The organizational chart is a valuable business tool . It helps you understand more clearly the roles and responsibilities of each department and professional within a company.
But did you know there are different types of organizational charts? The main ones are vertical, horizontal, matrix, circular, and functional. Each has specific characteristics and is more (or less) suitable for a company depending on its characteristics.
If you own a business or manage a company, check out this article to learn about the main types of organizational charts and find out which one is best for you!
What is a business organizational chart?
A corporate organizational chart is a visual tool that represents a company’s hierarchical structure. It helps promote greater transparency for all professionals, contributing to a more organized and productive work environment .
In practice, this tool can provide companies of all sizes and sectors with a range of benefits. In addition to providing greater clarity regarding the hierarchy of positions and departments, the organizational chart helps companies with factors such as:
- internal communication;
- operational efficiency;
- human resource management;
- organizational culture;
- integration of new employees;
- career development of employees.
What are the main types of business organizational charts?
Now that you understand the concept of a business organizational chart and its benefits, see the main types in the topics below!
Vertical organizational chart
The most conventional choice is the vertical organizational chart. Often referred to as the traditional organizational chart, it shows the top-down hierarchy of a business. To put it another way, the top executives have more power and responsibility within the company.
This type of organizational chart is often beneficial for companies with well-defined structures. It facilitates hierarchical visualization and the visualization of each function within the company, as well as streamlining supervision and control activities .
On the other hand, this organizational chart model is considered more rigid. Because of this, it can hinder communication between different hierarchical levels, for example, and demotivate employees at lower levels due to its inflexible structure.
Horizontal organizational chart
The horizontal organizational chart features a flat structure with minimal layers of hierarchy, in contrast to the vertical form. It gives workers more autonomy while emphasizing teamwork and communication on a more linear level.
This kind of organizational chart is thought to be more adaptable due to these features. As a result, it can, for instance, promote communication and collaboration among staff members, thus raising their levels of motivation and satisfaction.
However, this strategy may cause complexity in areas like identifying responsibilities if a corporation has a lot of diverse roles. Additionally, it may lead to issues with supervision and control.
Matrix organizational chart
A model that incorporates elements of both vertical and horizontal organizational charts is the matrix organizational chart. This model is appropriate to companies whose employees report to many managers since it permits multiple lines of responsibility for various projects or departments.
This approach is more adaptable than the horizontal organizational chart and promotes cooperation and communication across various departments within the business. However, because there are several lines of command, it may result in authority disagreements and may be confusing.
Therefore, the matrix organizational chart is a model that requires well-coordinated management to avoid these problems.
Circular organizational chart
Another organizational chart option is the circular one, also called the radial one. As the name suggests, this model represents the organizational structure in a circle, with senior management at the center and layers of employees surrounding it.
This type of organizational chart is visually intuitive, often more motivating and less hierarchical than a vertical chart , for example, and helps promote cooperation. However, it may not be appropriate for all organizational cultures and may be difficult for some people to interpret.
Functional organizational chart
Finally, another type is the functional organizational chart. It is typical of medium- and large-sized enterprises and separates the organization according to the roles of each department, such as marketing, finance, human resources, etc.
This solution has the benefit of clearly outlining the organizational structure of every department inside the business. Nevertheless, this approach may result in a lack of departmental cooperation and communication, erecting obstacles and consolidating decision-making inside each industry.
How to choose the right organizational chart for a company?
You now have a better understanding of the primary kinds of organizational charts thanks to the descriptions above. But which one suits you the best? You must take into account the following factors in order to respond to this question:
- company size and complexity;
- business sector ;
- organizational culture;
- need for coordination;
- level of flexibility of the company.
Regarding the selection and development of a corporate organizational chart, it’s worth noting that it can be adapted, for example, to accommodate the outsourcing of specific sectors. In a business, it’s common for some areas to be outsourced to improve efficiency, reduce costs, and other issues.
A common example of this involves the marketing sector. In many companies, this outsourcing is commonplace, as it allows businesses to rely on the work of professionals specialized in the subject, avoiding the need to hire internally, and focusing on their core business .
