Building a Business Organizational Chart

As your business grows, it's impossible to keep a completely horizontal organizational chart. Chaos would erupt as new employees wonder who to turn to for help. In this article we will look at a few ways that you can work on your organizational chart to make sure it grows with your business.

It’s likely that you’ve seen the very standard organizational chart: the president/CEO on top, followed up upper management, followed by middle management, followed by employees or front line staff. Unfortunately, it’s not as easy as that when you’re growing. However, it is important to have an organizational chart.

As you grow, a posted and visible (but flexible) organizational chart will help you to make sure you maintain control over your business and that new staff know who to turn to for guidance and who to listen to for direction. But there are a few ways to create a business plan- which one is right for you?

You can divide your business up by region, so the president is at the top and regional upper management control employees in each region.

  • Advantages: this type lets your business react to regional changes and helps to decentralize decision making- making your job easier!
  • Disadvantages: this type sometimes leads to inefficient and costly duplication of administrative services (for example, every region ends up with a financial person or a photocopier lease when those assets could be centralized for more cost effective use).

You can divide up your business functionally, so that the president is at the top and the upper management is divided into business types like production, marketing, and finance.

  • Advantages: this type lets each manager make changes and decisions that are appropriate for their specific area of the business (production might work at night when it’s cooler so the machines don’t overheat while sales needs to work in the day when the customers are around).
  • Disadvantages: depending on the type of business you have, one or two managers could be loaded down with too many employees while other managers are walking around with little to do.

These are two very popular forms of organization for businesses.

Success tips:

  • Rather than going for the very traditional approach of the organizational chart that looks like a family tree, consider an organizational chart that looks more like a molecule. You can use a combination of regional and functional upper management, each with their own teams but be sure to connect one team with another to help ensure improved communication and efficiency.
  • Encourage a spirit of customer service in your organization by putting the customer at the top of our organizational chart and not yourself. Remind your employees constantly that they are there to serve the customer.
  • Give a lot of thought to your organizational chart before you publish it. Companies that provide a constantly updated organizational chart to their employees create confusion in the workplace and make it difficult for people to know who is in charge.
  • A short organizational chart (one in which there are not a lot of steps between the CEO and the employees) is both good and bad: It’s good because the employees feel like there is very close communication with the boss, making the company seem like a tight-knit family. It’s bad because employees may perceive that there is little room for advancement and move on.
  • Aside from having employees answer directly to their supervisor, there should be some kind of opportunity for them to be able to speak frankly to another person at their supervisor’s level. This is especially important if your company does not have an HR department. Employees who can mention concerns they have with their supervisor to another supervisor will help to reduce turnover if there is a problem with one of your middle managers.

I need help with:

Got a Question?

Record it below. We’ll answer selected ones on our livestreams.

Affiliate Disclosure: This post may contain affiliate links, meaning we get a commission if you decide to purchase something using one of our links at no extra cost to you.