How to Create the Organizational Chart You Know Your Business Needs

How to Create the Organizational Chart You Know Your Business Needs process.st /organizational-chart/ 5/31/2017

Is your team confused about responsibility, hierarchy, or who reports to who?

Do you have a clear idea of where there’s room to give a promotion, or which department could do with more hires?

You need to make an organizational chart for your business, no matter what size your company is because it ensures your company can scale consistently with a clear view of its structure. It’s just as important as solid processes because it’s the single source of truth for the architecture of your business.

In this article, I’m going to show you how to create organizational charts using simple free tools, or powerful paid alternatives.

You’ll learn: The definition and components of an organizational chart The hidden benefits of organizational charts, and why they’re not just a formality Creating a cloud-based organizational chart in Google Sheets that you can automate How to use templates to create a simple org chart in Word, PowerPoint, Excel, and dedicated diagram tools How to use different types of charts for alternative organizational structures, like matrix and flat

What is an organizational chart?

An organizational chart — or, for some reason, an organigram — is a diagram that illustrates rank, responsibility, and information flow in your company. As Business Dictionary puts it, “power travels downwards and answerability 1/12

travels upwards”.

Here’s a very simple example, illustrating upper management and the departments they lead:

And here’s a more complex specimen, including departments, individuals, and even descriptions of job functions:

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(Full-size image here) As you can see, it makes it easy to see which branches report to which department heads, and which departments perform which function.

Why do you need an organizational chart?

Businesses have so many moving parts that it’s necessary to have a single source of truth. If you let responsibility slip into informal, half-forgotten guidelines, you’ll notice teams missing deadlines, information getting lost, and disagreements over authority.

With an organizational chart, it’s 100% clear who reports to who, who has authority over which teams and members, and where information should be going to and from.

Documented organization structures also double as a roadmap for current employees to use to see where their next promotion may be, improving employee motivation.

Often, small businesses choose not to create an organizational chart because the employee count is low, or because it seems like a waste of time in comparison to core business functions. In reality, organizational charts are a way to future-proof your business as it scales, ensuring consistency and a concrete document to refer back to in case of confusion.

Finally, organizational charts also serve as a way for you to see holes in your company’s structure. Too many people reporting to one manager? Not enough testers on one particular software team? You’ll see when you map your organization out.

How do you make an organizational chart?

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For the first sketches, you can use any diagram tool you’re comfortable with (or even a pen and paper) to make an organizational chart.

For simplicity’s sake, I’m going to draft a fictional organizational chart in Draw.io before giving you a few templates you can use. When you create a new diagram in Draw.io, you can choose from a list of presets. Under ‘charts’ you’ll find three different layouts you can use to make a start on your org chart.

You can duplicate the boxes, easily connect them, and re-arrange entire branches in one go. Then, just start filling in the boxes with text according to each employee’s title and department.

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Use these organizational chart templates If you don’t fancy doing it all yourself or would rather use a different tool, below is a list of templates you can use instead.

General templates: Proprietary templates:

Make an organizational chart in Google Sheets At Process Street, we’re advocates for cloud software and feel like Microsoft’s old fashioned software doesn’t get the job done as well as Google Sheets, a free, cloud-based and capable alternative.

In fact, Google Sheets has an organizational chart template built into it. Add that to the fact that it’s free, integratabtle, permission-controlled and cloud-based, and you’ve got the #1 tool for sustainable, versioned, accessible-anywhere org charts.

Create a new Google Sheet and list all employees in column A. Then, list the manager each directly reports to in column B. Here’s what it’ll look like:

Then, select the cells including the column header and go ‘Insert’ > ‘Chart’. Uncheck the boxes at the top. Scroll down, and you’ll find an org chart template near the bottom:

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Click it, and you’ll have an organization chart automatically generated for you:

Here’s a video explaining the process thoroughly:

Automating your organizational chart creation A spreadsheet method is the most sustainable and easily updated option. Since organizational charts need updating regularly, it’s less practical to re-design a diagram for every new hire than it is to input two cells of data.

And that’s not all. Since Google Sheets is cloud-based, you can send data to it from other apps . If you use SaaS payroll or HR software, you can push the new employee’s name and manager to Google Sheets automatically every time you make a hire. This is done using Zapier, a tool that can connect over 750 other apps together with 6/12

connections called zaps.

There is no pre-made configuration available for this particular zap, but you could easily make one in a few minutes.

For more information on Zapier’s integrations with Google Sheets, click here.

Alternative organizational chart tools Since an organizational chart is one of the more common graphic requirements for businesses, almost every modeling, flowchart, or diagram tool comes with a full range of org chart features.

We already covered some of these tools in our guide to Business Process Model & Notation, so if you’re familiar with BPMN, you might already have a tool that can make org charts.

Most common: Microsoft Office The Microsoft Office suite is used by the majority of businesses, and almost all of its main tools can make organizational charts:

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It’s a popular choice because it’s right there on your computer already, but it’s not necessarily the most sustainable or easily updated because it’s not strictly cloud software. Using Word could mean that your org chart is sitting on someone’s hard drive, vastly out of date.

With cloud services, however, you can edit and access from anywhere that has the internet.

Free: Organimi 8/12

Organimi is a dedicated org chart tool, designed to make it quick and easy to create well-designed charts. For one organization with 50 employees and one chart, the tool is free to use.

Instead of having you fiddle around with spreadsheets or manually drawing the charts, Organimi breaks it into a 3step process:

Organimi is role-based, so you click to add a role then fill it with a member of the roster. You can even upload your roster via CSV if you already have the list available.

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Fully-featured: LucidChart LucidChart is an absolute force in the diagram software market, and its popularity is well deserved. The powerful software can help businesses with every kind of chart imaginable. And, it comes loaded up with templates and examples you can use:

Other types of organizational charts 10/12

So far, I’ve talked about org charts in the context of their most popular type: hierarchical. However, that isn’t the way every organization is structured.

There are two less common structures, matrix and flat.

Matrix organizational charts A matrix structure is used when employees report to more than one manager in more than team. McKinsey reports that 17% of organizations are structured this way. It’s often used in organizations where multi-skilled employees float between teams, using their abilities to help multiple different departments, or where project managers are brought in.

Here’s an example of a matrix organizational chart:

Get free matrix organizational charts here.

Flat organizational charts Flat structure, as explained by First Round Review, is “defined by lack of hands-on management, a high degree of autonomy, and everyone being empowered to make important decisions for the company”. It’s often found in startups who use it to shun the corporate idea of hierarchy and run a more egalitarian business. Both Wistia and Buffer have tried (and ditched) flat structures, but some companies — notably Gumroad, Medium and Zappos — have found it to be stable and viable.

With a flat structure, org charts look like this: 11/12

Often, it means that middle management is limited or doesn’t exist, and there’s an emphasis on employees organized by project or function, not seniority.

Ready to create an organizational chart for your business?

I hope this post has put you on the right track to creating an org chart for your company. To get started right now, it’s quickest to use one of the MS Office templates I linked further up the page, or to use a cloud-based tool like Organimi.

P.S. check out the first organizational chart ever, created in 1855.

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