February 7


How to make a useful org chart

The organizational chart.

The ultimate symbol of corporate bureaucracy, right?

Not if you you use it right.

Why the org chart as you know it is broken

In theory, an organization chart is a directory of who fits where into a business. It would seem to be a useful, even necessary, guide to navigating a big company. The problem is that it ends up being more a tool for score keeping. Instead of using the org chart to understand the company, employees end up thinking about questions like these:

  • How close to the top am I?
  • How important does my title sound?
  • How many people are under me?  With solid lines or just dashed lines?

It also often becomes a reference for an employee’s identity. They start to define themselves with phrases like…

I report into into Mr. Big’s organization. Or, I’m a solid line to EVP Jane, but I have a dashed line relationship to the C-suite.

The org chart becomes more a tool for distraction and score keeping than anything useful. It’s no wonder, then, that most small business owners don’t have one. To many, it’s a trapping of the corporate world that they chose to avoid.

It doesn’t have to be that way.

How to make an organizational chart useful

An org chart can – and should be – a critical tool to manage your business.

When used properly, the org chart shows you all the roles your business needs to function. It also identifies who is filling each role. We just need to get back to that ideal to make the org chart useful.

I just used the word “role” deliberately. Your org chart isn’t about people and it isn’t about titles. It’s about roles. When I say role, I mean specific functions that contribute to the successful operation of the business.

The key to creating a useful org chart is to take the people and the titles out of it. Focus only on the functions. Once the functions have been identified and defined, then you can go back and fill in the people. You can even give them titles, or not.

How to create your org chart

First, list all the functions that needed in your business. Then, add a few bullet points describing the main responsibilities of each function. If your business is small, there will be more functions on your list than you have employees. Don’t worry about that, just make sure you list out all the functions.

Once you finish making the list, double check it to be sure you have really divided up all the functions. For example, many small business have a receptionist/office manager. This person has a list of responsibilities like this:

  • Greet visitors
  • Answer the phone
  • Order office supplies
  • Manage service people like cleaning companies, copier repair people, etc

That is two different roles and should have two spots on the org chart. One role is the receptionist and a separate role is the Office Manager.

When you take a closer look at the roles you have written down, you will probably see several places where you should have more than one role. Go back and break those up into as many distinct roles as needed.

Second, you can create the chart that shows the relationships between the roles. There are many software tools that can do this, or you can rock it old school and draw boxes and lines on a piece of paper.

Now you have a chart that shows the real organization of your business. It shows all the pieces that need to exist to make your business work. At is point, your org chart is still missing one important item, employees. We’ll fill in the people next.

Finally, after you have mapped out all the roles that make your business work, put employees into those roles. I can’t stress the importance of creating the chart without any regard at all to the people enough.

Is this because I’m cold hearted and don’t care at all about the people who toil away in the business? No, not at all. It’s because a sustainable organization must be created around the parts that make it work. It shouldn’t be organized around individual personalities who happen to be working there.

This is important for two reasons

First, the only way you are going to clearly see what roles need to exist is focus only on the roles.

Second, every employee you have ever had or ever will have is going to leave. Think about that. The only person likely to be around for the entire life of the business is you, the owner. And if you sell the business at some point, even you are going to leave.

Now start filling in the names of your employees for every role on the chart. Yes, that means the same person is probably going to show up in more than one spot. You will probably also find roles that no one is doing at all.

As you do this, take the opportunity to ask yourself and your employees if the person’s skills and interests make them the right person for that role. If they aren’t a good fit, even if they have been doing that job already, don’t put them into that role. Put them someplace else that better fits their strengths.

You may also find that someone just isn’t a good fit for any of the roles you’ve defined. At that point, you need to decide if you can train them to fit into a role or if it would be better for all if you parted ways. The one thing you absolutely should not do is to create a role that you don’t need because you like the person. It might make you feel good in the short term, but it doesn’t serve your business.

Once this process is done, it will be much easier for you to identify positions you need to hire for. It will also be easier to hire, because you have a clear understanding of what this role needs to do and the skills necessary to do it.


  1. Some very valuable information. As a diagramming company we see lots of our users draw org charts for the sole purpose of showing the hierarchy. When there are so many possibilities like identifying role gaps, possible gaps in hiring, showing performance data etc.

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