What is an Organizational Chart?

Organizational charts, often referred to as org charts, have been rapidly growing in popularity amongst organizations of all shapes and sizes. While these charts have been helping executives manage their workforce for centuries, recent technological advancements have made them more prominent and impactful in today’s current business world. This recent rise has led many to wonder, “What is an organizational chart?”

Org charts are visual representations of an organization’s hierarchy. They guarantee that employees always know which manager to report to in any given situation, and ensure that managers always know which employees that make up their teams. Today’s org charts are virtual, as in they’re imbedded into modern HR software solutions available for easy access throughout an entire organization. With that said, it’s been a long road for the org chart to get to where it is today.

The Evolution of the Organizational Chart

Back in 1854, a man by the name of Daniel McCallum took over the New York and Erie Railroad. At almost 500 feet, it was one of the longest systems in the world at the time. The trouble is, it was not one of the most efficient due to an extreme number of workers coupled with an extreme lack of structure. To tackle this problem, McCallum went to work.

Rather than the modern pyramid we all imagine when we think of org charts today, McCallum’s, in fact, resembled a tree, putting the Board of Directors as the roots, Chief Officers at the trunk, and the railroad’s different departments as the branches. Rather than moving from top to bottom, the first org chart ran bottom to top. While it may be hard to read, it truly was a work of art.

However, the term “organization chart” didn’t come into fruition until 1914, when an engineer by the name of William C. Brinton used it in a textbook titled Graphic Methods for Presenting Facts (which you can read here) describing the charts importance in organizational success. It wasn’t until the 1920’s when the chart took on it’s simpler pyramid shape, and business leaders caught on to the term and started implementing their own organizational charts.

It wasn’t until the 2000’s when the org chart got another update. The update wasn’t to the structure or aesthetics of the chart, but rather to the way executives could utilize and expand its functionality. Nowadays, executives can access their organizational charts online through their HR and Payroll software. Modern software solutions come equipped with innovative, actionable org charts that empower managers, administrators, and executives to view employee information and take corrective action with just a click of a button.

Benefits of an Organizational Chart

Structure - An organization requires structure to be successful. Without structure, employees won’t know where they stand within their organization, or which manager to report to in certain situations. Ultimately, organizational structure improves efficiency, streamlining internal communication and workflows. An org chart encourages structure by acting as a visual representation of the organization, separating employees by department and team.

Uninterrupted Workflows – Let’s imagine a scenario when a manager leaves their organization midway through a project that their team has spent months working on. In most cases, the team will be without a leader to report to until the manager’s position is filled with a new hire. However, with a virtual org chart, the workflow gets automatically redirected to the next appropriate leader, ensuring that the chain of command and workflow remains intact.

Seamless Communication – Communication is the key to organizational success. When departments can’t communicate with one another, they’re unable to effectively collaborate on projects or decisions. In fact, the DATIS State of Workforce Management survey report found that 66% of organizations currently struggle communicating between departments. Within today’s org charts all employees are empowered to see where employees are located within their organization, and how to properly get in touch with them.

Increased Transparency – According to an article by TruPath, transparency promotes trust in leadership. When employees are given the same access to organizational information as their managers, they are less likely to expect that management is doing anything ‘behind their back’ so to speak. An org chart puts managers and employees on a single platform. While managers may have more authority than employees once inside the org chart, they both have the same general view.

Implementing an Organizational Chart

Hopefully, by now, you have a clearer answer to the question “what is an organizational chart?” However, you may now be wondering, “Now how on earth do I implement one into my organization?” First, it’s important to note that drawing your org chart on a piece of paper and posting it in your company cafeteria won’t work. While Excel documents are a step in the right direction, they won’t cut it either. The best org charts are digital tools that require an investment from the organization.

While there are a few vendors that sell digital organizational chart software, it’s important to find an organizational chart that integrates well with your organization’s recruiting and onboarding modules. This will significantly decrease the amount of manual data entry your team will need to do in terms of updating the org charts information. Fortunately, there are sophisticated, unified HR and Payroll systems that come fully equipped with innovative org charts. For example, our org chart at DATIS receives information instantaneously from the recruiting and onboarding modules of our software then updates in real time.

Org charts change the way executives can organize and structure their workforce. They ensure workflows are always routed correctly and encourage cross-departmental communication. There are countless of other benefits that come with implementing a virtual org chart within your organization. Although the org chart has come a long way since it was ideated back in the 1800’s, they continue to play an increasingly significant role in the way organization’s setup their workforces.

Still asking yourself, “What is an organizational chart?” Download the DATIS Organizational Chart datasheet.

Written by James Clark

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