Why Your Business Should Utilize An Organizational Chart And How To Create Them?

Believe it or not, starting a business can be both challenging and exciting. At first, startup founders wear multiple hats, manage tasks on the spot, and make important decisions quickly. 

While this level of agility and flexibility is essential, you need to create an organizational chart as the startup expands. 

Organizational charts are visual representations of a company’s departments, hierarchy, and reporting lines. It’s like a roadmap, helping stakeholders, employees, and customers understand how a business functions.

Whether you have just started or have an established business, an org chart can be useful. Not only does it show how your business works, but it also plans for future growth and changes.

This article will explore why companies need organizational charts and how to create them seamlessly. 

6 Reasons Why Your Company Needs an Org Chart

Here are six benefits of using organizational charts for businesses:

• Clear Reporting Structures

Org charts show who reports to whom in a company. They help everyone understand their roles, how work should be done, and how information is shared. To do this efficiently, it’s good to have a manager with a small group of employees reporting to them.

In big companies, it is important for employees to know who they are reporting to. This way, when you have issues or need advice on tough problems, your boss can help you quickly. 

It’s better to ask for help early instead of waiting for scheduled meetings. Not to mention, having a clear communication chain spreads messages effectively and reduces misunderstandings.

• Help Streamline Onboarding Processes

New employees often find it hard to get familiar with their coworkers. However, an organizational chart displaying the company’s structure helps them recognize faces and names beforehand. 

This eases the initial phase for fresh hires, enhancing efficiency and comfort during onboarding.

• Impacts On Long-Term Planning

Org (visual) charts can help you see if any team or employee might slow down progress over time. If employees/teams are handling a heavy workload, you can immediately notice it on the organizational chart. 

This is useful for creating backups and contingencies in case something goes wrong, which helps keep your business running smoothly. 

• Restructuring Made Easy

For rising startups or small businesses, growth is natural and inevitable. This often involves restructuring teams and departments. Employees can be moved to different teams or areas based on their skills. 

When you create an organizational chart that has detailed employee ability information, management can easily reconfigure and create well-balanced teams during these growth phases.

• Effective Communication

Communication in business is increasingly important. Don’t believe us, believe the stats:

• According to a Hart Research Associates study, 93% of employers consider communication skills over a graduate major
• 86% of employees cite inadequate or ineffective communication as a primary cause of workplace failures

With an org chart, employees can easily identify who to communicate with for specific matters. This reduces confusion, streamlines communication channels, and ensures that information reaches the right people promptly and effectively.

• Improves Training & Development

Having a visual representation of the organization’s structure can help design better training and development programs. 

It helps managers and HR professionals identify skill gaps and tailor training initiatives to meet departmental needs.

Now that you know why businesses should utilize org charts, let’s learn how to make one.  

How to Create the Best Organizational Chart for Your Business?

Creating an organizational chart is a visual representation of the hierarchy and structure of your organization. It helps employees understand reporting relationships, responsibilities, and the company’s overall structure.

Here’s a step-by-step guide on how to create an organizational chart:

• Define Purpose & Scope: Clearly define the intended purpose and scope of the organizational chart before creating it. Decide whether it will be a high-level overview or a detailed representation with job titles and reporting lines. This sets the direction for chart design
• Determine Key Positions & Departments: Recognize key roles and departments within your company. Start with top-level positions like CEO, Executive Director, or President, then list various departments. Compile the roles and departments you wish to include in the chart
• Identify Reporting Relationships: Establish reporting relationships among roles and departments. Accurately depicting the hierarchy is crucial. Determine reporting lines and any indirect or cross-functional connections. This visualizes authority and communication flow

• Select Chart Type: Decide on a suitable chart style (hierarchical, matrix, flat) that matches your organization’s structure and communication requirements
• Choose Design Tool/Software: Utilize specialized tools with customizable templates for designing the chart
• Design The Org Chart: Use the chosen tool to create the chart. Add roles, departments, and links to depict reporting relationships. Pay attention to layout, spacing, and clarity
• Review & Refine: Check accuracy, completeness, and visual appeal. Gather feedback from colleagues for improvements
• Share & Update: Distribute the finalized chart among stakeholders, encouraging reference. Keep it up-to-date with role, department, or reporting changes

Takeaway

An organizational chart is a useful visual tool that displays your business’s structure, hierarchy, and reporting lines. 

It clarifies roles and responsibilities, improves communication, streamlines decisions, aids growth, and eases onboarding. 

This guide equips you to craft an efficient chart for your business so you can drive growth with an organized, well-structured workforce.

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