How a business is organized and structures its operations is often a key to its success. Getting this piece wrong could doom your organization from the outset.
A clearly defined and well-understood org chart should help create the structure needed for clear communication, collaboration, and efficiency. Using charts and graphs, an org chart creates an easy-to-understand visual representation of your structure.
A good org chart will:
- Define the relationship between employees
- Establish lines of reporting
- Help assess employer workloads
- Enhance collaboration
- Demonstrate who has authority and responsibility
- Identify gaps in staffing or resource allocation
- Provide a framework for company evolution
Making the best org chart for your industry varies by industry and verticals.
So, how do you know which is the best type of org chart for your organization? We’ll show you some of the different ways org charts are used in industries to help you better understand which one might work for you.
Managed Services Provider Organizational Chart
Top-performing managed service providers (MSPs) are experts at efficiency. They create clearly defined roles and responsibilities and typically have an MSP org chart that shows what everyone is accountable for.
An MSP org structure is a little different than other businesses because nearly every role revolves around product management and delivery. Without product delivery, there’s no company. Everyone has to be focused on the core products being deployed.
Most MSPs use an org chart that breaks employee groups into functional units, such as administration, business operations, sales, marketing, product development/engineering, and service delivery/support. Within each functional area, there may be additional employees that report to managers.
However, MSPs also tend to be more collaborative and work across traditional department lines. For example, let’s say there is a flaw in the product. This can hurt sales and customer retention. It may invalidate marketing. It may cause budgeting and financing issues. Since everyone has a stake in the product delivery, it becomes a group responsibility.
IT Organizational Chart
An IT organizational structure will vary depending on whether it’s a stand-alone company or a department within an organization. It will also depend on how big the organization is.
For example, in a smaller company, the IT org chart will be fairly simple. As companies grow, they will start to add specialists to handle different functions, such as customer support, cybersecurity, product development, etc.
Once IT companies reach a certain size, they tend to adopt one of these models:
- Hierarchical IT org chart with top-down and centralized decision-making
- Decentralized or autonomous business units that divide tasks and roles and let each functional area make decisions
- Product-centric, such as a matrix org chart, where employees have multiple responsibilities for multiple functional areas
Non-Profit Organizational Chart
A non-profit org chart will typically follow a familiar structure with the board members at the top, managing officer or Executive Director and staff underneath, and then volunteers under a staff member. Depending on the size of the non-profit, there may be a flat hierarchy or a more top-down non-profit org structure.
In most non-profits, the Board of Directors also has committees, such as fundraising, budgeting, and committees. These would fall underneath the board and work in conjunction with the CEO, President, or Executive Director.
In a flat structure, all staff would then report to the managing officer. In larger organizations, staffers may be divided into various departments or functional areas, such as Development, Finance, Operations, Marketing, and Volunteer Coordinators. Each area may have other employees that report to the heads of the functional areas.
Get your structure right, or the whole business could collapse around you | Image by PIRO / Licensed under Pixabay License
Tech Company Organizational Chart
While there’s no right or wrong way to define your organizational structure, most tech companies divide roles within an organization. While still following a top-down structure for tech company org charts, many companies choose to split functional areas at the higher management levels.
For example, the CEO might oversee sales, marketing, legal, and human resources, while the Chief Technology Officer (CTO) might manage the frontend and backend engineers, user experience team, and data scientists. While the CEO is the ultimate authority, they are only directly managing part of the organization.
In large tech organizations, functional areas might have team leads or managers that oversee teams of specialists.
In software-as-a-service companies, the typical SaaS organizational structure will grow as the business grows. At the beginning, it may start with a founder that is responsible for sales and marketing along with a small team that handles product development and administration.
As the organization grows, roles get further divided, first with team leads, then department heads, and eventually with C-suite executives overseeing the functional areas.
As tech companies continue to evolve, they often add additional managers at the VP level to continue to manage and grow the business.
For more on tech company organization charts, please read this article.
Small Business Organizational Chart
A small business organizational structure typically uses one of the three types of org charts:
A functional organizational chart for small businesses creates a hierarchy by grouping employees based on roles. One person is in charge while other employees report to them within the functional area.
A divisional organization chart for small businesses might divide roles by geographic territories or sales regions.
A matrix organizational structure is common in small businesses, although they may not recognize it as such. In a matrix structure, teams have leads (rather than managers) who oversee different employees on different projects. Rather than a traditional department structure, employees may have cross-department responsibilities and dotted line reporting to each other.
You see this in small businesses with only a handful of employees. Someone may be the most knowledgeable person in one area, but everyone needs to pitch in. Then, the same lead in one project may have to report to someone else who has more knowledge in another area.
For more on small business organization charts, please read this article.
Startup Org Chart
The startup organizational structure typically evolves as companies grow. What may work in the beginning may not work when companies add additional customers.
According to a recent CB Insight study (1), 23% of startups struggle to stay viable because of inconsistencies within the team. This may be due to a lack of structure or incorrect job fit.
For example, it takes a much different experience level to market and sell products or services than it does to manage a team of sales reps. At a startup, one founder may take the lead on sales, but as the company grows, it needs to expand the sales team and the job of managing may be too big for one person or they may not have the best skills to do it.
Startups also commonly follow a growth plan. As startups grow, roles go from being “everybody does everything” to functional specialists. Managers are added as the customer base grows.
Startups may need to add outside expertise at higher levels, such as a CEO or CFO. Continued growth may necessitate growing levels of management.
For more on startup organization charts, please read this article.
: The Best Org Charts for Your Business
The best org charts will define where your organization is now, but also allow you to envision where your organization needs to go in the future.
Creating multiple variations for different levels of growth can help you see gaps in your staffing or functional areas. It can help you better prepare for the future.
Functionly provides a fast way to create beautiful and easy-to-understand org charts to visualize your structure. Using intelligent org design, you can create simple or complex org charts using built-in templates or design your own.
With drag and drop functionality, it’s easy to make changes, so when you’re planning for the future, you can easily evolve your org chart.
Functionly's organization builder tools help with your strategy mapping, functional alignment, and team accountability. Functionly integrates with most payroll and HR platforms so you can create charts and graphs and share data.
Sign up now for a free trial and let us show you how creating org charts for your structure can help you manage and grow your business.
- The Top 12 Reasons Startups Fail, CB Insights, 3 Aug 2021
Title header image: Image by Gerd Altmann / Licensed under Pixabay License