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What is an organizational chart?

And how can human resources benefit from it?

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Each individual employee, the different org units and the executives of an organization – all of them rely on HR to provide them with valuable insights to make informed business decisions. But before delivering only the essential information, HR has invested quite some time sifting through a great amount of workforce data.
We believe that org charts can make this “sifting process” more efficient, providing you with a clean overview of what is really important to you.
But let’s start at the beginning.

What is an organizational chart?

An organizational chart is a diagram that shows the hierarchy structure of an organization, starting at the highest level of the hierarchy and leading down to the basis of an organization, as well as the relationships and relative ranks of its employees and positions. Unlike table-based reporting or use of spreadsheets, org charts are a more natural and intuitive manner to present key HR data, key performance indicators (KPIs) so to speak, to management in the context of the organizational structure itself.

What is an organizational chart?

Benefits of a basic org chart

As a first benefit, org charts provide a clear overview of an organization’s structure and distribution of workforce. But depending on what you are looking for, your org chart can be designed to show certain KPIs, too. After all, a key role for HR is the ability to measure the composition of the workforce and to provide guidance to management on key HR metrics to help develop talent and improve employee retention. The org chart can be the perfect tool to communicate critical data to management. An immediate benefit of visualizing key metrics such as vacancies in an organization chart is the ability to identify current open positions in the organization, which highlights potential gaps in the org structure.

Evaluating the org structure portrayed in an org chart also helps one understand the reporting relationships and the number of layers in the organization. An org chart effectively communicates who reports to whom, and the number of direct reports for each manager.
If your org chart design resembles a sort of “corporate directory”, it can prove to be an invaluable resource to all employees to understand the key positions employees hold throughout the organization, and will typically include employee email address and phone number for communication and collaboration.

How to make an effective organogram

What is an organizational chart?

Depending on where in the world you are located, organograms consist of different elements. While companies in countries such as Germany, Austria or Switzerland often create organization charts based on org units, most other countries work with a position-based structure. Let’s take this latter model as an example, to explain the creation of an effective org chart: After visualizing the general hierarchy structure of the organization, the next step should involve defining the position-based relationships within the organization and the employees or contingent labor placed in those positions.
These direct reporting relationships can be further augmented by including indirect reports for a matrix-based organization, which is commonly portrayed with “dotted lines” to indicate matrix-based reports. Keep in mind that a position may also be shared amongst two employees, so an org chart must be flexible in an approach to capture the different types of reporting relationships that may exist in an organization.
In addition, as mentioned above, key HR data visualized as part of the organogram can round up the picture and give a quick overview of what is happening in your company.

Challenges when creating organizational charts manually

The larger the organization, the exponentially more difficult it becomes to create and maintain org charts manually. Furthermore, large organizations often relegate the creation and maintenance of organization charts to various departments, which leads to inconsistent reporting spread across multiple resources and departments. Manual org chart creation and support can not keep pace with a rapid, changing environment with new positions, employee turnover, contingent labor, etc. For this reason, it’s not surprising that larger organizations that rely on popular drawing tools face difficulty in keeping their org charts up-to-date. The constant strain on resources to manually update org charts comes at an increasing cost to HR due to the time and effort required to produce org charts.

Benefits of automated org charting

Automated org charting via software delivers several benefits. These include:

“One version of the truth.”

Data is sourced from the HR system of record, meaning there will only be “one version of the truth” when it comes to HR data displayed in the org chart.

No manual updates

Manual updates are no longer necessary as data is refreshed on an automated schedule, which removes human data entry errors from the equation.

HR data quality

Since data is sourced from the HR system of record, any reporting errors displayed in an org chart reflect data problems in the HR system of record that need to be corrected for better data quality.

Secure, online distribution

Automated org charts can be published out to the web or intranet in a secure manner.

Getting started with automated org charts

If you are looking to get started with automated org charts, here are several key considerations:

HR System

Org unit, position or Person-based reporting relationships?

Understanding the cost to recruit talent by position can be very helpful. Add to this analysis around the source of hire and performance ratings to help pinpoint the most effective means to hire high performing employees.

Data Security

If your org charts are to contain sensitive employee data, you can consider configuring access control privileges to control who gets to access the org charts and key sensitive data fields.

Key Metrics to help drive informed business decisions

Org charts can become effective tools for HR and management by including measurable workforce insights to help drive informed business decisions. For example, automated org charts can display key headcount metrics such as number of direct reports, number of employees by the span of control, salaries, time in position, performance ratings, and more. This can aid an organization in determining which managers may have too many direct reports, where there are certain gaps in the organization, and which departments may be lacking high performers or employees with sufficient job tenure.

There are many more metrics that can be displayed in an org chart based on the specific business use case. Org charts today are used for example for headcount management, recruiting and open positions, talent management, diversity and compliance, benefits, succession planning, organizational modeling, and more.

Our flagship product Ingentis org.manager delivers org charts visualizing an organization’s hierarchy structure. In addition, our software allows you to effectively and automatically track key HR metrics that are always up-to-date and based on your system of record. Furthermore, with the built-in security and permissions capabilities you can rest assured your HR data analytics and reports are only distributed to those who are meant to see the respective information. We invite you to speak to us about org charting and what Ingentis org.manager can do for your organization.

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See how visualizing HR data in org charts, dashboards and diagrams created with Ingentis org.manager can provide you with great insights. 

 

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