SHRM (an HR management org) found that 70% of employees experienced at least 4 significant changes in their organizational structure in the past five years. Meaning, businesses are continually adjusting team member roles, hiring, and shifting team structures to stay competitive.

And the best tool to update your team on these changes is an org chart – a visual layout of your whole team that you can reframe as you grow and scale.

As you scale and grow your team, you need to implement structural changes, improve your standard operating procedures (SOPs), face internal issues, update your core values, develop new strategies, and more.

And as you change, your employees have to stay informed on the updated roles and responsibilities within your organization. Enter the org chart.

What is an org chart?

A business organizational chart (or org chart) explicitly shows every person’s position in a company and who reports to who. An org chart’s visual representation of this structure includes boxes (one for each person). And in each employee’s box is their name, title, and picture. 

The boxes all connect to show the executive at the top and your business’s management structure going down. AKA who reports to who. When you do this, it’s easy for you and your team to spot your company’s management framework in one glimpse. 

That way, everyone can see who does what, who reports to who, who’s considered leadership, who makes up each department, and so on.

Why your business needs an org chart

An organizational chart helps your employees understand internal structure and how roles are divided among each department. In other words, it lets them know where they fit into the business. And helps you identify any gaps so you can plan for the future of your company. 

Here are some important reasons you should add an organization chart to your business playbook:

Communicate changes

McKinsey research has found that continual communication is a leading factor in a business’s transformational success. Meaning, if you want to level up your company as you make adjustments, you’ll need to relay changes to your team in real-time.

This communication happens best when you give your team something tangible to refer to when they don’t know what changes have been made. Right now, you might relay changes to your team using Slack, email, all-hands meetings, product release notes, or other resources.

But when you have people changes, this communication will look like an org chart. And it should include everyone’s role, who reports to who, and the teams that make up your business. (Hint: an org chart includes all these things!)

Prevent employee turnover

Only half of employees experience role clarity in the workplace. In other words, half of your team tackling their jobs today don’t really know what they’re being held accountable for on a day-to-day basis. They’re just winging it.

While small business teams are used to juggling hats, employees need to know what they’re being held responsible for. And of course, how each person on the team is contributing to your company’s overall goals.

Per Gallup, when workers are engaged and confident in what they own responsibilities-wise, the company experiences 25-59% less turnover.

In fact, 75% of employees with well-defined roles are satisfied with their jobs, compared to the US national average of 65% job satisfaction. And their work performance increases by 25% more than those without clear roles.

Creating an org chart will help you get the ball rolling as you start to create well-defined roles for your team members. After all, put simply: roles are positions and job titles. 

And when you help your employees understand their own roles and the roles of their team members through an org chart, you’re handing them confidence in their contributions and how they can work with others. In turn, keeping them productive, happy, and less likely to look outside your org for a new position.

Help your team know who’s who

If your company hasn’t developed an org chart yet, you’ve likely overheard employees get confused with their peers’ names and positions.

But if you give everyone access to the company org chart, they’ll be able to piece it all together (especially when photos are attached).

Having the chart on hand is especially helpful for those working remotely. Odds are your remote employees work with people who they’ve never actually met face-to-face. 

Remote collaboration can make learning names, faces, and titles difficult — especially cross-departmentally. But having an organized chart with everyone’s basic info will help flatten out the learning curve for remote workers. 

And the same goes for new hires. Meeting so many people all at once can make remembering everyone a challenge. But when you give them an org chart on day one, it will make putting faces to names a whole lot easier.

Save workers research time

Some small businesses print out a company directory to relay the team layout to employees. But a list of names simply doesn’t help anyone connect the dots. 

Most of your employees process information based on what they see. According to Forbes, 65% of us are visual learners. And an org chart is an easy-to-digest, one-page, visual directory. 

When you use an organization chart, your team won’t have to time-consumingly leaf through a directory past multiple phone numbers and addresses to find someone. Instead, they can pull up a single diagram and find people by role and department right away.

Outline growth paths

Having a clean organizational layout shows everyone a clear path for advancement. By just looking at the org chart, any employee can begin to create a growth plan. 

When they see the structure of their department and others, they can gain an understanding of what gaps they may want to fill when a peer gets promoted and how they could contribute to the initiatives of other departments in the future.

This will help them come better prepared for development conversations with leadership.

An org chart that displays everyone top-down will also help you determine if it’s time to expand or rearrange your team. When you look at the big picture, it can tell you if one department has too many employees or if another doesn’t have enough. 

Many experts believe that a supervisor can effectively manage about six workers. In other words, if a manager has too many employees underneath them, they won’t have time to train and sufficiently oversee every employee. 

You should consider several factors when determining the best number of subordinates for each supervisor. But management gaps become more apparent when you visually lay out your team structure. 

When you look at a team diagram, you can easily see the employee-to-manager ratio for each department. So you’ll notice that your three-person department can continue to grow under one manager while your 15-person team might need more management help.

As your company grows, your org chart will grow right along with it. And it’ll continue to be helpful for both existing and new team members. Meaning, seasoned employees can learn the names and roles of new hires while newbies can figure out the current business structure – and exactly where they fit in.

How to build an organizational chart

When building your org chart, you’ll want to be mindful of a few factors that can bring it from not-so-helpful to game-changing. Follow our step-by-step guide to create a killer org chart:

1. Set up a hierarchical structure 

Before you dive in, you’ll need to have a game plan for the structure of your chart. Per Chron, the hierarchical structure has been the most straightforward way to organize small businesses for decades. Think of it as a pyramid where each brick row represents the next leadership level.

The highest position (CEO or president) sits at the top tier when setting up your organization chart to reflect a hierarchical structure. Other leadership levels (VPs and middle managers) will line up in the following tiers. Your lowest-level workers will sit in the bottom tier. 

Let’s say your leadership team consists of a CEO as the highest-ranking executive, VPs reporting to the CEO, and managers reporting to VPs. Meanwhile, the rest of your team members report to managers. When you look at your org chart, you should see your CEO at the top, a row of VPs underneath the CEO, a row of managers below the VPs, and your lowest-level employees at the bottom tier. 

Also within this structure, you’ll want to separate sections of your chart into departments. For example, the members of your sales team will be under sales managers, who report to the head of your sales department. And those managers likely report to the VP or head of your sales team. The same goes for your other departments, which will create multiple department sections across your chart. 

Structuring your chart like this will ultimately help your employees understand your company’s chain of command.

2. Name all the members of your team

As you get started with your org chart, be sure to keep it straightforward. Stuffing the boxes full of too much info only makes it harder to read – and doesn’t meet your aim to create an easily-digestible resource.

For this reason, there won’t be any specifics on your org chart – you can save extra info like a bio and responsibilities for people’s profiles, the employee handbook, and directory. 

Your organizational chart should display as a single collective diagram. After all, you can’t tell who connects to who if you have too much info and are forced to chop your chart into multiple pages.  

All you need is a simple layout where each box has an employee’s name, title, and photo. And bam – you’ve got yourself a complete chart!

3. Keep your org chart up-to-date

Timely transparency of your org structure will help your whole team understand how the company is changing while it’s changing. It’s crucial that you continually present the latest company structure to your team so everyone stays in the know. 

After all, the chart is essentially useless if it’s not up to date. It will lead your employees to soak up the wrong info, leading to confusion. 

And if your team catches inaccuracies in the chart, they’ll stop using it as a go-to resource. This issue only leads to your people feeling uninformed about company changes, team members reaching out to the wrong people, and more questions brought to you.

When you use software to build your org chart, it’s easy to adjust it as your team changes (versus paper versions that you’ll need to redo completely). 

You can effortlessly make changes as folks get promoted, switch roles, or onboard as new hires. And your team will instantly see changes made to the chart, so they won’t be left asking questions like “When did so-and-so get promoted?” 

At the end of the day, you want to do everything in your power to stay organized, track company growth, and keep your team members in the loop. So it’s time to level up your business playbook with a company org chart.

👉 Streamline your company org chart creation with the world’s leading business playbook builder, Trainual. You’ll find the simple layout you need right on your account’s org chart page. And if you want to see more info for someone (like their bio, roles and responsibilities, contact info, and team) you can simply click on them to go straight to their profile. Try for free.