What Is an Organizational Chart?

An organizational chart is a diagram that visually conveys a company's internal structure by detailing the roles, responsibilities, and relationships between individuals within an entity. Organizational charts either broadly depict an enterprise company-wide or drill down to a specific department or unit.

Organizational charts are alternatively referred to as "org charts" or "organization charts."

Key Takeaways

  • An organizational chart graphically represents an organization's structure, highlighting the different jobs, departments, and responsibilities that connect the company's employees to each other and to the management team.
  • Organizational charts can be broad-based, depicting the overall company, or can be department- or unit-specific, focusing on one spoke on the wheel.
  • Most org charts are structured by using the "hierarchical" model, which shows management or other high-ranking officials on top, and lower-level employees beneath them.
  • Other types of charts include the flat org chart, in which individuals are all placed equally, and the matrix chart, in which people are grouped by skill, department, or another type of sub-category.

Understanding Organizational Charts

Organizational charts graphically display an employee's hierarchical status relative to other individuals within the company. For example, an assistant director will invariably fall directly below a director on the chart, indicating that the former reports to the latter. Organizational charts use simple symbols such as lines, squares, and circles to connect different job titles that relate to each other.

Types of Organizational Charts

Organizational charts are constructed in three main formats.

Hierarchical

This most common model situates the highest-ranking individuals atop the chart and positions lower-ranking individuals below them. For example, a public company typically shows shareholders in the highest box, followed by the following in descending vertical order:

  • Chairman of the board of directors
  • Vice-chairman of the board
  • Board members
  • Chief executive officer (CEO)
  • Other C-suite executives (joined to one another by horizontal lines)

Other job titles that may follow c-suite execs include:

  • President
  • Senior vice president
  • Vice president
  • Assistant vice president
  • Senior director
  • Assistant director
  • Manager
  • Assistant manager
  • Full-time employees
  • Part-time employees
  • Contractors

Organizational hierarchies generally depend on the industry, geographical location, and company size.

Flat

Also known as a "horizontal" chart, the flat org chart positions individuals on the same level, indicating more power equality and autonomous decision-making ability than is typical with employees in hierarchical corporations.

There is no single correct way to fashion an organization chart, as long as it identifies the officials, employees, departments, and functions of the firm, and how they interact with each other.

Matrix

This more complicated organizational structure groups individuals by their common skill-sets, the departments in which they work, and the people they may report to. Matrix charts often interconnect employees and teams with more than one manager, such as a software developer who is working on two projects—one with his regular team manager, and another with a separate product manager. In this scenario, the matrix chart would connect the software developer to each manager he is working with, with vertical lines.

Regardless of a company's structure, org charts are extraordinarily useful when an entity is contemplating restructuring its workforce or changing its management complex. Most importantly, org charts let employees transparently see how their roles fit into the overall company structure.