9 Reasons Every Business Needs an Org Chart

Many factors differentiate large business operations from small business operations. One of them is the communication and implementation of the optimal organisational structure. A clearly planned org chart works as a clear visualisation tool for a variety of human resource tasks, including managerial authority. It is very important for small business owners to consider having a formal structure right from the beginning as this helps enhance the growth process in the different stages of the evolution of the business. Deciding on the best organisational structure is a key driver of success no matter what the size of the company in question.

Many businesses consider an organisational chart an unimportant, overly formal process, only appropriate for large corporations. Let’s look at 9 reasons all businesses need an org chart, and explore how they can enhance the clarity of communications while improving overall workforce management.

Enriched OrgChart Now chart highlighting competency metrics

Why organisations need org charts

An org chart helps organisations design a clear structure

Every business requires a clear structure that will help efficiently channel each employee’s contribution towards the achievement of company objectives. Org charts visually communicate the organisational structure clearly and consistently to every employee helping guide and inform their contributions to team goals.

Org charts aid in the division of functions

Organisations, large or small must perform a variety of functions to meet their objectives. We charge individuals, groups, teams, and departments with one or more of these functions. When we fail to clearly communicate these responsibilities, multiple contributors duplicate efforts or butt heads. This kills productivity and effectiveness. A clear org chart helps delineate responsibilities for more effective implementation.

An org chart defines relationships between employees and functional groups

The relationships between employees play a key role in the growth or collapse of the organisation. By clearly communicating of how different staff members and groups are related to each other, organisations experience greater growth by avoiding unnecessary conflicts and collisions in the workplace

An org chart helps assess employees’ workloads

It is difficult to evaluate managers without clearly defining their range of responsibility. An effective organisational chart illustrates each manager or director’s span of control, making it easy to assess their workload and determine whether adjustments are in order. This helps decision makers in the structuring and restructuring of responsibilities across the organisation.

An org chart can help determine competency

With functions and responsibilities clearly delineated via org charts, companies and organisations are better able to measure each employee’s contribution and growth over time. This measure is critical when it comes to effectively evaluating employees and managing employee growth and advancement for maximum productivity and reduced turnover.

A good org chart enhances coordination within the organisation

In most organisations, each individual or group is tasked with specific functions, yet most projects an organisation undertakes require cross-functional coordination. A solid org chart helps streamline that coordination to better meet the objectives of the organisation. Like a well-oiled machine, each employee is able to focus their energy and time on productive tasks.

A solid org chart clearly illustrates who to “loop-in” where the “buck stops”

The org chart enables each employee to identify collaborators, stakeholders and decision makers for any given task or issue. This helps efficiently identify and overcome roadblocks by immediately knowing who to involve when a change in course or decision is needed.

Org charts are good for resource allocation and analysis

Org charts are used to design work teams, carry out budget analysis and generate essential reports for productivity. This allows the organisation to manage the available talent and financial resources for enhanced growth and productivity.

Org charts spotlight “holes” in organisational structure

Without the insights an org chart provides, it is more difficult to identify talent gaps. Important functions that no-one is accountable for are immediately apparent in an org chart. Managers can then write better job descriptions and requisitions and quickly fill those needs.

Org chart software highlights how to effectively channel contributors to meet an organisation’s goals. Ineffective communication makes it difficult for contributors to give their best, impacting growth and productivity. A good org chart enables effective resource management.