How Org Charts are Used
Org charts are useful for business enterprises, nonprofit organizations, educational institutions and governments. Regardless of the size of the organization, having a chart that outlines roles and reporting hierarchies is beneficial.
So, how are org charts used in real-world application? An organizational chart has four principal uses:
- To Show Management Structure
It shows the management structure of the organization at a glance. It can also show other organizational structures, such as relationships between companies with common or affiliated ownership.
- As a Planning Tool
Org charts are used to visualize and plan company reorganizations.
- An Employee Reference
It provides a reference for employees to help them understand their role in the organization, who they report to, and who reports to them.
- An Employee Directory
Adding other information, such as headshots, telephone numbers and email addresses allows the org chart to also function as an employee directory.
Let's examine how org charts are used in more detail.
The org chart shows the individual roles and chain of command within the business structure. A well-managed company will function according to this framework, as well.
The chart at the top of this page shows the organizational structure of a video game company. This hypothetical company has four positions that report to the CEO.
- Office Manager
- Art Director
- Director of Technology
- Director of Operations
At a glance you can see that the company is divided into four areas of responsibility.
- Artwork Creation
An executive is responsible for each of these areas.
An org chart is useful as a valuable management tool. It allows managers to effectively manage goals, develop strategy, and improve interaction between individuals or entire departments. If the org chart structure does not mirror the way the enterprise functions, it points to potential problems in operating the company.
Other Organizational Structures
An organization chart can also be used to show other hierarchies, such as corporate entity structure. The chart below shows the corporate structure of a commercial real estate company. Each property is owned by a separate LLC, and all of the LLCs are owned by a holding company. The holding company has also organized a management LLC to oversee property operations.
A Planning Tool
You can also use an org chart for planning purposes. An example is to visualize alternative ways of organizing a work force. This is much easier to do if the software you use to draw the organization chart makes it easy to move boxes around without having to manually adjust every position. For example if you wanted to move the Office Manager in the chart above to report to the Director of Operations, just click that box and drag it to its new position.
A good org chart software program will allow you to perform this type of operation and will also reformat and realign the diagram for you, automatically. Using org charts for planning is simplified with a tool designed for this purpose. If you want to learn more about how to evaluate org chart makers, read this article.
An Employee Reference
Many organizations give a copy of the organization chart to each employee, or make it available on a company intranet.
Once an employee finds their position on the chart, they can see immediately who their supervisor is, who their co-workers are, and how they fit into the organization.
In a small organization, you can easily print the organization chart on a single page and distribute it this way. In a larger organization the most practical way to share the org chart with employees is with an online copy viewed with a web browser.
An Employee Directory
Whether you are new employee in a small organization, or any employee in a larger organization, an org chart can serve as a directory to the other employees. Adding headshots is a great way to allow people to use the org chart to "put names with faces."
An organization chart makes it possible to find the name of the person responsible for a particular function. For example, it you want to know the name of the VP of sales' assistant you can immediately find it from the org chart.
A chart shared electronically can be even more useful. The name of each person in the chart can provide a hyperlink to their email address. Phone extensions can also be included in the chart.
You can also hyperlink boxes in the chart to other electronic documents, like the job description of the position.
More specific information about creating an org chart is available in the article, How to Draw an Org Chart.