An organizational chart works great as a rolodex of staff members that lays out job functions and clears confusion about who works for whom. But which chart format should you use and what should you include in it? Read on to learn how to make a small business organizational chart.
Pick an Organizational Chart Format
How you lay out your small business organizational chart depends on how your business is structured. There are three types of organizational charts that correspond to the three primary business structures: flat, hierarchical and matrixed. Take a look at each one below and identify which one most resembles your business structure.
Flat: Common among start-ups with only one or a few departments, a flat business structure is one with minimal hierarchy. In a flat business structure, there are generally few to no levels between the highest level of management and the lowest level of staff. For example, you as the business owner may directly supervise all staff members. In the flat organizational chart of such a business, you’d have one box in the chart representing yourself. Below this box, you’d have a branch or connecting line from yourself to all members of staff, who each occupy a separate box. The result is a chart that short and wide.
Hierarchical: When your business grows to a scale that warrants multiple tiers of management, a hierarchical structure might be appropriate. In a hierarchical business structure, there are multiple levels between management and staff. But each individual still has a defined role and reports to a single manager. With such a business structure, you as the owner may not directly supervise all employees. You might directly supervise one or more managers who in turn supervise one or more employees. In a hierarchical organizational chart of such a business, you’d have a connecting line from yourself only to two managers. These managers would each have a branch to the staff reporting to them. This is why a hierarchical organizational chart often resembles a pyramid.
Matrixed: If staff member A at your business does work for manager A and manager B, you probably have a matrixed business structure. In this business structure, roles are fluid rather than defined. For example, a graphic designer might work for both a design manager and a product manager. This translates to an organizational chart that usually looks like a grid.
List All Employees
So you don’t omit staff members from the chart, type out a list of all employees, which department they belong to and whom they report to before you start charting. Don’t forget to include yourself in this list, even if you are the business owner.
Choose a Charting Method
Next, decide how you’ll put together an organizational chart that aligns with the organizational chart format that fits your business structure. The easiest way to create a chart that can easily be maintained with time is to use charting software like Orgweaver or an online diagramming tool like Gliffy.
You can also opt to temporarily draw out an organizational chart on paper if you are in the very early stages of business.
Create the Small Business Organizational Chart
Using your charting method of choice, add in a box at the top of the chart representing the most high-ranking staff member (e.g. owner, CEO or president). Write or type the individual’s name and job title into the box. Then, work your way down to the next level of staff, adding in a box for each staff member and then filling out his or her corresponding name and job title.
Add a branch or connecting line from the owner or CEO to his or her subordinate. Repeat this process of adding a box, adding a name and title and drawing a branch for every level in the business structure. At the end, you should have the same number of boxes on the chart as there are employees on the list you created earlier.
Maintain the Organizational Chart
As individuals join or leave your business, add or remove them from the chart to keep it up-to-date. Similarly, staff members may over time change positions, either to a role at the same level or a level above.
When this happens, you want to update the chart to reflect the lateral move or promotion.
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.