Business organization chart

A business organization chart is the clear and simple graphic representation of how a company or organization is structured.

Business organization chart

Fundamentally, the organization chart defines the formal structure that a company has. This graphic representation is for informational purposes. Since, just by looking at the organization chart, you can understand the authority system, the hierarchical levels and the relationship between them.

Also, it is called an organization chart or chart. Since every organization chart describes the lines of authority and responsibility. In the same way, it defines the communication and supervision channels that are established between the different levels.

What is the organization chart for?

It is important to mention that the organization chart is a widely used instrument in companies because it details very important information for any organization. For this reason, it is necessary that when elaborating it is easy to understand and use. In addition, it must contain only essential elements for a better understanding.

An organization chart reports on:

  • The way the functions are divided.
  • The levels of the hierarchical structure.
  • The different lines of authority and responsibility.
  • Formal communication channels.
  • The linear structure and staff of the different departments.
  • The managers in charge of each group of employees.
  • The relationships between the different positions of the company and the departments.

Generally, to represent the linear and staff structure, different colors can be used. While for the representation of communication lines, lines of different thickness can be used. However, what is most commonly used are solid lines to identify linear authority and dotted lines for the staff line.

Advantages of using the organization chart

Among the main advantages of using the organization chart we can mention:

1. It is easy to understand

Indeed, an organization chart is easy to understand, you do not need a long explanation to understand it. Since it allows to easily observe the general structure and work relationships within the company. Which doesn’t need a lengthy description.

2. Determine who depends on whom.

Likewise, this graph shows in a particular way the structure of each company, which makes it possible to identify their strengths and weaknesses. He informs anyone who observes him about the organization’s working relationships and the changes that have taken place. All of this helps the principles of the organization work efficiently.

In addition, it shows new managers and staff in general how they fit and integrate within the organization.

Disadvantages of using the organization chart

The disadvantages that we can find when using the organization chart are:

1. Does not reflect informal relationships

Of course, the organization chart only indicates formal authority relationships, but does not report on informal relationships. Which is a limitation, because informal relationships can offer meaningful information.

2. If it becomes complex, it loses utility

Similarly, it does not reflect the degrees of authority between the various levels. If lines that indicate informal authority and communication relationships are used, it becomes complex. By becoming complex, it loses its usefulness.

3. It can become obsolete

Sure, the organization chart describes how the organization should be, but it may not reflect what the organization is like in reality. Organizations change and if the organization chart is not updated it becomes obsolete.

Business Organization Chart 1
Business organization chart
Advantages and disadvantages

Classes of business organization charts

Organizational charts can be of several kinds, among the most used we find:

1. Vertical

First, we find the vertical organization chart. The vertical organization chart is represented as a hierarchical or pyramidal structure. The business structure is represented from top to bottom. The boss is at the top and has the highest authority. This authority is subordinated at the lower levels.

Also, it is characterized by being a rigid authority and responsibility structure. It is the most widely used organization chart because it is simple and because it adapts to any type and size of organization.

2. Horizontal

Second is the horizontal organization chart. The horizontal flowchart runs from left to right. In this case, the person with the highest authority and hierarchy should appear on the left side. The next levels of hierarchy unfold towards the right side.

Of course, in this form of structure, communication and relationship occurs horizontally. So the links and lines of communication are also horizontal. Encourage dialogue and participation.

3. Circular

Third, there is the circular organization chart. The circular organization chart is formed by a central circle that represents the authority and the highest hierarchy. Then around it concentric circles are generated and each one represents a lower level of authority. In these circles are placed the immediate bosses with their respective channels of authority and responsibility.

4. Mixed

Finally, the mixed organization chart is a mixture of the vertical, horizontal and circular organization chart. Companies use it when their relationships of authority and responsibility are very complex. They are widely used by companies that are very large and for that reason they have many departments and many employees. What is sought is the optimization of the workspace and that it is understandable.

Business Organization Chart 2
Business organization chart
Organizational chart classes

To conclude, it can be said that the organization chart is a graphic instrument widely used by companies. Since it allows to graphically represent the structure of the organization, indicating the corresponding lines of authority and responsibility. Above all, it shows the hierarchical structure of the company in a simple and easy to understand for anyone who sees it.