What is the purpose of a company’s functional organizational chart?

18 of October, 2022

When we think of creating a company’s organizational chart, a pyramidal structure may come to mind. Or maybe some other static design that shows stable hierarchy levels over time. However, reality tells us that this map can hardly resist the fluctuations of today. In order to streamline a company’s processes related to human resources, an organizational chart is required. For this reason, more and more companies are opting for functional organizational charts, which are integrated in a harmonious and organic way.

Functional organizational chart definition

A functional organizational chart is a diagram that displays and specifies, with maximum detail, the roles, responsibilities and competencies of each department of a company.

Due to remote work, companies have had to modify their organizational charts and make them more flexible. This is so that team members could understand changes more easily. These changes are not only related to the new remote work modality but also to their new functions, tasks and responsibilities. For this, a functional organizational chart is essential.

Characteristics of a functional organizational chart

• It indicates in detail the way in which responsibilities are divided within a company. Thanks to this, it is easier to divide the workload and control the activities to be carried out. 
• It determines authorities and hierarchy levels so that it shows who should give orders in a department. This avoids misunderstandings in the chain of command and helps employees to know what instructions to follow.
• It makes company analysis easier for managers who must make decisions in the long, medium or short term.
• It is a useful tool when expanding a company. Because it allows us to easily evaluate which departments can take over more responsibilities or which ones need to start with the steps of hiring more personnel or resources.

Benefits of having a functional organizational chart

Now that we know the definition of a functional organizational chart, it is time to discover why we should choose this type of structure. Here are some of its advantages:

• It is clear and precise in defining the structure of an organization.
• It allows employees to understand to which group they belong or to which manager they have to report to.
• Creating an organizational chart establishes the levels of hierarchy.
• Any employee, new or senior, can understand it.
• Tasks or responsibilities can be assigned according to company departments.
• It is easier to expand the company with the help of this tool.
• It optimizes your decision-making process.
• It is more intuitive than a long report or an endless list.

Types of functional organizational charts

Vertical organizational chart: this is the most common and well-known. Its structure is designed to be read from the top down. It is worth mentioning that the CEO of a company will always be the first one. Then, below him/her, the list will go down according to the ranks.

Horizontal organizational chart: in this specific case, the organizational chart is read from left to right. For example, the person with the highest rank will always be on the left side, while the rest of the team will be on the right. Between them, you will find the departments or people that make up the company.

Mixed organizational chart: it is a combination of vertical and horizontal organizational charts. In terms of leadership, it is read from top to bottom, while departments are displayed from left to right. 

Circular organizational chart: the axis of its structure is based on a person or a department. The one inside the circle has a higher level in the hierarchy than the rest and the one outside the circle has a lower level in the hierarchy. Finally, we should mention that if you want to design and structure a functional organizational chart, you need to have a software specialized in creating them. In this sense, an HR software such as Sesame HR is your best alternative. With it, you will be able to develop organizational charts in a matter of minutes, so your employees will be aware of the company’s organizational structure at all times.

Tiago Santos

HR Influencer | LinkedIn | | Web | +post

HR professional with experience in building strong 𝐜𝐨𝐥𝐥𝐚𝐛𝐨𝐫𝐚𝐭𝐢𝐯𝐞 𝐜𝐨𝐦𝐦𝐮𝐧𝐢𝐭𝐢𝐞𝐬 among HR leaders. As the founder of the 𝐇𝐑 𝐂𝐥𝐮𝐛 and 𝐇𝐑 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐭𝐲, I leverage my 15+ years of experience to enhance the professional landscape for HR leaders.

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