Creating an organizational chart

In this article we cover:

Creating an org chart for a business can be beneficial because it shows your employees how the business is structured, where they can turn to if they need help, shows where they fit in, and more. Creating a small business organizational chart can be achieved relatively easily with a range of tools to assist.

Creating an organizational chart

From traditional players to newer SaaS-based players, small business owners have options when it comes to org chart software. Let’s review some org chart software options which can help you create an org chart from scratch or by using organizational chart templates:

Microsoft: Everyone is familiar with Microsoft and their software options. You can use PowerPoint, Word, or Excel to create an org chart. Any of these options are good for small businesses. However, as the org grows in size and complexity the org chart might become difficult to maintain using these tools.

• Templates: For Word and PowerPoint, Microsoft has guidance and links to template options located here. Towards the end of that document, Microsoft provides guidance on how to use Visio (more on this below) and data from Excel to automatically generate an org chart. This option will likely help your org chart scale as the company grows in size and complexity.

Google: Similar to Microsoft, Google has its version of Word (Google Docs), Excel (Google Sheets), and PowerPoint (Google Slides). Google’s tools are free to use, you just need a Google account.

Canva: Canva is a web-based software solution that can help you create an org chart. They offer templates for both their free and paid subscribers. They offer a drag-and-drop interface with a lot of graphics options.

Org chart maker software: Both diagram and chart software can help you create and maintain an org chart. Solutions such as Lucid Chart, Miro, and Visio (drag-and-drop chart software by Microsoft) are just three of the many options that exist.

For smaller-sized orgs, any of the first three options listed above should be sufficient to develop and maintain an org chart. However, when companies start to grow, a software solution is preferable.

Considerations

Consider starting with Microsoft Excel or Google Sheets. Both of these options make it quick and easy to create boxes and to structure your org chart. The examples created for this article (below) were developed using Google Sheets. Once you create your box, you can copy and paste them to create your hierarchy, fill in each box with the appropriate information, and add a border. Creating a border can also be used to create the lines that connect each box.

Microsoft PowerPoint or Google Slides will work if you plan on keeping a very small org. Once your company grows in size, you will quickly outgrow these two tools. However, they are very easy to use and easy to get started with. If you are comfortable and familiar with either, they can be a good place to start. Both offer the ability to drag and drop shapes which can help you structure the org chart.

Microsoft Word or Google Docs can also be a good starting point for small businesses. Everyone is familiar with these and smaller org charts can easily be stood up and maintained. You can export your org chart as a PDF, print it, or distribute it in just about any way you want.

Canva is a great option if an entrepreneur wants an org chart to look nice. Canva can help small business owners create visually stunning org charts. For business owners and companies who care deeply about their brand, Canva can be a great choice. Excel/Sheets, Word/Docs, and PowerPoint/Slides are better choices than Canva if you want something simple and not fancy.

For those businesses that can anticipate growing rapidly, software might be a smart choice. If you set up your org chart foundation using software, it can easily scale and you are eliminating the future administrative burden or updating it or moving it to a software solution later. There are a lot of options beyond the three (Vision, Lucid, Miro) that we touched on in this article. Also, software might be a good choice for larger companies or even small companies with complex management structures. For example, many times companies can have employees who are part of one division but might report to another. “Dotted Line” relationships can be challenging to convey using a basic tool.

What is the easiest program to create an organizational chart?

The answer to this question is it depends, but consider the following as a guide:

• Small Businesses or Startups that intend to remain small: Companies that are currently small, or intend to remain small, should consider starting with Google Sheets or Microsoft Excel. It is simple to create a single box with the necessary information (Name, Job Title), style it a bit, and then use it as a template. Then simply copy and paste additional boxes to meet the needs of your organizational structure. You can have an org chart created quickly using this method.
• The answer changes to Canva, Google Slides, or Microsoft PowerPoint if you are a company where graphics, design, or something visual is your product. An org chart, as will be the case with most company artifacts, should represent the brand and showcase the company’s creative talents. New employees and potential prospects, will see the org chart and it should add the experience and essence of the company.
• Small Businesses or Startups that intend to grow: Companies that are starting small but have the intention to grow into a mid-size company or larger, should start with a software solution such as Visio, Lucid, or Miro. Software will allow your org chart to easily scale and grow with the business without too much hassle.

What is the best Microsoft program to create an organizational chart?

Microsoft Word, Microsoft Excel, and Microsoft PowerPoint all allow you to use a feature called SmartArt to create an org chart. This makes all three a good choice, and the best might come down to your skill set with these tools. However, using Microsoft Excel likely allows for the greatest flexibility as it is very easy to create a styled box to serve as the building block for a custom-made org chart, or integrate with Microsoft Visio.

Types of organizational structures

There are many business structures but we are going to focus on four common types: hierarchical structure, matrix structure, divisional structure, and flat structure. We will cover the benefits, and drawbacks, and show an example of what an org chart looks like for each.

The 4 types of organizational structures

Hierarchical Organizational Structure: A hierarchical org structure is a traditional, top-down company structure with department heads, middle management (for larger orgs), etc. Most people are familiar with this type of reporting structure.

• Benefits: There is a clear structure, organization, and owner for every function. Every employee knows where to turn for every business need.
• Drawbacks: For larger companies, the layers of management and approval can create bureaucracy, bottlenecks, and slowdowns.
• Hierarchical Organizational Chart Example:

Matrix Organizational Structure: A matrixed organization is a project-based structure where staff members are assigned to different projects. A matrix organizational chart can be fluid and change depending on project assignments. For example, a project manager might be assigned to multiple initiatives, different teams, and has multiple project leaders to report to.

• Benefits: Employees have the benefit of working with stakeholders from across the organization and can participate in a variety of projects.
• Drawbacks: Employees’ split focus might cause a reduction in work quality.
• Matrix Organizational Chart Example:

Divisional Organizational Structure: Some companies can be organized by product lines, division, geography, or more. Divisions have division heads, sometimes called general managers and different departments within a division. For example, a company with both a Japanese division and an American division might have its own marketing and human resources teams.

• Benefits: Companies can have division functions that specialize in a single division (product, geography, etc). For example, the Japanese marketing team can specialize in Japanese products intended for Japanese consumers, while the American marketing team can specialize in American products intended for American consumers.
• Drawbacks: Run the risk of a disjointed brand or paying for resources or software twice.
• Divisional Organizational Chart Example:

Flat Organizational Structure: A flat structure attempts to break down the traditional chain of command and team members report directly to the highest levels of the company. The idea is that a flat organization will speed up workflows, decision-making, and business operations. Startups typically start as a flat organization until they reach a certain size and then re-structure into one of the three structures discussed above.

• Benefits: Direct access to company decision-makers and increased exposure to senior leadership.
• Drawbacks: Employees might face heightened pressure or scrutiny by having their work reviewed daily by senior leadership.
• Flat Organizational Chart Example:

Each of these organizational structures has its benefits and drawbacks. There isn’t a right answer on which you should choose, it depends on your company, your goals, and your leadership style.

Elements of an organizational chart

Organization charts don’t have to be overly fancy as they have a relatively simple task to accomplish. Typically, org charts have the following elements:

• Name of the employee
• Job title
• Brief job description (optional)
• Picture
• Contact information
• Lines or arrows indicating reporting flow

What is the purpose of an organizational chart?

Consider why you’re creating an org chart in the first place. It helps employees know who to go to when they need support or have questions, it helps new employees during their onboarding, and it is a visual representation of the functional structure of the entire company. This helps employees understand where and how they fit into the broader company and its objectives. In other words, it helps employees answer the question “Why am I here and how do I fit in?” Employees must have a sense of meaning behind their work and an org chart is one way to help them to understand that.

Is it useful to create an organizational chart for a small start up?

Even small startups should have an org chart. Similar to developing a business plan, an org chart can help solidify your thinking about company structure in its current or future state. Creating an org chart for your future state can help you start to think where you want to take the company and the hires you will need to make.

For more information on business plans, refer to our article How to Write a Business Plan for a Loan Application. For more information on hiring employees, please see our guide Small Business Guide to Hiring Employees.