9 Reasons Every Business Needs an Org Chart

June 2, 2021

12:06 AM

By OrgChart Team


9 Reasons Every Business Needs an Org Chart

9 Reasons Every Business Needs an Org Chart

Whatever the size, deciding on the best path for an organization is the key to success. Many factors differentiate large business operations from small business operations. One of them is the communication and implementation of the optimal organizational structure. A clearly planned org chart works as a clear visualization tool for a variety of human resource tasks, including managerial authority. It is very important for small business owners to consider having a formal structure right from the beginning as this helps enhance the growth process in the different stages of the evolution of the business.

Many businesses consider an organizational chart an unimportant, overly formal process, only appropriate for large corporations. Let’s look at 9 reasons all businesses need an org chart, and explore how they can enhance the clarity of communications while improving overall workforce management.

9 Reasons Every Business Needs an Org Chart

Enriched OrgChart Now chart highlighting competency metrics

Why organizations need org charts

An org chart helps organizations design a clear structure

Every business requires a clear structure that will help efficiently channel each employee’s contribution towards the achievement of company objectives. Org charts visually communicate the organizational structure clearly and consistently to every employee helping guide and inform their contributions to team goals.

Org charts aid in the division of functions

Organizations, large or small must perform a variety of functions to meet their objectives. We charge individuals, groups, teams, and departments with one or more of these functions. When we fail to clearly communicate these responsibilities, multiple contributors duplicate efforts or butt heads. This kills productivity and effectiveness. A clear org chart helps delineate responsibilities for more effective implementation.

An org chart defines relationships between employees and functional groups

The relationships between employees play a key role in the growth or collapse of the organization. By clearly communicating of how different staff members and groups are related to each other, organizations experience greater growth by avoiding unnecessary conflicts and collisions in the workplace

An org chart helps assess employees’ workloads

It is difficult to evaluate managers without clearly defining their range of responsibility. An effective organizational chart illustrates each manager or director’s span of control, making it easy to assess their workload and determine whether adjustments are in order. This helps decision makers in the structuring and restructuring of responsibilities across the organization.

An org chart can help determine competency

With functions and responsibilities clearly delineated via org charts, companies and organizations are better able to measure each employee’s contribution and growth over time. This measure is critical when it comes to effectively evaluating employees and managing employee growth and advancement for maximum productivity and reduced turnover.

A good org chart enhances coordination within the organization

In most organizations, each individual or group is tasked with specific functions, yet most projects an organization undertakes require cross-functional coordination. A solid org chart helps streamline that coordination to better meet the objectives of the organization. Like a well-oiled machine, each employee is able to focus their energy and time on productive tasks.

A solid org chart clearly illustrates who to “loop-in” where the “buck stops”

The org chart enables each employee to identify collaborators, stakeholders and decision makers for any given task or issue. This helps efficiently identify and overcome roadblocks by immediately knowing who to involve when a change in course or decision is needed.

Org charts are good for resource allocation and analysis

Org charts are used to design work teams, carry out budget analysis and generate essential reports for productivity. This allows the organization to manage the available talent and financial resources for enhanced growth and productivity.

Org charts spotlight “holes” in organizational structure

Without the insights an org chart provides, it is more difficult to identify talent gaps. Important functions that no-one is accountable for are immediately apparent in an org chart. Managers can then write better job descriptions and requisitions and quickly fill those needs.

Org chart software highlights how to effectively channel contributors to meet an organization’s goals. Ineffective communication makes it difficult for contributors to give their best, impacting growth and productivity. A good org chart enables effective resource management.

Next step…

See how you can monitor the performance, and growth of your small business, and by engaging one of our experts for a free demo.