Creating an organizational chart
February 16, 2023 | Last Updated on: February 16, 2023
February 16, 2023 | Last Updated on: February 16, 2023
In this article we cover:
Creating an org chart for a business can be beneficial because it shows your employees how the business is structured, where they can turn to if they need help, shows where they fit in, and more. Creating a small business organizational chart can be achieved relatively easily with a range of tools to assist.
From traditional players to newer SaaS-based players, small business owners have options when it comes to org chart software. Let’s review some org chart software options which can help you create an org chart from scratch or by using organizational chart templates:
Microsoft: Everyone is familiar with Microsoft and their software options. You can use PowerPoint, Word, or Excel to create an org chart. Any of these options are good for small businesses. However, as the org grows in size and complexity the org chart might become difficult to maintain using these tools.
Google: Similar to Microsoft, Google has its version of Word (Google Docs), Excel (Google Sheets), and PowerPoint (Google Slides). Google’s tools are free to use, you just need a Google account.
Canva: Canva is a web-based software solution that can help you create an org chart. They offer templates for both their free and paid subscribers. They offer a drag-and-drop interface with a lot of graphics options.
Org chart maker software: Both diagram and chart software can help you create and maintain an org chart. Solutions such as Lucid Chart, Miro, and Visio (drag-and-drop chart software by Microsoft) are just three of the many options that exist.
For smaller-sized orgs, any of the first three options listed above should be sufficient to develop and maintain an org chart. However, when companies start to grow, a software solution is preferable.
Consider starting with Microsoft Excel or Google Sheets. Both of these options make it quick and easy to create boxes and to structure your org chart. The examples created for this article (below) were developed using Google Sheets. Once you create your box, you can copy and paste them to create your hierarchy, fill in each box with the appropriate information, and add a border. Creating a border can also be used to create the lines that connect each box.
Microsoft PowerPoint or Google Slides will work if you plan on keeping a very small org. Once your company grows in size, you will quickly outgrow these two tools. However, they are very easy to use and easy to get started with. If you are comfortable and familiar with either, they can be a good place to start. Both offer the ability to drag and drop shapes which can help you structure the org chart.
Microsoft Word or Google Docs can also be a good starting point for small businesses. Everyone is familiar with these and smaller org charts can easily be stood up and maintained. You can export your org chart as a PDF, print it, or distribute it in just about any way you want.
Canva is a great option if an entrepreneur wants an org chart to look nice. Canva can help small business owners create visually stunning org charts. For business owners and companies who care deeply about their brand, Canva can be a great choice. Excel/Sheets, Word/Docs, and PowerPoint/Slides are better choices than Canva if you want something simple and not fancy.
For those businesses that can anticipate growing rapidly, software might be a smart choice. If you set up your org chart foundation using software, it can easily scale and you are eliminating the future administrative burden or updating it or moving it to a software solution later. There are a lot of options beyond the three (Vision, Lucid, Miro) that we touched on in this article. Also, software might be a good choice for larger companies or even small companies with complex management structures. For example, many times companies can have employees who are part of one division but might report to another. “Dotted Line” relationships can be challenging to convey using a basic tool.
The answer to this question is it depends, but consider the following as a guide:
Microsoft Word, Microsoft Excel, and Microsoft PowerPoint all allow you to use a feature called SmartArt to create an org chart. This makes all three a good choice, and the best might come down to your skill set with these tools. However, using Microsoft Excel likely allows for the greatest flexibility as it is very easy to create a styled box to serve as the building block for a custom-made org chart, or integrate with Microsoft Visio.
There are many business structures but we are going to focus on four common types: hierarchical structure, matrix structure, divisional structure, and flat structure. We will cover the benefits, and drawbacks, and show an example of what an org chart looks like for each.
Hierarchical Organizational Structure: A hierarchical org structure is a traditional, top-down company structure with department heads, middle management (for larger orgs), etc. Most people are familiar with this type of reporting structure.
Matrix Organizational Structure: A matrixed organization is a project-based structure where staff members are assigned to different projects. A matrix organizational chart can be fluid and change depending on project assignments. For example, a project manager might be assigned to multiple initiatives, different teams, and has multiple project leaders to report to.
Divisional Organizational Structure: Some companies can be organized by product lines, division, geography, or more. Divisions have division heads, sometimes called general managers and different departments within a division. For example, a company with both a Japanese division and an American division might have its own marketing and human resources teams.
Flat Organizational Structure: A flat structure attempts to break down the traditional chain of command and team members report directly to the highest levels of the company. The idea is that a flat organization will speed up workflows, decision-making, and business operations. Startups typically start as a flat organization until they reach a certain size and then re-structure into one of the three structures discussed above.
Each of these organizational structures has its benefits and drawbacks. There isn’t a right answer on which you should choose, it depends on your company, your goals, and your leadership style.
Organization charts don’t have to be overly fancy as they have a relatively simple task to accomplish. Typically, org charts have the following elements:
Consider why you’re creating an org chart in the first place. It helps employees know who to go to when they need support or have questions, it helps new employees during their onboarding, and it is a visual representation of the functional structure of the entire company. This helps employees understand where and how they fit into the broader company and its objectives. In other words, it helps employees answer the question “Why am I here and how do I fit in?” Employees must have a sense of meaning behind their work and an org chart is one way to help them to understand that.
Even small startups should have an org chart. Similar to developing a business plan, an org chart can help solidify your thinking about company structure in its current or future state. Creating an org chart for your future state can help you start to think where you want to take the company and the hires you will need to make.
For more information on business plans, refer to our article How to Write a Business Plan for a Loan Application. For more information on hiring employees, please see our guide Small Business Guide to Hiring Employees.
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