As an organization grows, its structure becomes more complex. Leadership adds new roles and responsibilities. Teams are formed, and different layers of management are created.
Initially, it may have been easy for team members to know how information and accountability flow through the organization. Now, that’s not necessarily the case. It may be time to officially document the company structure with a staff org chart.
Do You Need an Org Chart?
When you envision an organizational chart as a static document, it may not seem that important to the operation and growth of most companies.
However, modern organizational charts are living documents. They can be used as a source of organizational information and a valuable resource for several important business actions and functions, including:
- Mergers and acquisitions
- Allocation of responsibilities
- Vacancy planning
The tools used to create and present organizational charts include features such as integrations with other software packages, future state planning, and reporting.
Any organization that needs to map out its management hierarchy, plan for growth, familiarize new employees with the chain of command, and identify gaps or redundancies in areas of responsibility should consider adding a staff org chart to their company library or knowledgebase.
There are other uses as well. An organizational chart can be helpful in large projects that require cooperation and coordination between multiple business areas. Org charts can even be used to ensure that employees are carrying fair workloads and progressing in terms of competence and responsibility.
4 Types of Org Structures Explained
There are four primary organizational structures. These are:
Here is a more in-depth explanation of each of these.
1. Functional organizational structures
Under a functional organizational structure, the company is divided into teams or departments according to function or area of expertise. Each of these units is led by a department head or manager.
Depending on the size or complexity of the organization, there may be teams within each department. These teams are often led by managers or supervisors who report to the department manager. Functional organizations will also have a leadership team that is over the different functional areas.
Steve Jobs famously turned Apple's fortunes around by implementing a Functional Structure when he returned in 1997.
2. Flat organizational structures
A flat organizational structure is unique because there is a lack of management layers between executive leadership and the rank and file.
This is a common structure used by very small businesses with few employees, simply because there aren’t enough staff members to build a deeper hierarchical structure. There is usually no management structure or just a single structure immediately above the employees.
Google is renowned for having a flat organizational structure.
3. Multi-divisional organizational structure
A multi-divisional structure divides the organization into multiple units that function largely as independent organizations. However, there is a centralized leadership layer that largely focuses on finances.
4. Matrix organizational structure
People working within a matrix organizational structure will report to multiple leaders. These leaders usually include several functional leaders as well as a team lead. The purpose of this structure is often to provide employees with access to guidance and functional experts to report to.
Team leaders handle the administrative and development components of team leadership. The result is that teams don’t need to undergo restructuring for different projects.
There are other organizational structures as well. These are not as well-known or as widely adopted. For example, a network structure focuses on a small, centralized main office with satellite divisions located in different regions. This structure also includes heavy use of contractors and vendors to perform necessary functions.
An interactive example of a Matrix org structure, built in Functionly.
Examples of Staff Organization Charts
Any HR professional or executive leader who is still unsure of the value of organizational charts for their business should consider these use cases.
Mergers and acquisitions
A business that is merging with or acquiring another company must have a very clear picture of its own organizational structure and that of the other business.
The chart will provide them with key information about roles and responsibilities and where different departments fall within the company hierarchy. This information is imperative for integrating teams, avoiding redundancies, and filling gaps.
Similarly, it would be a mistake to attempt significant business growth, rebranding, or reorganization without a current state analysis that includes an up-to-date organizational chart. This is useful in determining that the required resources are in place to execute the pending changes.
Additionally, an organizational charting tool can be used in this case to map out various organizational scenarios that may occur after any changes have taken place.
Compliance and standards
While the ISO-9001 standard does not require org charts, it does mandate that authorities are clearly defined. In most cases, the best way to ensure compliance is to maintain an updated organizational chart that clearly shows authorities and responsibilities.
Also, keep in mind that having a current and easy-to-navigate organizational chart is always recommended in the event of an audit.
Major organizational projects
When consultants or organizational leaders are trying to earn buy-in for major projects or changes, they need to be able to win over stakeholders. This won’t happen if they are unable to communicate their vision clearly. They also must make a convincing case that there are enough resources available. An organizational chart that focuses on the availability of resources and competencies should be part of the documents that are used to convince stakeholders
Planning for growth
Even when there aren’t major organizational changes or restructuring in the works, it’s important to be prepared for organizational growth. This means having a clear picture of current team structures to be able to assess any needs should growth opportunities arise.
Small businesses become medium-sized businesses, and those businesses may expand into enterprises. When this growth and restructuring occurs, the org chart as a singular, static document may no longer be valuable.
However, an interactive chart that reflects changes in real-time can help mitigate growing pains and ensure that any sort of restructuring leads to positive results.
Planning for downsizing
Businesses today must operate more efficiently than ever. This is due to a combination of factors, including post-COVID recovery, inflation, and staffing concerns. At times, the way to optimize a workplace and run a lean organization is to downsize. When that need arises, an organizational chart can help management make those choices without weakening the company as a whole.
Staff org charts for future scenarios
Good leaders don’t just focus on today and the immediate term. They also work on strategies and plans that will be applied well into the future. An organizational charting tool includes all of the functionality needed to communicate a variety of future planning scenarios and how they might impact the organization.
Whether these use cases or others align with your business objectives, Functionly can help you build a dynamic organizational chart. We offer intuitive, drag-and-drop tools that allow you to create charts for the purposes of planning your org team structures, compliance, or simply increasing your understanding of your company’s hierarchy.