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The Different Types of Organizational Charts and Why Each is Important

In Human Resources — by Recruiterbox


While technology influences every corner of our lives, it also affects the modern work landscape, the way we structure our businesses, and even the teams within those organizations. If your business is growing so fast that it’s hard to keep track of new employees, roles are changing often, or you have a lot of people working together on multiple teams, it can be hard to account for who is coming and going.

Enter org charts. The simple definition of an org chart is a graphic representation of a company’s organizational structure. They’re used primarily as a tool for navigating the identity of the overall company, but they’re also helpful for hiring, budgeting, and other tasks. Most of all, they serve as a tool for communicating with and connecting the people who make up a company, which is a crucial element of any successful business. In this blog post, we’ll outline three different types of org charts so you can decide which is best for your organization.

Hierarchical org chart


This one is the most conventional type of org chart since it’s often structured by rank. It starts with the supervisor/managerial positions at the top and scales down like a family tree. The hierarchical org chart is most commonly organized by department – sales, marketing, engineering, etc. – but it can also be organized by function, geography (helpful for global businesses or those with multiple locations), or by product for companies who offer multiple goods or services.

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Hierarchical charts work well for defining clear boundaries between roles and departments and help foster a clear sense of company identity at every rank. It can also act as a natural motivator for employees to work toward a promotion. Because it groups departments together, it can also create a familial vibe or sense of belonging to teams, which can cultivate stronger collaboration. The downside to the top-down structuring, however, is it can make low-ranking employees feel undervalued, especially if they sense no real room to grow in their roles.

Horizontal or “Flat” org chart


Next up is the horizontal or flat org chart, which organizes its components in a more lateral grouping. This format is best for – and most often used by – smaller companies and organizations that have a lot of overlap in their roles. In fact, a horizontal org chart is perfect for a startup or small business in the early days when people are wearing many hats (as opposed to a company with a lot of “middle management”). It allows for more responsibility and independence, as well as communication. It also improves coordination and the speed of implementing new ideas. The downsides, however, are that horizontal org charts can be a bit nebulous. They often lack clear boundary lines, which can make some employees fuzzy on who to report to or where responsibilities start and end. Still, if you’re a startup, you probably already have a team of independent people who don’t want to be micromanaged and feel comfortable with shifting or expanding roles. Once the company grows large enough, however, the horizontal org chart might not be able to keep up with expansion.

Matrix org chart


For a more complexed structure, a matrix org chart works best. Rather than the traditional pyramid layout, this particular chart is organized into a matrix-shaped diagram so the layout is less about the hierarchy of authority and more about relationships and communication. An example of this would be an employee who reports to multiple supervisors or works on different projects within various departments.

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One benefit of the matrix org chart is that it streamlines teams and allows for easy interaction — as well as a clear view of how individual teams combine efforts on a multi-departmental project. On the plus side for managers, it makes project management much more efficient, since a supervisor can choose employees based on the specific need for each unique project. A downside to the matrix org chart is that the more detailed they become, the more overwhelming or confusing they can become. Because of that, they’re best for smaller organizations, or at least those with a very clear vision and execution.

Because an org chart will be a tool of communication for your whole company, you’ll want to do your research first and make sure to choose the style that best suits your company’s needs. Make sure it’s updated often, centrally located, and easy to read. Consider maximizing the relevance of this important tool by linking to other important resources from it. Or get creative and give your org chart personality with photos and yearbook-style captions. However you choose to design your org chart, just remember, this resource is an asset to your employees.

Lauren Pezzullo currently resides in Austin, TX where she writes about workplace culture and human resource solutions for Pingboard. Pingboard is real-time, collaborative org chart software that makes it easy to organize teams, plan for growth, & keep everyone informed.

Image courtesy of William Iven

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