At its center is the owner, CEO, or president of the company while all the employees are scattered in the wider, bigger, and more open circle, and the directors or supervisors are located in another orbit away from it.
Sectoral organization chart
The sectoral organizational chart is structured in a similar way to the classic (vertical) one. However, as the name suggests, it is defined based on the company’s sectors.
This type of organizational chart is especially useful for large companies, such as multinationals, that have many employees. It can be divided into the president or CEO at the top and, below that, the commercial, operational and administrative sectors.
Below the commercial sector, for example, there may be purchasing, marketing and sales. After the operational section, it is worth including logistics, production and IT. And, below the administrative department, it is common to include accounting, finance and people management .
Linear Responsibility Organization Chart
Finally, there is the linear organizational chart of responsibility. It is structured in a table format and, in addition to indicating the hierarchical level from left to right, it shows the activities, duties and obligations of each sector or position.
In the horizontal part (top), there are the sectors, such as human resources and finance, or the positions — president, manager, director, assistant, etc. In the vertical part, there are the descriptions of the tasks, for example:
- approve budgets;
- make investments;
- pay employees’ salaries;
- define marketing strategies ;
- create content;
- analyze results;
- do training.
What is the importance of the corporate organizational chart?
After understanding what a business organizational chart is and what types there are, it is worth knowing that this document is essential for companies because it helps to:
- understand how the company’s structure works;
- organize information;
- identify flaws and points for improvement;
- hire new employees;
- create career plans for employees;
- improve internal communication;
- integrate new employees (onboarding);
- improve project management;
- maintain a level of transparency with employees ;
- improve decision making.
So, as you can see, there are several positive points and advantages to using a corporate organizational chart in your business. Therefore, it is important to know how to create one and put it into practice in your company.
How to make a business organizational chart?
You are now prepared to design your company’s organizational chart. The first thing you should focus on is the information that this paper should contain. There are four primary components:
- horizontal division of labor: jobs and industries that share a common level of hierarchy;
- hierarchy: level of subordination, such as top to bottom or left to right;
- lines of communication: lines that indicate the interconnection between positions and sectors;
- work units: these are the circles or squares that indicate occupations and departments.
With this information, you can start building your organizational chart. Next, you need to define which type best fits your business. With this definition, you can create a list of all the positions and departments in the company.
Finally, simply distribute them in the organizational chart template you chose. Once the document is finished, distribute it within the company so that everyone has access to it. Also, be sure to explain the importance of the organizational chart to your employees.
