Organizational Chart Basic Knowledge

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What's an Organizational Chart

Organizational Chart Type

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An org chart is the same thing as an organization chart. The term org chart refers specifically to the chart used to track human resources for the accurate management of human capital.

Organizational Chart Definition

An organizational chart is a chart which represents the structure of an organization in terms of rank. The chart usually shows the managers and sub-workers who make up an organization. The chart also shows relationships between staff in the organization which can be:

  1. Line - direct relationship between superior and subordinate.
  2. Lateral - relationship between different departments on the same hierarchical level.
  3. Staff - relationship between a managerial assistant and other areas. The assistant will be able to offer advice to a line manager. However, they have no authority over the line manager actions.
  4. Functional - relationships between specialist positions and other areas. The specialist will normally have authority to insist that a line manager implements any of their instructions.

In many large companies the organization chart can be large and incredibly complicated and is therefore sometimes dissected into smaller charts for each individual department within the organization.

There are three different types of organization chart:

  1. Hierarchical
  2. Matrix
  3. Flat

An organizational chart is a diagram that depicts the structure of an organization in terms of relationships among personnel or departments. An organizational chart also represents lines of authority and responsibility. Generally, an organizational chart is a horizontal or vertical tree that contains geometric shapes to represent staff or divisions. The lines that connect the shapes indicate relationships between the positions. An organizational chart indicates the formal structure of a business or company.

Most often, a rectangle represents a person, position, or department. In a hierarchical organizational chart, the Chief Officer or President is the top rectangle. The level underneath the chief officer contains high-level managers or executives, and each succeeding level includes the subordinates of the line above.

In standard organizational charts, the shape is similar to a pyramid. Often, box size is relative to the authority level of the position; for example, an executive position may have a larger rectangle than a subordinate position. Peers generally have boxes of similar size in an organizational chart. Lateral positions on an organizational chart indicate a relationship between departments on the same level of hierarchy in the organization.

In a standard organizational chart, solid lines depict a formal and direct relationship between positions. A double linked rectangle might indicate a situation with co-supervisors. A dashed line indicates an advisory or indirect relationship between positions, while arrows indicate the flow of communication. To indicate job sharing or dual responsibilities, a divided box might be used. An open position is sometimes represented by a dashed border surrounding a rectangle, or a box containing either TBH (to be hired) or TBD (to be determined).

Because in a large company, the organizational chart can be space-intensive and complex, smaller charts may be utilized to represent individual departments. Other common space-saving techniques used in organizational charts include a staggered tree method, a columnar stack, or a list style which provides names or job titles rather than boxes. To avoid the frequent needs to update an organizational chart, you might use position titles rather than the names of individual staff. Due to the changes in organizational structure, an organizational chart is not always up-to-date.

To create an organizational chart, you can use Organizational Chart software. Microsoft Word has a Diagram Gallery to create such a chart, and Microsoft PowerPoint and Publisher have similar capabilities. The use of software to create an organizational chart makes revisions and additions simple.

Human Capital Management

Effective management of human capital is essential for staying competitive. It is the goal of every forward looking company to decrease costs and increase efficiency. At the most fundamental level of managing human capital, you must have an org chart.

See the Benefits of Effective Human Capital Management:

  1. Identify key employees
    Allocate your resources in the most efficient manner. An org chart will help you identify key personnel and put them in a suitable position to maximize their effectiveness
  2. Assess your organization
    Evaluate the hierarchical structure of management and delineate clear paths of authority and responsibility. This will assist in creating a dynamic environment where employees understand their role within the organization and work together to further the goals of the company
  3. Develop and strengthen key areas of the organization
    An org chart will show you the strong areas of the organization and identify parts that need to be reorganized for effective and efficient results
  4. Create a dynamic environment
    Energize the company with effective management of human resources. With an org chart you can instantly reorganize the priorities of the organization to deal with changing markets and competition. Today's fast paced environment demands the ability to immediately allocate resources where they are needed.

Limitations of an Organizational Chart

There are several limitations with organizational charts:

  1. It only shows " formal relationships" and tells nothing of the pattern of human (social) relationships which develop.
  1. It shows nothing about the managerial style adopted (e.g. autocratic or democratic)
  1. It very quickly becomes out-of-date, especially in large organizations who change their staff regularly.

Chart showing the interrelationships of positions within an organization in terms of authority and responsibility. There are basically three patterns of organization: line organization, functional organization, and line and staff organization.

How to Draw Organizational Chart

The easiest way to draw a new org chart is by starting with an organizational chart template.
Simply choose New from the File menu, then select from the vast array of flowchart examples available at your fingertips under the Samples Pane.
Templates and examples listed under this category have all the special settings for grid snaps, line- and shape-linking, wizards, and other crucial attributes that make it easy to draw a flowchart.
You can start with an example that closely resembles your project or you can start with a blank page by choosing New Document.
To choose a template, double-click on it.

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