A Complete Guide to Organizational Charts

Definition

An org chart is a visual representation of an company’s structure. It illustrates the relationships between individuals and departments, showing the chain of command and how different parts an organization connect.

Although there is no universally accepted format for org charts, they are typically drawn in a tree-like structure. The highest-ranking leader (such as a CEO) sits at the top, with boxes representing individuals or departments branching downward. These boxes often contain key information such as name, job title, and contact details, and connecting lines indicate reporting relationships.

Alternative Names

Organizational charts are known by several names across industries and contexts.

They are often referred to as Org Charts, Organograms (or Organigrams), Organizational Structure Diagrams, Organizational Breakdown Structures (OBS), or Hierarchy Charts.

In a business setting, people may use terms such as Company Structure Chart, Management Tree, Reporting Structure, Chain of Command Diagram, or Company Flow Chart.

More informal references include Staffing Chart, Workforce Diagram, or People Map.

Functions

Organizational charts can serve a multitude of important functions within a buisiness. They provide a complete visualization of a company, making it easier to understand structure and working relationships. By clarifying roles and reporting lines, org charts offer insight into how a company operates.

They can also assist in planning for the future by identifying staffing issues such as overlaps, gaps, or inefficiencies. This helps leadership allocate resources effectively and make informed decisions about workforce planning.

For new hires, org charts serve as a valuable onboarding tool, giving them a quick overview of the company’s hierarchy.

Additionally, org charts improve accountability by making reporting relationships clear. They promote employee visibility by highlighting talent, identifying career pathways, and clarifying collaboration across departments.

Ultimately, they support better communication and decision-making by ensuring that everyone understands their role and who to turn to for guidance.

A well-designed organizational chart should enable any employee to quickly find the information they need. It should answer questions such as:

• Who is on the leadership team?
• Where do I fit within my department?
• Who can answer any questions I may have?
• Who do I directly report to, and who reports to me?

Limitations

Despite their usefulness, organizational charts do have limitations. Manually updated charts can quickly become outdated, especially in fast-moving organizations. Keeping them current can also be time-consuming.

Org charts typically only show formal reporting relationships; they do not capture informal networks or social connections within the workplace. They also exclude external stakeholders such as customers and partners. Furthermore, org charts may fail to reflect the nuances of different management styles or how a manager interacts with their team in practice.

A Brief History

Organizational charts date back to the mid-19th century, when expanding railroad companies sought ways to manage their growing complexity.

The first known org chart was created in 1855 by Daniel McCallum, general manager of the New York and Erie Railroad. His chart visualized reporting lines and clarified responsibilities across a rapidly expanding workforce.

Although adoption was slow at first, the idea gained traction in the early 20th century as industrial growth and the rise of large corporations demanded more formal structures. By the 1920s and 1930s, org charts had become common management tools, evolving from simple diagrams into more sophisticated structures that reflected hierarchical, functional, and eventually matrix organizations.

Today, org charts remain essential for understanding company structure. However, modern digital versions often emphasize flexibility, collaboration, and dynamic updates rather than rigid hierarchy.

Types of Organizational Charts

Several types of organizational charts are commonly used:

• Hierarchical Chart – The classic “top-down” structure showing reporting lines.
• Matrix Chart – Represents employees who report to multiple managers, such as both functional leads and project managers.
• Flat Chart – Depicts fewer levels of management, commonly found in startups and small businesses.
• Circular Chart – Highlights the equal importance of teams rather than strict hierarchy.
• Functional Chart – Groups employees by department, such as marketing, human resources, or finance.

Why Do You Need One?

Organizational charts help businesses communicate roles and responsibilities clearly. They improve efficiency by reducing role confusion and support strategic workforce planning. Charts also help allocate resources effectively, support restructuring or scaling efforts, and make onboarding smoother for new employees.

In short, they enhance visibility, clarify structure, and provide leaders with insights to make better decisions.

What Problems Do They Solve?

Micro (Day-to-Day)

On a daily basis, org charts prevent confusion about reporting lines, clarify accountability for tasks, and reduce communication gaps between departments.

Macro (Organizational)

At a larger scale, they support growth planning, help leadership identify team gaps or overlaps, and align the workforce structure with broader business goals.

How to Create Your Own

The right approach to building an org chart depends on your needs and resources.

Pen & Paper

The simplest method is sketching by hand. This works for very small teams, early-stage planning, or brainstorming sessions where flexibility matters more than polish. However, hand-drawn charts are impractical for long-term use since they are time-consuming and cannot be easily updated.

Drawing Tools

For startups and small businesses, tools like PowerPoint, Google Slides, or SmartArt within Excel can be effective. These allow for manual mapping of reporting lines and team structures. The drawback, however, is that updating them becomes increasingly difficult as the organization grows.

Automated

Organizations that use HR software or a centralized employee database can benefit from automated tools that generate org charts directly from existing data. This ensures accuracy, reduces administrative work, and updates charts dynamically whenever staff changes occur.

Modern Org Chart Software

Dedicated org chart software goes beyond static diagrams by making charts interactive and collaborative. Modern platforms often integrate within your existing workflow, provide search and analytics features, and support drag-and-drop editing. These solutions are particularly valuable for medium to large businesses where complexity makes manual charting difficult.

TeamOrgChart

One example is TeamOrgChart, a platform that connects to your existing data source and integrates seamlessly into your Microsoft workflow. It automatically generates and updates org charts, supports multiple visualization styles, and allows secure sharing across teams. For businesses that are scaling quickly or managing distributed teams, tools like this save time, reduce administrative burdens, and provide leadership with valuable insights into team structures and succession planning.