How to make the best org chart for your business

No matter where you work, knowing who does what and where they fit in can help everybody do their jobs better. An organizational chart gives everyone a quick glance into how the business is structured, whether it’s an established office, a startup, a manufacturing plant or something else.

What’s an organizational chart?

Chances are, you’ve seen one before. Organizational charts, also called org charts or organograms, feature boxes, shapes or photos that represent people and positions. They can also include contact information, page links, icons and illustrations.

When connected with lines, those boxes form a chart that depicts the internal structure of an organization. It shows who reports to whom, where divisions lie and how departments are connected.

What is the purpose of an organizational chart?

Org charts can help new hires or volunteers get to know a company quickly by assisting them in putting names and faces to roles and responsibilities. Even long-time staffers, HR departments and business owners can benefit from having an organizational chart at their fingertips.

Here’s what they do:

Show the internal structure and hierarchies
Help employees figure out who to report and who to contact if problems occur
Assist in clarifying roles and responsibilities
Make it easy to keep employee contact info in one convenient place
Help management see how many employees are in each department and how to allocate staff and other resources best
Give staff insight into promotion channels

One organogram can’t do everything. Let’s take a look at the types of org charts companies use most.

What are the four types of organizational structures?

The type of org chart you use will depend on your audience, your organization and what you want to convey. You may need just one sample of chart for your entire company or a few for several different audiences or divisions.

While each type of organizational chart can be modified and edited, most companies use org charts that fall into one of these four categories:

1. Functional top-down hierarchy

Perfect for showing a traditional business structure, the hierarchy chart starts with the C-Suite at the top, then it’s broken into departments or divisions. Within each division, you’ll list senior management, middle managers, senior staffers, mid-level personnel and junior staff members. In the end, the hierarchy chart looks like a pyramid with every department rolling up to the CEO.

NOTE: Hierarchical org charts are generally easy to understand. But when there are multiple layers in the chain of command, knowing who to connect with and when can seem difficult, especially if there’s a problem or if someone has a new idea.

2. Divisional organizational chart

This form is a safe choice if your company is organized along product lines or geographic regions. If they’re independent of one another, a divisional org chart is also an excellent way to reflect that clearly. Like an organizational hierarchy chart, the divisional chart starts with a president or CEO, but instead of a division into departments with shared resources, it’s divided into lines of business (LOBs). The chart covers each LOB’s departments, like HR, accounting, legal and marketing and the people or positions within those departments.

NOTE: Because organizations like this often have redundant departments within each division, a divisional structure can result in staff bloat and unnecessary overhead expenses.

3. Matrix organizational chart

Four people hold and assemble interlocking puzzle pieces in various colors.

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This type of organogram usually applies to companies with teams or team members who have more than one manager. For instance, at a newspaper, a reporter may cover a local news beat as well as a financial beat, which means they would have two managers. Or a graphic designer at an energy provider may report to the head of graphic design. But because he or she works on projects for the renewable energy division, then the designer may also communicate up to someone on that team.

NOTE: When team members work across departments, organizations can usually find more creative ways to solve problems. This creates a more cooperative environment. However, when teams or team members have more than one supervisor, it can increase confusion and conflicts.

4. Flat organizational chart

Used almost exclusively by small businesses, flat or “horizontal” org charts usually have two levels: administrative officials and workers. Within the chart, solid lines show the principal chain of command, and dotted lines show secondary lines of authority. On paper, companies with a flat org structure may look similar to a small fire department, with a chief, three captains and several firefighters who work under the captains. Or it might be a supervisor or department head with a handful of employees who are his or her direct reports.

NOTE: In a flat structure, supervisors and their teams often have close relationships and share in decision making. Employees usually have more responsibility and more autonomy than in other organizational structures. This means that that building trust is critical—and teamwork is, too. But because the matrix is so compact, if there are conflicts between employees, they can be more pronounced due to the simple fact that the team is so small.

Building org charts with software

Org chart software makes building new organograms and revising old ones simple. Let’s take a look at how to create an org chart online using some of the most popular software options available.

Org charts in PowerPoint

PowerPoint may have been designed as a presentation tool, but you can also use it to develop org charts. To get started:

Open a new PowerPoint document
Go to the Insert tab and click SmartArt
Navigate to the Hierarchy group and select the org chart template you need
Click into the shapes to add text
Add more shapes (or people) as needed

Once everyone is accounted for, you can start reorganizing your org chart in PowerPoint. Just go back to the SmartArt Tools Design tab and using the Promote/Demote buttons to move shapes vertically. Use the Move Up/Move Down buttons to move your shapes horizontally.

Org charts in Word

It may not be a traditional way to create org charts, but Microsoft Word can help design basic diagrams that show how your organization functions. To create an org chart in Word, all you need to do is:

Go to the Insert tab and click SmartArt.
Go to the Hierarchy group and choose the org chart template you want to use.
Next, you’ll see a menu with shapes that represent people. Just enter text to represent each person in your chart.
If you need to add shapes to your org chart template, click the SmartArt Tools Design tab, then click Add Shape.
To order someone in your org chart, click their name in the Text Dialog box. Press Tab to move them up or Shift + Tab to move them down. Or, you can manage your hierarchies in the SmartArt Design tab.

You can adjust your colors, fonts and sizes, via the SmartArt Tools Design and Format tabs.

Org charts in Visio from Excel

Visio is a visual, drag-and-drop canvas tool that allows people to create org charts, and it also has the power to connect with data in existing Excel files or Active Directories to help you automatically create org charts. But when you combine the two, you can create eye-catching org charts for companies of any size. To get going, open Visio and click the Organization Chart Wizard, then:

Click “Information that’s already stored in a file or database”
Answer questions when prompted
Import pictures or images if you’d like
Click finish

Along with importing information to your org chart from Excel, you can also add info directly into the Organization Chart Wizard.

More org chart tips

Even with org chart software, organograms can quickly become a blur of shapes and words. But with a little design work, they can capture people’s attention the proper way. So, when finessing your chart try to:

Right size it. If your chart is too large, it will be overwhelming. If you need to create three charts rather than one, do it. This way, your audience can get an overview of the organizational structure, then take a deeper dive into departments or divisions when they’re ready. Just make sure that everything leads back to your organization’s highest level.
Use shapes and colors consistently. By using the same shape for supervisors, another shape for mid-level staff and yet another for junior employees, you can help people understand your chart better. Use one color for each division in your company, as well.
Add pertinent information. Be sure to add details about your staff, like contact information, location, clients or specialties. This way if someone’s looking for help, they can tell who does what and where.
Show assistants with a sidebar below the manager. This formatting style can help denote the assistant role while still clearly showing the manager’s direct reports. And it can also help people know who to contact if you need to reach the manager.
Pay attention to spacing. Keep boxes equidistant from each other. Your chart will be easier to read and have a more professional appearance.

Once your chart is complete, have someone who knows the organization well (and someone who doesn’t) take a look. This way, you can make sure that it’s not only correct but clear and informative for those at every level. You can learn more about creating org charts with software and templates with this step-by-step guide.

The Microsoft 365 team is focused on sharing resources to help you start, run, and grow your business.

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