08/09/2007 Business & Finance

An organizational chart provides a tool for evaluating titles and functions within an organization or business.

An organization chart (org chart) is a diagram of a reporting hierarchy that is commonly used to show relationships among employees, titles, and groups.

Org charts can range from simple diagrams, as in the following illustration, to large and complex diagrams that are based on information from an external data source. The shapes in your org chart can display basic information such as name and title, or details such as department and cost center. You can even add pictures to the org chart shapes.

City Organizational Chart

Market Organizational Chart

IT Organizational Chart

Organizational charts provide a graphical method to show relationships within a business or other organization. Organizational charts are hierarchical and are read from the top down. Imagine an upside-down tree with many branches. The top of the organization creates the root of the tree. Subordinate functions or people make up the branches on the tree.

Let's make a sample organizational chart for a small organization. Let's imagine a small manufacturing company, Acme Ballet Shoes for the Coordination Challenged. Acme has twenty-five people on its staff.

At the top of Acme's hierarchy are the President and Chief Operation Officer. The president has an Administrative Assistant who reports only to him. Place a box to one side of the President's box, but make it smaller than that of the President. On a piece of paper or on your computer screen laid out horizontally (landscape) place a box with his/her title, followed by his/her name or the number one. Two vice president report to the president. Add two boxes for Vice Presidents under the President's box and label them "VP of Operations" and "VP of Sales and Marketing, respectively." Production, Quality Control, Shipping, and Receiving report to the VP of Operations. Place a box for each of these departments under the box for VP of Operations. As you might guess, the Sales and Marketing departments report to the VP of Sales and Marketing. Place the name of the supervisor for each department in its box. Note that the Shipping and Receiving, although separate departments with discrete functions, have the same supervisor. Show his/or her name in both boxes. Create a small box for each staff member in each of the departments, and list his or her name in the box with his/her title. Connect the boxes with lines to show the relationships and to complete the "tree branches".

We've forgotten one person, the company Accountant, who reports to both the President (for accounts payable and receivable) and to the VP of Operations (for purchasing and inventory). Place the accountant's box between the President and VP of Operations and connect him/her to each with a dotted line. Dotted lines are used to show dual reporting structures within an organization. For example, a person may be assigned full-time to a specific department, but have a "dotted line" relationship with another department or organization.

The process is similar for a large organization, but names are not listed on the chart. However, each title will likely show a head count next to the title. Also, any vacancies are specified on the chart.

A very small organization will likely fit on one piece of paper. Other organizations will require oversize (8.5" x 14" or 11" x 17"). To create or print an organizational chart on standard 8.5" x 11" letter size paper, the chart will need to be broken into discrete units, usually divisions (groups of departments) or departments. Typically, the executive positions are listed on the first page of a multi-page chart. Pages should be numbered and the charts should be annotated, similar to the annotation in a map book, to show the chart to which a section connects.

Finally, you can use box size, line weight, and color to show relationships and to make your chart easier to read. The organizational chart is a tool used by both management and staff to document and better understand relationships and functional roles within and organization.