Perhaps you work for a small to mid-sized organization, and you are trying to figure out the best flow of communication within your organization. How can your company be the most successful it can be? The first step to your success is setting up an organizational chart; however, it’s important to start with some foundational knowledge about an organizational chart and the main organizational structures currently used.
What is an Organizational Chart?
An organizational chart is a visual breakdown of the structure of your company, usually organized in such a way that it shows connections and relationships between particular employees within your organization. For example, an organizational chart might include a marketing section, with your company’s Chief Marketing Officer at the top and all other marketing employees falling below the CMO.
What is the Purpose of an Organizational Chart?
An organizational chart demonstrates the structure of a company with information about the roles and responsibilities of every single member of an organization. Organizational charts hold multiple purposes, including the following:
- Organizational charts lay out the foundational structure of an organization and how communication flows through it.
- It provides a way for every member of a company to know their coworkers’ roles and where each coworker fits into the organization.
- Organizational charts are especially helpful for HR departments to know where the staff at their company live within the entire organization.
- Organizational charts help employees more effectively communicate, as they are aware of who works in what departments, geographies, or on what products within a company.
- Utilizing an organizational chart helps to make sure everyone is accounted for, allowing management to schedule one on one with employees and for office managers/people teams to properly account for employees when planning work activities.
What are the 7 Main Organizational Structures?
Because there are various goals from business to business, there are also a variety of organizational structures. The 7 most common structures are outlined below.
1. Hierarchical Organizational Structure
The hierarchical structure is the most common type of organizational chart used. This chart is structured with company leadership at the top, including all C-Suite executives, and then all other levels of staff fall underneath the executives. This structure operates so that every employee falls underneath another employee, except for the very top members of management. This is the most common structure because it is historically the most straightforward way to manage an organization.
2. Functional Organizational Structure
Functional organizational structures group people together based on their functions; for example, all individuals touching operations are grouped together. The same goes for all other groups of individuals, including marketing, finance/accounting, human resources, and even senior management.
This structure is often used because it encourages people who work in the same arena to communicate. Essentially, the functional model allows for easier communication within departments.
3. Horizontal or Flat Organizational Structure
Flat or horizontal structures provide the most direct contact between upper management and regular staff members. Essentially, flat structures eliminate middle management so that staff report directly to upper management. In this way, staff members are much more involved in the decision-making process under a flat structure than under any other type of structure.
This structure is especially helpful for increased employee involvement in the decision-making process. It also improves communication by eliminating levels of management.
4. Divisional Organizational Structures
A divisional organizational structure groups employees by their geographic location, products, or the markets they work with. Each of these divisional segments includes at least one person for every necessary job function; for example, one segment could include people from marketing, IT, finance, and other departments within the organization.
This structure is used for organizations that split their employees onto product teams or that work specifically within geographical locations. For example, if Google were to operate under a divisional model, they might split their employees based on what products they touch, including Google Chrome, Google Maps, and Google Play.
5. Matrix Organizational Structure
Matrix organizational structures function in such a way that every employee reports to two managers instead of one. An employee may report to both a project manager and a manager for his or her specific department. This type of structure is especially helpful when skills are needed in cross-disciplinary functions within your organization.
There are three types of this organizational structure: the weak matrix, balanced matrix, and strong matrix. A weak matrix operates so that each employee mainly reports to their direct manager; a project manager is still in a position of authority but does not have as much influence as the direct manager. A balanced matrix operates so that more authority is given to a project manager. A strong matrix structure puts the project manager and direct manager in the same position of authority.
6. Team-Based Organizational Structure
Team-based structures operate so that employees are organized with others that are working towards the same goal. While these employees are working towards a similar task, they also operate independently to complete individual tasks and projects. This organizational structure is less hierarchical than other organizational counterparts.
7. Network Organizational Structure
The network structure is another less hierarchical organizational feature. A network framework is based on the structure of social interactions, where open communication is key. Within a network organization, management oversees relationships externally and internally with the company.
People describe this type of structure as being more cutting edge than other traditional organizational structures. For organizations hoping to cultivate bottom-up decision-making, the network organization is a good choice.
How to Make an Organizational Chart
The first step to making an organizational chart is deciding which model you want to emulate within your company. From there, it’s a matter of finding the right online software to set up your organizational plan. Do some research into different software systems to find the right one for your organization’s needs. Some of the most common online softwares include The Org, Lucidchart, Charthop, Creately, Microsoft Visio, ClosePlan, and Pingboard.
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