When an organization says, “People are our greatest asset,” they don’t just mean the individuals. Well, no person is an island. The organization creates value only when employees work together, building collaboratively.
In essence, an organization is the connections and relationships that people have between each other and the company itself, including
Who reports to whom
Who works with whom
What role are they in
How much are they paid
How does their compensation compare with similar roles in other departments
How many more employees are to be hired
Who is leaving, and when is their last date of employment
Even for a fifty-person organization, these connections can run into thousands of data points. Managing this needs a comprehensive structure.
The organizational chart is one of the most popular and effective tools for managing this. Let’s see what it is and how it helps.
What is an organizational chart?
An organizational chart is a visual representation of a company’s structure, including the people, roles, relationships, and other employee information. A typical modern organizational structure is either flat or hierarchical. Here’s what that would look like.
Flat organizational structure
A flat organization is simple. Independent and self-managed employees report directly to the CEO.
This model is best for small organizations, where the CEO can manage everyone directly. It gives autonomy and enables team members to iterate quickly. It also eliminates losses in translation as information and feedback is shared directly between the CEO and the team member.
In this kind of org chart, while there is no hierarchy, not all roles, designations, and compensation levels are the same. For instance, the marketing and finance heads in the above organization will likely be in a more senior role and pay grade than the quality analyst or the designer. A good org chart will help visualize the differences effectively.
This model, however, isn’t sustainable. As the organization grows, CEOs can’t manage everyone, even if they’re self-managed. To make sure every team member gets the support they need from their leaders, the flat org structure naturally evolves into a hierarchical one.
Hierarchical organizational structure
A hierarchical org chart organizes the team according to their reporting structure, breaking the company into presidents, directors, managers, etc. The hierarchy can be functional, divisional, or both.
Hierarchical org structure is the most commonly used model because it scales well. It enables supervisors to have a manageable span of control, being available and accessible to their teams.
A functional hierarchy is structured around functions such as sales, marketing, or software development. The CEO manages the head of functions, to whom directors/managers and their teams report.
Functional org structures streamline processes and enable clear delineation of responsibilities. They are best suited for lean organizations with 1-2 products.
Here, the company is broken down into divisions, such as product (e.g., search, email, AI), verticals (e.g., healthcare, manufacturing, finance), geography, etc.
This org structure is best when the portfolio of offerings is expansive. However, having a flat structure within each division can have the same pitfalls of manageability.
Combination org chart
Organizations can also have a combination of the two. For instance, every division can have its own functional org chart.
Most enterprises today follow the combination org chart. It helps simplify the org structure and enable better management. However, when used in small organizations, it can create unnecessary bureaucracy.
Why do you need an org chart?
An org chart gives leaders visibility, control, agility, and more. Here are a few benefits of using an org chart.
Visualizing team structures: With an org chart, you can clearly see your company’s people landscape. Looking at team composition, you can rationalize the span of control. You can break down a large team or combine two very small teams for efficiency and ease of management.
Tracking personnel changes: The org chart keeps a record of resignations, new hires, backfills, and internal transfers, such as promotions or inter-departmental movement. A good organization chart is not just about roles/designations but also about people.
Forecasting staffing needs: A comprehensive view of the entire organization helps measure the teams' productivity, performance, and outcomes. This allows managers to forecast future staffing needs for their goals and plans.
Support org design: Conway’s law states that an organization’s communication structure affects the systems/software they build. So, good org design means better efficiency, effectiveness, and quality of delivery. An org chart is the fundamental tool in org design.
Yet, for a tool that’s so universally powerful, it is often created and maintained poorly. HR teams create org charts in spreadsheets, slides or Miro boards, which present a number of challenges.
Challenges with current org charts
If you’ve been using spreadsheets, presentations, or Miro boards to visualize your organizational structure, you’ll relate to the following challenges.
Outdated: Unless you manually update the org chart every time there is a new hire, resignation, or internal transfer, it remains outdated and, therefore, unusable.
Non-scalable: How many people can you add to a single slide? If you break down each department or team into a new slide, how do you visualize their interconnections?
Siloed: Even if you manage to make your org chart usable within the spreadsheet or slides, employee data is inevitably siloed. For instance, if you need to know anything about an employee, like how long they’ve been in their current role, you need to use another tool!
Not actionable: You can’t just click on an employee and surf through their employment history or take any action from an org chart on slides or spreadsheets. Any scenario planning or team shuffling needs to be done on yet another tool.
Not contextual: When the hiring data is in one place, onboarding in another, and performance management in the third, the org chart misses the critical context necessary to support decision-making.
Inflexible: You can’t sort, filter, or change the view of the org chart for analysis without impacting the source data.
Current org chart software is ‘static’—it doesn’t scale, adapt, grow, or connect with various sources. It remains static, even as the organization evolves rapidly.
Role of good org chart software in headcount management
A purpose-designed org chart software will give you 360-degree visibility, including the following.
Individual profiles: Roles, responsibilities, and employment history
Team structures: Reporting hierarchies and relationships between individuals
Department structures: The way teams roll up into departments, and then the organization itself
With an org chart that gives you a bird’s eye view and allows you to zoom into the granularities, you can access any personnel information you want. TeamOhana’s org chart module enables you to drill down level by level, all the way to each employee and their history. More importantly, it allows you to set clear access control ensuring that each user has access to the correct information (e.g. doesn’t see sensitive data).
A good org chart will automatically update information in real time. It’ll sync with the HRIS tools to automatically update new hires, promotions, internal transfers, or exits. As a result, headcount data is always accurate, effectively supporting headcount planning.
A good org chart software isn’t just about the present and the past but also the future. It needs to help leaders visualize future scenarios, alternative organizational designs, restructuring, and optimizations.
TeamOhana achieves this by visualizing future headcount, including open reqs, approved roles without open reqs, and people planning to leave the company at a future date.
Moreover, a future-proof org chart must adapt to the changes in the organizational structure itself. For instance, you might begin with a flat org structure, evolving into a hierarchical one within a year or two. The org chart software must be able to dynamically incorporate this change.
TeamOhana allows you to add levels, creating a hierarchical structure organically. This gives you the complete picture of your company’s headcount in a contextual, dynamic, and effective manner.
No org chart gets it right the first time. Especially during the headcount planning and organizational design phases, there is a lot of back-and-forth between the various teams, typically via email or Slack.
Even once the plan is frozen, Talent, HR, Finance, and functional heads need to collaborate for approvals and decision-making. If you’ve had all these conversations away from the org chart software, information will surely fall through the cracks. In the least, it’s inefficient.
A good org chart software will allow you to communicate within the app. On TeamOhana, you can leave comments, make forecasts, share plans for approvals, and more.
If you’re making critical headcount-related decisions based on gut feeling, you will, at best, win some and lose some. Org chart software can change this and bring certainty to decision-making.
TeamOhana enables all stakeholders to make data-driven decisions about hiring, staffing adjustments, and long-term workforce planning. With a few clicks, you can change the org chart and see its budget impact immediately, making more rooted decisions.
An org chart serves several people. Talent acquisition, HR, Finance, hiring managers, and functional leadership use the org chart. For instance, a functional leader might use the org chart for org design and the HR manager for compensation planning.
Each needs a different report and a unique view relevant to them. Org charts must enable this.
TeamOhana allows users to customize their view by attributes like tenure, initiative, location, etc., for granular and relevant visibility. Let’s take the example of an HR manager using the org chart software for compensation planning. TeamOhana’s tenure view allows you to plan equity management. The location view helps analyze data for pay equity. Dragging and dropping individuals or teams can help scenario planning and organizational design.
This way, TeamOhana supports every stakeholder intuitively in making headcount management simple, agile, and more effective.
Structure the future with TeamOhana
If you’ve been seeing org charts as a static image of how your teams currently look, you’ve been missing a significant opportunity. A dynamic org chart can enable you to visualize, plan, and manage your headcount effortlessly.
The org chart on TeamOhana is designed to do all this and more. You can, of course, view the organizational hierarchy. In addition, you can see individual profiles with information synced from the HRIS. You can see historical headcount as well as future plans. You can have your data updated automatically in real time. You can also request new hires, promote a team member, or backfill a role right within TeamOhana.
TeamOhana empowers you with better org charts for better headcount management.