The main purpose of having an organizational chart is to illustrate authority and the relationships between employees in a company. Organizational charts can be drawn as a hierarchical chart, where people are arranged in hierarchical levels, ranging from supervisors to subordinates. Organizational charts can also depict lateral relationships, in which people are grouped on the same level. Lines may be solid, showing the main lines of authority, or dotted to show secondary lines of authority. Organizational charts are an essential tool for ensuring that formal relationships are clearly understood.
Another major benefit of having an organizational chart is that it helps clarify roles and responsibilities within an organization. A properly-developed org chart can also help administrators assess the applications of employees and the effectiveness of their work. It also helps keep track of promotions and command chain, making it easier for subordinates to find the right person to contact if they have questions or need information. An outdated organizational chart can lead to a company that fails to realize its potential.
If a company is a people-dependent business, the problem of confusion among employees is a common occurrence. Organizational charts provide a clear picture of the responsibilities of employees and can help management decide how to best organize the company to meet its objectives. By incorporating these details into a business model, an org chart can guide the decisions and actions of managers and their teams. It can also be used to create a strategy for the operation of the company.