There are different types of organizational charts, and each shows how employees’ positions in a company link with one another. Depending on the scale of the organization, you can use a chart to visualize the duties and responsibilities of the entire corporation, or you can split it down by department, displaying the link between functions within departments.
This graphical representation of the functions found throughout the company helps workers and stakeholders execute the organizational hierarchy. The symbols on the chart, such as lines, help to demonstrate the relationship between responsibilities.
Types of Organizational Charts
Typically, organizational charts resemble pyramids, having the C-level executives at the top and lines extending down to mid-level management and, finally, staff-level personnel.
However, not every corporation benefits from a hierarchical organizational structure. There are several types of organizational charts to choose from since there are different kinds of organizational structures.
Let’s go through the seven most popular types of organizational charts and structures and the advantages and limitations of each.
Hierarchy Chart
A hierarchy chart has the pyramid-shaped organizational structure discussed above. In fact, It is the commonly used type of organizational chart— with the chain of command extending from the top (CEO) to the bottom (Entry-level and low-level employees), with each employee reporting to a supervisor.
Advantages
- Shows a clear reporting structure
- Shows the people responsible and accountable for each project
- It can be used to motivate employees by showing them career advancement opportunities within the organization
- Gives each employee a specialty
- Helps foster a spirit of Helps camaraderie among employees
Limitations
- This leads to increased bureaucracy which may become a roadblock to innovation and essential changes.
- A hierarchy structure may cause employees to act in the interest of their respective departments rather than the entire company.
- It May causes lower-level employees to feel less important
Functional Chart
A functional organizational chart is similar to a hierarchy chart in that it groups employees based on levels of authority. The top-level management goes on top of the chart, followed by lower-level employees. However, in this type of chart, employees are arranged according to their skills and related function in the firm. In organizations with a functional structure, each department is governed autonomously.
Advantages
- Employees can focus on their specific role
- Facilitates specialization
- Help teams and departments feel self-determined
- It is easily scalable regardless of company size
Limitations
- May create silos within a company
- This leads to poor cross-department communication
Flat/Horizontal Chart
A flat or horizontal organizational chart is best suited for companies with little to no mid-level management. Most small startup firms use this organizational structure before they upscale and build consolidated departments. Some firms keep this structure as they grow because it encourages employee involvement and lesser supervision.
Advantages
- Encourages employee involvement
- Fosters communication
- It leads to faster coordination and implementation
Limitations
- This May lead to confusion as employees may not have any direct supervisors to consult.
- This May lead to employees with generalized skills rather than specializations.
- Some firms may find it hard to maintain this structure after they grow beyond the startup phase.
Divisional Chart
In Divisional charts, employees are grouped based on market, product, and geographical region. In this type of organizational structure, divisions of a firm have authority over their resources, effectively acting as their own company within the larger organization. This structure works effectively for large firms because it allows different divisions to make choices without everyone reporting to a few bosses.
Advantages
- It helps large companies stay flexible.
- This structure enables a more rapid reaction to industry developments or consumer needs.
- Encourages individuality, autonomy, and a tailored approach
Limitations
- This can easily lead to replicated resources
- This can lead to a poor flow of communication between the headquarters and its divisions.
- This May lead to a firm competing with itself
Matrix Chart
A matrix chart resembles a grid and depicts cross-functional teams formed for specific tasks. For example, an engineer can belong to the engineering or manufacturing department and work on a temporary project (led by a project manager). A matrix chart can represent both of these positions and reporting connections.
Advantages
- Helps supervisors determine the employees most suited for the project needs
- It gives a more dynamic organizational view.
- Encourages employees to apply their expertise in jobs other than their original ones
Limitations
- This may lead to a conflict between project and department managers
- It is more prone to changes as compared to other organizational charts
Team-based Chart
As the name implies, a team-based organizational structure organizes personnel into teams. This organizational structure deviates from the traditional hierarchical structure by emphasizing problem-solving, teamwork, and giving more power to employees.
Advantages
- Firstly, it breaks down the silo mentality, which increases productivity, performance, and transparency.
- Secondly, it encourages a growth mentality.
- Changes established career paths by encouraging people to shift laterally
- Experience is more important than seniority.
- Finally, this type of structure requires minimal supervision.
Limitations
- In a network chart, employees’ promotional paths may become less apparent.
- Secondly, It goes against many firms’ natural preference for a fully hierarchical structure.
Network Chart
In recent years, larger market cap corporations have consolidated their services under one roof. To manage this, firms have to coordinate with multiple vendors, subcontractors, freelancers, and remote facilities. Therefore, a network chart facilitates these processes by making sense of resource allocation. It might also apply to an organizational structure that prioritizes open communication and relationships over hierarchy.
Advantages
- Firstly, these charts help visualize and make sense of the complex network of on and offsite relationships within firms.
- Secondly, it gives companies agility and flexibility.
- Thirdly, it Encourages employees to take the initiative, collaborate and make decisions by giving them power.
- Finally, it helps employees understand the firms’ workflows and processes
Limitations
- When dealing with many remote processes, it might soon become unnecessarily complex.
- Furthermore, these charts may make it more difficult for employees to understand who has the final say.
