Corporate Organizational Structure

We have all encountered an organization that has a hierarchy of work. From the government, to your school, to your first job. Each type of business was organized to work together to provide a service or meet a need. For example, in government the President is at the top of the organization, at school the Principal is at the top, and at work the CEO is at the top. Others report to them, and then those people have people working under them as well. This is known as corporate organizational structure.

One thing that can help you understand how communication within the organization flows is the use of organizational charts. These charts define the roles of each section of the company and explain who should be taking care of what job. They are a great way to visualize reporting relationships and team roles in non-profit organizations, schools, businesses, and government.

There are three types of organizational charts. The type of organization chart you need will depend on the type of organization you have and what information you want to focus on conveying.

First, we have a functional, top-down organizational chart. This is the type used most in a traditional business structure. This chart type has the CEO at the top, followed by other senior management, then middle managers, and so on. The structure is then divided more into traditional departments like finance, marketing, human resources, IT, and operations based on everyone’s function or role in the organization.

A divisional organizational chart is indicative of a company organized along a product line or specific breakdown. For example, in a grocery chain the divisions may represent Dry Goods, Dairy, Produce, and Frozen Goods. Each division then has its own functional structure like sourcing and marketing.

A company will use a divisional set up like this when one division is mostly independent from another.

The third chart is a matrix organizational chart. This is used in a company where employees are divided into teams by projects by a project manager, but the employees also report to a functional manager for day-to-day needs. The matrix organizational chart is used by a company that operates with interlocking groups instead of trickle down supervision.

A matrix organizational structure can help open communication between groups and create a flexible, dynamic work environment that can easily shift resources where they are needed. However, this type of organization can also create confusion and frustration with more than one priority project from multiple supervisors.

So why are these organizational charts needed?

An organizational chart has five main uses to an organization:

To Show the Structure of the Management

A well-made organizational chart shows the management structure of the organization with ease. It can also show other organizational structures, like those of the relationships between companies the organization does business with.

1. To Show Other Types of Organizational Structure

Other relationships, such as the ownership of the business, can be shown using organizational charts.

2. As a Planning Tool

Organizational charts can be used to visualize and plan company reorganizations and workflow.

3. As an Employee Reference

A chart can provide an easy-to-understand reference for employees so that they can grasp their role in the organization, who they should be reporting to, and who should be reporting to them.

4. As an Employee Directory

In addition to these four uses, a fully filled-out organizational chart can have added information such as staff photos, telephone numbers, and email addresses that would allow the organizational chart to also be used as an employee directory.

Span of Control

Another thing that a corporate organizational chart can help you to visualize is the span of control.

Span of control is defined by how many subordinates a manager directly supervises. Supervisors with control over a few employees have a narrow span of control. Supervisors managing multiple subordinates have a wide span of control. Span of control is not arbitrary, but there is no set number that signifies a wide or narrow span of control. The terms vary between companies and organizations.

Thanks so much for watching this overview of Corporate Organizational Structure. See you next time and, as always, happy studying!