Business Organizational Chart
Organizations use many metrics to get validated learning. They use actionable metrics, business models, department charts, analytics, and a lot more. But still, there is one thing that can improve the organizations' decision-making because they give an abstract view of the whole organization. By the end of this article, you will learn about business organizational charts, their importance, and some examples for businesses.
1. What is a Business Organizational Chart?
A business organizational chart is an abstract view of the whole organization, which tells us the relationship between multiple entities working inside the organization. Moreover, dozens of departments work in an organization and work cross-functionally.
To track those organizations and avoid uncertainties, excellent and well-known organizations never forget to make the business organizational chart, which tells the business owners, board of directors, stakeholders, employees, managers how the whole business is functioning.
Let us tell you the importance of a business organizational chart. Take an example of an employee working in an organization with a complex hierarchy. Suppose an organization doesn't contain the business organizational chart or assume they have and never published it to the whole firm. In that case, an employee will never know who is above him and to whom he should report.
Why do Companies Need Organizational Charts?
Some endless reasons and situations make companies have a good business organizational chart. Some of the critical cases are listed below.
It Communicates the Responsibilities
Business organizational charts tell everyone about their roles and responsibilities, why they are being employed, how they will perform their functions, and if any uncertainty strikes, then what they must do.
Employees Know to Whom They Report
Business organizational charts tell the employees to whom they must communicate or report. If an organization doesn't have any organizational chart, employees will never know their true importance or position.
Decision Making
As described above, an organizational business chart helps the managers, board of directors, CEO, or C-suite take important business decisions. It provides business leaders a sense of how they must lead to make the business sustainable at all levels.
2. How to Create a Business Organizational Chart?
Business leaders must know the importance of business organizational charts. Whether you are starting a business or working in a company that has imposed on you a leader-level position, then you must know how to make a perfect business organizational chart. This section will get a general and high-level overview of making a perfect and complete business organizational chart. Readers can follow the listed steps.
2.1 Identify Organizational Chart Types
The first step in this vital process is identifying the business organizational chart that best fits your business case. There are four types of business organizational charts that managers, C-Suite, board of directors must know. The four types of business organizational charts are listed below:
Hierarchical organizational chart: A hierarchical organizational chart is a chart that helps organizations that have both complex and straightforward hierarchies. Many entities say that organizations spread across multiple departments should only make hierarchical organizational charts. But, a small business can also make a hierarchical business organizational chart. A hierarchical business organizational chart starts from the C-suite and then falls to the low-level positions of the organizations. The connections in hierarchical business charts tell that an employee must report or communicate.
Functional organizational chart: A functional organizational chart is the same as a hierarchical business chart, but there are still many differences. It is best for an organization with departments spread across multiple locations and work cross-functionally to track them with a functional business organizational chart. The functional business organizational chart includes both the positions and departments. The position depicts the leader or head of each department.
Matrix organizational chart: The matrix organizational chart depicts the employees or departments who have multiple supervisors. This organizations have the most complex hierarchies, and so the matrix organizational charts are best to handle these organizations. The matrix organizational chart also depicts the managers who work in multiple departments of the same organization.
Circle organizational chart: It is also a hierarchical chart that includes the leading positions at the circle's core. In contrast, the low-level positions are listed above the top places.
2.2 Order the employee data
The next important step is to gather and organize the employee data and arrange them according to the type of business organizational chart best for your business case. All the charts discussed above have connections and little to more hierarchies, so after listing every employee, connect them according to whom they communicate or report.
2.3 Make your chart look perfect
After identifying, listing, and connecting every employee in the business organizational chart, try to search for an answer to this question, how can this chart be completed? You will find the answer in the tools or products used extensively in business diagram-making.
There are hundreds of tools available on the Internet organizations use to make the charts for their business. You can see or use Microsoft Office (Excel, Outlook, PowerPoint, Word) or Google Sheets. But the best practice is to choose efficient tools in many ways and boost productivity. The best and trending tool that has been used for diagram-making for two years is EdrawMax, which is consistently iterating to make the business procedures easy and quick.
2.4 Use the tool and complete the chart
Find the best tool according to your business use case, and it is time to use it and fill the business organizational chart. You can take help from multiple people in the organization to avoid errors. The best practice is to start from the template to avoid mistakes and boost your production.
After you have completed the chart, take it to review by your supervisors and then pass it to the C-suite, who will approve it and share it with everybody to make the consensus. If it succeeds, then the chart must be shared across the organization.
3. Business Organizational Chart Examples
To help you make your concepts clear about the business organizational chart, we have gathered some practical use cases that show how they can be implemented.
Example 1: Organizational Chart for Small Business
This business organizational chart can provide many helpful insights in decision-making for small businesses. As described above, to avoid confusion, small businesses can use the hierarchical business organizational chart to map the entities working inside the company. The chart shows from top to bottom how the business is working. In this top-to-the-bottom business organizational chart, every entity is connected indirectly. Still, all the departments get the notes from one department that is the COO of the organization. This chart also helps employees to understand positions.
Example 2: Big Business Organizational Chart
If you believe that your business is big and has many departments and complex hierarchies, you can use this big business organizational chart. An enormous business organizational chart includes both positions and departments working inside the company. The chart shows the connection representing the relationship between each position and department which helps in complex decision-making. You can also take ideas from this chart while making a big business organizational chart. You can also include a short description of every employee listed on the chart.
Example 3: Startup Organizational Chart
The diagram perfectly defines the startup organizational chart. Most of the time, the startups don't have many hierarchies and departments, and this chart is for these types of startups. The startups which belong to a parent organization have a different organizational chart or structure. The chart can be made using a hierarchical business organizational chart. Every department or entity in the chart is connected indirectly and communicates to a single entity called the co-founder of an organization. When the startup grows into a sustainable business, all the entities share it with the COO.
Example 4: Organizational Chart for Partnership
If the entity in the organization wants to manage the organization's partnership, then an organizational chart can also be made for this purpose. Take the idea from this organizational chart for partnership which shows both public and private partnerships. The public partner of the organization is the financial advisor and legal representative; meanwhile, the private partner includes the objects which reside inside an organization. If you are worried about how you would manage the partners of your organization, then you can start with mapping the partners in business organizational charts.
Example 5: Sole Proprietorship Organizational Chart
A Sole Proprietorship, also known as a sole trader, is an unincorporated entity or business with a single leader or manager. He is responsible for paying personal income tax from the gains earned from the sustainable enterprise. An organizational business chart can also be made for this. Usually, the business that includes the outside partnership is also included in the business organizational chart. Still, in this situation, the chart ends at the above single position like this pinned sole proprietorship organizational chart.
Example 6: Manufacturing Company Organizational Chart
Every business logic can be mapped to the business organizational chart. Take the concept from this construction business organizational chart. The chart is made with the help of a hierarchical business organizational chart framework because a construction company has many departments, and sometimes they work cross-functionally. The organizational chart also includes the regulatory body department of the ISO center. The chart starts from the board of directors and ends at the low-level positions of the organization.
4. Best Business Organizational Chart Maker
The mistakes in business organizational charts can harm both the reputation and daily operations of the business. So, every action should be taken to avoid errors in the chart. EdrawMax Online provides hundreds of tools and more than five thousand diagram-making symbols to help you make business organizational charts and other diagrams ideally. The application is straightforward and has all the tools and templates to help you avoid mistakes in business organizational charts and boost your productivity.
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