Why a Organizational Chart is a Must for Every Business

Organizational chart.
Organizational chart. Source: Shutterstock

An organizational chart is a representation of the structure and organization of any organization. It shows the relationship between individuals, teams within an organization or department as well as people with tasks or missions. The CEO and VP positions are normally at the top and there are levels below them which represent how far they go.

Organizational charts can also include other elements such as reporting lines, job titles or responsibilities, employee names for each reporting line to provide a better perspective on responsibilities and relationships. These types of charts show all employees’ connections with others down to the individual. The information displayed is also summarized in different types of charts, making it easier for the viewer to quickly understand the flow of work inside an organization.

When an organizational structure is mapped out clearly, every member knows where he/she stands within the company which helps him/her make better decisions when it comes to his responsibilities or objectives because everyone knows who reviews and approves. It also makes it much easier for HR managers during the recruitment process because candidates know what to expect and there is no room for uncertainty. Below are more reasons why a clean organizational chart is a must for every business:

Improved Communication

The first and most significant benefit of an organized and well-structured org chart is that it ensures clear and direct communication among employees and departments. When everyone knows who his boss is, he can communicate directly with this individual about any issues or problems at hand whether they be big or small.  If the organizational structure is not so clear, employees will always ask their manager “Can you take care of this?” which slows down productivity because everyone needs to wait until someone makes the decision on what to do next. This also causes conflicts between managers because both parties think that they are doing something more important than the other one which makes it difficult to achieve the common goal.


With everyone knowing who reports to whom, there is less confusion about decision-making and where power lies within an organization. This transparency ensures that no one tries to claim power or authority that they don’t really have, which can make employees lose respect for their managers if this type of behavior continues unchecked. It’s also important to remember that everyone has access to the organizational chart so all conversations can be monitored by management in order not to violate any confidentiality agreements signed during the hiring process (HR documents).

Higher Productivity

Time is money, as they say, but at some companies, time seems like it doesn’t matter too much because people are always late for work or meetings and even when they are on time they seem to be always distracted. This directly affects the productivity of any organization because people need to sit through meetings where decisions are made or projects are discussed without anyone seeming like they care about what’s happening around them. The consequences of this type of behavior are that people take longer breaks, go out for lunch when everyone else has already eaten, and spend more time chatting with co-workers which makes it very hard for managers to achieve their yearly objectives.

Improved Employee Engagement

Employees want to feel part of something bigger than themselves but many times they don’t have this feeling because it seems that there is no teamwork inside organizations. This lack of team spirit can be easily solved by communicating well within an organization so every individual knows his value and how he can contribute to the team. When people feel like they are part of something bigger, they get involved with “the cause” more than when they don’t feel any connection at all.

Decreased Turnover Rate

When there are no “unknowns” inside an organization everyone knows what is expected of them and how to do their jobs successfully which means that people will be more prone to stay with the company for longer periods because they don’t keep wondering “what if?” about anything. People want security in their professional lives but when they have no idea where the industry is heading it makes them insecure which leads many times to job-hop without ever feeling satisfied with any change made.

Easier Employees Onboarding

One of the most important parts of any job is training new hires so they can become valuable assets to the company, but this process becomes much easier if there are already clear lines of responsibility defined by management’s organizational chart which allows team managers to communicate efficiently with each other about these new employees without having to ask questions because everything is already laid out in front of them.

Faster Action

There are no delays inside organizations where action exists because everyone knows how they will be held accountable for their tasks which puts pressure on them to finish projects when they are expected to be done if they want to maintain good standing in their organization. This means no one will ever have the excuse of “I didn’t know what I had to do” and everyone will work at full speed because they know that their performance is being constantly monitored by management.

Stronger Financial Positioning

One of the most important aspects of any company is its financial position but this can’t be judged properly if there is no idea about who works where inside an organization making it hard for employees, shareholders, and government agencies to see what’s happening behind closed doors. By putting everything out in the open with easy access through an organizational chart, financial professionals can monitor the company’s status from many different angles which gives them the ability to see the bigger picture and make better decisions.


Organizational charts can look very simple or they can be more detailed by including many levels and lots of information. No matter how the chart looks, its main role is to document who reports to whom and additionally provides insight about each employee’s position in an organization.

Try an organizational chart maker

Now’s the time to create a new or revamp your previous organizational charts with the help of an org chart maker. Use Venngage’s ready-to-use organizational chart templates or opt to use its create-your-own function that allows you to tailor your chart to your needs. Other Venngage infographics are also available which you can use for other projects or to supplement your organizational chart.