Organizational Chart Basic Knowledge

What’s the Purpose of Organizational Chart

Wondering what’s the purpose of organizational chart? Read this article and you will find the answer and organize your business better.

What Is Organizational Chart

An organizational chart is a graphical representation of the roles, responsibilities and relationship between individuals within an organization and it is a simple way to visualize how work flows within a business. It can be used to depict the structure of an organization as a whole or broken down by departments or units.

There are different organizational chart types divided by different categories. There are 4 organizational chart types divided by organization relationship and they are line organizational chart, lateral organizational chart, staff organizational chart and functional organizational chart. If divided by organization structure, it can be classified into functional organizational chart, divisional organizational chart, hierarchical organizational chart and matrix organizational chart.

marketing org chart

Whats The Purpose of Organizational Chart

More and more business companies tend to use organizational charts to structure their business better and keep competitive in this fluctuating market. Why do they like organizational charts? And what are the purposes of organizational charts? Here list the 4 main purposes of org charts for your reference.

1. Developing Workforce

Organizational charts can help HR departments clearly know how the company is staffed, whether it is reasonable or not and makes appropriate adjustments if necessary.

2. Budgeting

Org chart is a great tool for budgeting when organizing annual activities and avoid unnecessary waste.

3. Communicating Better

Org charts clearly depict the relationship and contact information within a business which helps employee to contact each other more conveniently.

4. Defining Roles

Employers can use org charts to define the roles of each employee and check their duties accomplishment at fixed periods.

How to Create Organizational Chart on Edraw

It is super easy to create organizational chart with Edraw org chart.

If your time is limited, just choose a professionally designed organizational chart template and start your edition to make it suitable for you.

If you want to enjoy the drawing process and create the organizational chart totally by yourselves, just go to File menu > New > Organizational Chart, and double click the icon of Organization Chart open a blank drawing page. Then you can start your creating by several drag-and-drop steps in minutes.

Organizational Chart Examples

Below are organizational chart examples created by our org chart maker. Are they interested you? If yes, just feel free to download and share them. And all the examples are editable, you can customize the contents and make them your new organizational charts.

City Org Chart

city org chart


Company Org Chart


company org chart


Software Company Org Chart

software company org chart

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Differences Between Vertical and Horizontal Org Chart

vertical org chartFigure 1. Vertical Org Chart


horizontal org chartFigure 2. Horizontal Org Chart


Org chart can be classified as two types: vertical and horizontal, basing on approach of layout.  A vertical org chart looks like a pyramid. At the top is CEO or company president and then each segment consists of series middle management and its manager who are responsible for their departments respectively. However a horizontal org chart has no middle management where lots of workers are made to report to one manager. It’s also called flat org chat. These two types of org charts are very different. This article is going to explain differences between them on aspects of decision-making, collaboration and communication.



In a vertical org chart, decision is made by the top management and descended down to employees through the hierarchy. Employees are required to follow orders and guidance from the upper level to do complete the tasks. But in a horizontal org chart, employees can make decision in their daily operation and only have to ask for instruction when it comes to some large issues. Most of the time, staffers are driven by not the manager’s command but company’s goal.



In vertical org chart, since decision is made by the upper level and flows down to employees, collaboration can only occur in some formal occasions like meeting. In horizontal org chart, employees have rights to make decision during the daily operation therefore collaboration tends to happen more organically. Employees are more accessible to acquaintance with each other in order to produce collaborative solutions.



Communication in vertical org chart is mainly to occur within in departments or between department members and managers. It can be slowed down by rigid structure. But communication in a horizontal org chart can be easier to flow down from one department to another.

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4 Tips for Creating Functional Org Charts

Functional org chart is a popular organizational diagram usually implemented by small business companies. In this structure, organization can be grouped into separated departments by areas of specialty or function. Those departments are vertical and disconnected from each other. One functional manager is going to regulate and control one department and all functional managers are supposed to report to one top boss namely the company president or CEO. Like other org charts, functional org charts have advantages and disadvantages. To make perfect the functional org chart, here we present you four tips for creating functional org chart.

functional org chart

1. Limit the Number of Layers to Three

Functional org chart would be quite a good choice for small companies but it might cause trouble in management and generate bureaucratism ending with severe damages in company’s advancement and profits earning as it expanses to a very large one. So it is necessary to make your functional org chart within 3 layers.


2. Encourage Communications Across Departments

There is a lack of communication across departments due to the fact that employees cluster together with those who are in the same departments and have few opportunities to mingle with colleges from other departments. Besides, cross-department communication is also hindered by the increasing competitive sense among departments. With regards to long-term development of company, people need to be encouraged to communicate across departments.


3. Develop Perspective of Overall Situation

Department may ignore the big picture of the whole company with too much focus on their own group goals rather than the entire company subjectives. For instance, there may be a desire by product department to update and optimize the last product but the overall company plan is to invest in new products instead. Since employees is lacking perspective of overall situation, they may lay important emphasis on goals that they believe are significant but which are not priorities for the entire company.


4. Motivate Employees

Usually, in functional org chat, workers have fixed tasks and routine work and they may get bored and upset by monotonousness and repeatability hence it’s better to motivate employees so as to keep them energetic to achieve high degree of performance.


The org chart in this article is made with Org Chart Creator, a perfect alternative to Visio. You can view more nice templates or download software.

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Five Common Characteristics of Functional Org Chart

Functional org chart is one of several common organizational structure diagrams many companies have adopted,  and a clear depiction of how people are organized. Wherein employees are segmented basing on their skills and specialties. Usually, people are grouped into departments and made to report to and follow their department manager. Each functional manager is responsible for supervision and direction with his or her department subordinates. This article aims for explanation of functional org chart by five characteristics.

functional org chart

  1. It Fits Small Companies Well

As for small companies, their functional org charts get low hierarchy layers therefore it’s concise and clear which can make the company operate efficiently. Functional org chart performs well when the hierarchy layer is less than four. While as company expands to a very larg one,  functional org chart would be much more complicated and redundant even cause bureaucracy which would make it hard to management and organization to response to outer market quickly.


  1. One-line Reporting Rules

Unlike matrix org chart, functional org chart forms vertically. One person is required to report to only one top manager which can avoid disorders in taking directions and generate great efficiency in work. It provides employees with great opportunities to get promoted from strong sense of competition.


  1. Development of Specialists

Functional org chart puts together those with similar expertises in the same field. So workers can become better at their field through discussion and knowledge sharing. In addition, high quality in-depth training can give workers clear goals and right direction to reach them.


  1. High Productivity

Expertise generates high efficiency in work and improves productivity level. Since people with similar skills cluster in the same departments, it is possible for workers to do tasks effectively and confidently with lower rate in occurrence of work-related mistakes because of assistance and advice from their department members.


  1. Ignorance in Big Picture

Workers possibly get too much focused on their own departments’ goals to neglect cooperation with other departments ending with terrible ignorance in the big picture of their company.


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What is Functional Org Chart

Functional org chart is a very common organizational structure that many companies follow, which is supposed to divide people into several departments according to peoples’ specialties and function they perform in the company. Persons with rich experience and profession would be appointed as department manager authorized to be totally responsible for department’s affair such as training, task allocating and promotion.

Each department has its own assignment and stays independently and functional manager is expected to report to top manager. Usually there is no project manager in this kind of organizational structure while some matrix org charts have project managers definitely. The functional org chart is suitable for companies which have daily operation work and standard procedures such as manufacturing and production industries. The figure bellow is an example of functional org chart.

functional org chart

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Functional Org Chart Introduction-Definition, Advantages, Disadvantages & Example

Definition of Functional Org Chart

The functional org chart divides people into different groups based on expertise and specialty. This structure gets involved in a great amount of process standardization within a company, with the real decision-making authority centered at the top of the organization. Employees in one department are responsible only for relevant tasks. For instance, a HR department that focuses only on recruitment & training, a sales department that only engages in sales activities, and an engineering department that only designs products and produces facilities.

Advantages of Functional Org Chart

  • Employees are instructed and trained by person with experience and profession.
  • Employees are offered chance to get promoted in their field which can make them stay longer in a company.
  • Employees with the same profession work together can accelerate knowledge sharing.

Disadvantages of Functional Org Chart

  • Team spirit is lacking in this organizational structure. Although specialized employees can often work with high efficiency, they may fail to cooperate well with colleagues from different departments.
  • It’s hard to control management. This type of org chart sets challenges for the top manager to maintain the whole company as the business expands widely. Top managers cannot give orders directly to all staff, but they have to assign the mission to several department managers. Then department managers continue to split the task to smaller parts to give them to every single person.

Example of Functional Org Chart

Functional org chart example




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Advantages of Matrix Org Chart

A matrix org chart is one of the most complicated org charts a company can adopt but as well as the most useful one. This article is aimed to make a brief introduction to org chart mainly on definition and advantages.

matrix org chart


A matrix org chart is a very common organizational structure many companies follow especially the enterprise of internet industry. It is formed with grid or matrix. Besides hierarchy, employees are divided into teams by projects, which means workers have dual reporting relationship-a functional manager and a project manager.



In a matrix org chart, staffers can get help in skill and profession from the functional managers and report to project manager who sets directions on specific. This org chart has some advantages:

  • Experts and equipment can be shared across projects to achieve high utilization rate in resources.
  • Products and projects are formally coordinated across functional departments.
  • Information flows can be accelerated since it spreads across and up through the company.
  • Employees get involved in more communication with others which can facilitate information sharing and decision making.
  • Competition among project teams can avail staffers’ motivation.



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The Function of Matrix Org Chart

Matrix org chart is a type of organizational structure combined functional framework with projected one. In accordance with Project Management Body of Knowledge, the level of authority project managers can own determines the strength of the matrix organization, to some extent.

Matrix Org Chart Example

If the strong matrix org chart is adopted in a company, project managers are empowered to have full control of the project in the whole project life-span. They are entitled to direct and supervise the entire team to get the project done on time.

While in a weak matrix org chart,  project managers have pretty limited authority. They are not in a position to command the team members to do any task. We would like to consider project managers in this case as project coordinators and the relation between the project team and manager is not leadership but collaboration.

Matrix org chart is a key diagram for human resource department. In this organizational structure, a number of people stay on the same level of management but work on different projects. It is very helpful for staff management compared with other types of org chart like horizontal org chart, hierarchic org chart, and functional org chart. Matrix org chart makes it possible that everyone skilled can be matched with the right project to achiever both individual progress and enterprise development.

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What is an Organogram ?-Definition & Purpose

Definition of Organogram

Organogram is an intuitive reflection of organization structure, one of the most common diagram to illustrate the relation among departments, superiors and subordinates vividly and briefly. It is defined as a top-bottom, with icon list, architecture diagram which can automatically increase vertical level. Organogram shows the correlation among organizational unit in the form of graphics and it provides great convenience for people to view detailed information of organizational units as well as the associated position and personnel.


Purpose of Organogram

  • It can display function division.
  • It allows people to know whether right and responsibility is set properly or not.
  • It can tell if someone is under overweight workload.
  • It can tell if there is someone undertaking relevant work and staying idle.
  • It can tell if some talented workers hasn’t been able to draw out the best in themselves.
  • It can tell if some unqualified person hold in  important position.
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Advantages and Disadvantages of Hierarchical Organisational Structure

Hierarchical organisational structure puts the authority and responsibility on the top side of the company and makes them flow down from the top to the lowest level gradually. This model works like a pyramid and centralizes all power and duties on people who stand on the peak of organisational structure. To assess this type of management style, it has advantages as well as disadvantages.

Hierarchical Organisationl Chart

Advantages of Hierarchical Organisational Structure

Everything in Hierarchical Organisational Structure is going to be organized and stabilized and there is less likely to get authority and obligation disordered. All the employees know exactly what position they are in and also know what job they have to do. Fixed rules of intra-organization procedures and structures is set and usually written in language, which leaves no discretion for interpretation. Most importantly, under this organisational structure, goals are clearly defined turning out to be suitable for all type of businesses. Also the objective will be clear so task can be done in time.


Disadvantages of Hierarchical Organisational Structure

However it barely allows flexibility, long term-planning, and creativity, ending with stiffness and dictatorship in management. Some leaders may be overburdened while some coordinates stay idle; some departments may pay too much attention to local target and interests but ignore overall objective and interests; schedule of the whole project might be affected extremely when some leaders are out of work. Moreover, this hierarchical organisational structure leaves little communication between employees causing a lack of team spirit. So workers may be jealousy when one gets promoted. They may not agree on the changes within the company and unwisely express that. This way, moral of organization is going to get bad.

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