Every company, big or small and whatever area it may operate, has various processes, duties and demands. If everything were to take place appropriately, harmoniously, and orderly, control and organization would be required.
It is a very relevant piece of paper in the context. However, do you know what it is? What is it used for? What are the different types it has? And why is it that important? So it’s good to know a bit more about the subject before it is actually used.
Thus, if you’re eager to know more about the corporate organizational chart and how to make one, read the details below!
What is a corporate organizational chart and what is it for?
An organizational chart is a graphic description of the hierarchy of positions and sectors within an organization. It serves to help people better understand how a business works who does what, and what the roles and responsibilities of each department and professional are.
This way, the operational levels of the company may be made easily visible and transparent. To speak more accurately, the paper would identify leaders in every sector as well as those who would become subordinates to them.
If an organization does not have a structured organizational chart, then it will be difficult to know who to talk to or to whom one can report the situation. Such lack of structure also leads to process problems, low productivity, and a drop in employee motivation.
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
The first type of corporate organizational chart is the classic one, also known as vertical. In it, the president, CEO (chief executive officer) or the owner of the company is at the top. Below him are the other sectors and positions in the organization. For example, directors, managers, assistants, salespeople, interns, 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.
In it, the hierarchical levels are demonstrated in a more subtle way, as everyone is inside a circle. In the middle is the president, CEO or owner of the company. Around it is another orbit with directors or managers, while in the larger, more open ring are the employees.
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.
Indeed, as you have seen, there are a few positive points and advantages in utilizing a corporate organizational chart in the business. This is why learning how to prepare one and practicing it in a company is really important.
How to make an organizational chart in business?
Now you are ready to create your business organization chart. The first thing you need to pay attention to is the information that should be included in this document. There are four main elements:
- horizontal division of labor: positions and sectors that are at the same hierarchical level;
- 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.