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The Importance of Organizational Charts in Business

A good organizational chart is helpful as a tool for talent management, staff planning, and clarifying reporting and communication structure. In the age of multi-dimensional positions, telecommuting, and less hierarchical organizations, putting together a visual representation of the Company’s structure becomes challenging, yet even more meaningful. By looking at an org chart, people should be able to gain a quick understanding of how an organization is designed and where each employee fits.

With many of EctoHR’s clients being very “flat” in their structure, reporting relationships may not be as clear as in larger, more “structured” organizations. Additionally, job titles likely do not have a true match to a given employee’s level within a company, and an org chart will better clarify how employees are grouped and how they relate to each other.  Below are a few noteworthy reasons for why every company should have an up-to-date org chart:

Reporting Relationships – a good org chart depicts reporting relationships so the entire organization has a clear idea of how each person is held responsible. This helps employees know who they should be taking direction from, where they fit in to the overall structure of a company, and the scope and restrictions of his or her roles.

Talent Management – utilizing an org chart as a planning tool typically helps clarify whether the company has the right people in the right positions. The visual nature of an org chart often makes it easier to see areas of concern for the future, such as a department with multiple near-term retirements or a group that does not have a high potential future leader. Additionally, Talent management requires strategy to determine what new positions may be needed in the future, and an org chart often helps in the discussion and planning process. A quick review of the org charts of many of our clients shows positions that are filled today that did not even exist 10 years ago!

Communication – A functional org chart can be designed to show the typical progression or workflow of a Company’s main service delivery. For example, starting with Sales and Marketing and working left to right through production and ultimately through Accounting and Finance provides a visual representation of how clients or customers work through an organization’s people. Org charts may display how employees need to work together and have direct lines of communication to other departments. It is, of course, important to remember that simplicity is often the ultimate sophistication!

EctoHR combines its experience working with hundreds of businesses to help them clarify structure and plan their staffing needs with advanced experience utilizing Microsoft Visio to help clients create org charts. For more information on our talent management and HR consulting services, contact us at 810-534-0170 or HR@

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