# Organizational Chart: Types, Meaning, and How It Works

![Organizational Chart](https://www.investopedia.com/thmb/Qx72hYGWbQxMQePVvcYfEBRhkuU=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/organizational-chart.asp-Final-ef68f3bb2c8c4bb5b2f78467e866b0f6.jpg)

*— Investopedia / Yurle Villegas*

## What Is an Organizational Chart?

An organizational chart, or org chart, graphically represents an [organization's structure](https://www.investopedia.com/articles/basics/03/022803.asp) by detailing the roles, responsibilities, and relationships between individuals within the organization.

### Key Takeaways

*   An organizational chart is a way to convey an organization's structure, highlighting the different jobs, departments, and responsibilities that connect the company's employees to each other and to the management team.
*   Organizational charts can be broad-based, depicting the overall company, or can be department- or unit-specific, focusing on one spoke of the wheel.
*   Most org charts are structured by using the hierarchical model, which shows management or other high-ranking officials on top, and lower-level employees beneath them.
*   Other types of charts include the flat org chart, the matrix chart, and the divisional org chart.

## Understanding Organizational Charts

Organizational charts either broadly depict an enterprise organization-wide, or drill down to a specific department or unit. It's one way to visualize a [bureaucracy](https://www.investopedia.com/terms/b/bureaucracy.asp).

Organizational charts graphically display an employee's [hierarchical](https://www.investopedia.com/articles/professionals/102915/hierarchy-investment-bank.asp) status relative to other individuals within the company. For example, an assistant director will invariably fall directly below a director on the chart, indicating that the former reports to the latter. Organizational charts use simple symbols such as lines, squares, and circles to connect different job titles that relate to each other.

Regardless of an organization's structure, org charts are extraordinarily useful when an entity is contemplating [restructuring](https://www.investopedia.com/terms/r/restructuring.asp) its workforce or changing its management complex. Most importantly, org charts let employees transparently see how their roles fit into the overall company structure.

## Hierarchical Organizational Chart

This most common model situates the highest-ranking individuals at the top of the chart and positions lower-ranking individuals below them.

For example, a public company typically shows shareholders in the highest box, followed by these stakeholders in descending vertical order:

*   Chair of the board of directors
*   Vice-chair of the board
*   Board members
*   Chief executive officer ([CEO](https://www.investopedia.com/terms/c/ceo.asp))
*   Other [C-suite](https://www.investopedia.com/terms/c/c-suite.asp) executives (joined to one another by horizontal lines)

Other job titles that may follow c-suite execs include:

*   President
*   Senior vice president
*   Vice president
*   Assistant vice president
*   Senior director
*   Assistant director
*   Manager
*   Assistant manager
*   Full-time employees
*   Part-time employees
*   Contractors

Many formal organizations are organized hierarchically and can be shown in chart form. These include corporations, [nonprofits](https://www.investopedia.com/terms/n/non-profitorganization.asp), governments, schools, universities, and the military (as the chart below illustrates).  

![Army Org Chart](https://www.investopedia.com/thmb/YmHQtRgGR85BHC7bq6yh0Ty-djc=/640x0/filters:no_upscale():max_bytes(150000):strip_icc()/milorgs_us_army_chart-59e1489a68e1a20011325886.jpg)

*From Army to Squad.*

> **Important**
>
> There is no single correct way to fashion an org chart. What's key is that it identifies members, departments, and functions of the organization, and how they interact with each other.

## Other Types of Organizational Charts

*   **Flat:** also known as a horizontal chart, the flat org chart positions individuals on the same level or on only a few levels. This may indicate that the organization has more power equality and that there is room for more autonomous decision-making than is typical with hierarchical organizations.
*   **Matrix:** This complex organizational structure groups individuals by their common skill-sets, the departments they work in, and the people they report to. Matrix charts often interconnect employees and teams with more than one manager, such as a software developer who is working on two projects—one with their team manager, and another with a product manager. In this scenario, the matrix chart would connect the software developer to each manager they are working with, with vertical lines.
*   **Divisional:** This chart [subdivides the company](https://www.investopedia.com/terms/p/protected-cell-company-pcc.asp) based on some specific criteria. It could be by product lines or by geographic regions. An example would be an auto manufacturer organizing its company by product type.

## What Should an Organizational Chart Show?

An organizational chart should visually show the hierarchy and/or relationship of various employees. For example, an assistant director will invariably fall directly below a director on a chart, indicating that the former reports to the latter. 

## Why Is an Organizational Chart Important?

Org charts depict an organization's structure, which can clearly identify seniority and lines of authority that ought to be followed. An org chart that is structured around projects can show which roles are responsible for what tasks. This can remove ambiguity and improve communication.

## What Are the Most Commonly Used Organizational Charts?

The two types of organizational chart formats that are most often used are hierarchical and flat. Hierarchical is the most common. It shows the ranking of individuals based on their role in the organization in a descending vertical order. A flat format, also known as a horizontal org chart, places all individuals on a few levels or even one level. This suggests that the organization is structured in a way that empowers its members to make decisions autonomously.  

## How Do I Make an Org Chart?

To make an org chart, consider using a software package or a template that is available online. Or you could make one by hand. The key is to depict the organization's structure. Typically you do this by placing the more senior positions at the top. Underneath each position should be subordinate roles, which may be grouped by division or department. The chart should attempt to reflect how the organization is structured in real life, no matter how complex that may be.

## What Are Lesser Known Types of Org Charts?

Matrix org charts and divisional org charts are less popular than the typical org chart.

The matrix organizational chart groups individuals by their common skill-sets, the departments they work in, and the people they report to. It's a matrix in that it shows workers connected with more than one manager.

A divisional organizational chart shows the structure of an organization based on some specific criteria, like a product line or a geographical area.

## The Bottom Line

Organizational charts allow you to visually understand an organization's structure and hierarchy. This shows how information spreads through organizations, whether that's a governmental department, school system, nonprofit, corporation, or the military. The most senior positions typically appear at the top of the chart with subordinate roles falling under them. The chart will vary depending on an organization's size and how its roles are arranged.