An org chart is a visual diagram that outlines the internal structure of a company or team.
Short for organizational chart, what it really does is show the shape of things—who does what, and who answers to whom. The CEO up at the top. The department heads, branching out. Then project leads, guiding their teams, one layer at a time. Sometimes it’s a simple tree. Sometimes it’s interactive, living inside an HR system, updating in real time. But the idea is the same: It lets you see the whole organization at once. And that turns out to be surprisingly useful. Because when you can see the hierarchy—who reports where, how teams connect, where responsibilities begin and end—things make more sense. Org charts give clarity. They help people understand their place in the system. And for companies that are growing fast, or spread across different locations, that clarity can make all the difference.
What does an org chart include?
A well-designed org chart typically displays:
- Employee names and titles
- Departmental groupings
- Reporting relationships (Manager → Direct reports)
- Lines of communication
- Functional roles within teams
In digital org charts, additional data such as contact info, location, or employment status (full-time or contractor) may also be included. A digital org chart is particularly useful because it updates in real time as your team grows or changes, giving you instant visibility into roles, reporting lines, and team structures. No more static spreadsheets or outdated PDFs.
Got a global team? A digital org chart is a snapshot of how your organization connects and collaborates, not just across departments but across regions.
4 types of org charts
Organizational charts aren’t one-size-fits-all. How you structure yours depends on how your business operates and grows. From traditional top-down models to flexible, cross-functional teams, each type supports a different way of working.
Here are four common types of org charts and what they reveal about how your company connects and collaborates.
Hierarchical
A hierarchical org structure is the classic top-down model. Clear lines of authority flow from executive leadership through middle management to individual contributors. It’s the go-to structure for many established companies because it streamlines decision-making and defines accountability.
The clear reporting lines of a hierarchical org chart make decision-making straightforward and accountability easy to track, which is a major advantage for large or established companies. But this clarity can come at a cost: slower communication and less flexibility, especially when teams need to move fast or collaborate across functions and regions. In fact, such top-down org charts may impede digital transformation efforts, according to a 2025 article published in Research-Technology Management.
Matrix
A matrix org structure brings flexibility to the forefront by showing dual reporting relationships. What does that look like? Employees report both to a functional manager and a project or regional lead. This setup breaks down silos and encourages collaboration across departments, helping teams share expertise and align around common goals. Research shows that in organizations with a matrix structure, employees understand that their influence is measured in cooperation, discussion and personal efficiency, more so than those working in organizations with other types of structures.
A matrix structure is a smart choice for global or project-driven organizations where adaptability is essential. However, with more than one boss in the mix, decision-making can get murky, and employees may face competing priorities.
Flat
A flat or horizontal org structure minimizes hierarchy, giving teams the freedom to collaborate and make decisions without layers of management in the way. It’s a favorite among startups and agile teams that thrive on flexibility, speed, and a sense of shared ownership.
Without formal management levels, communication flows openly, and ideas rise quickly from anywhere in the organization. The trade-off? Without clear leadership tiers, accountability can blur, and scaling becomes tricky as teams grow. Still, for companies built on innovation and trust, flat structures can spark creativity and keep everyone closely connected to the mission.
Flat org structures may also be good for boosting consumer sentiment. “All else being equal, perceived organizational flatness (vs. tallness) tends to induce more positive consumer reactions, such as increased purchase amounts, advertising engagement, purchase intentions, crowdfunding contributions, and brand choice,” according to a 2025 study in the Journal of Consumer Research.
Functional
A functional org structure groups employees by their area of expertise: marketing with marketing, finance with finance, engineering with engineering, and so on. Each team is led by a department head. This setup builds deep specialization and efficiency, allowing experts to focus on what they do best while maintaining clear lines of responsibility. It’s ideal for organizations that value consistency, quality, and operational control. But when teams work in silos, communication across departments can lag, and innovation may slow.
Why org charts matter in growing teams
As businesses grow, maintaining clarity in reporting lines and team responsibilities becomes increasingly important—especially across borders or with hybrid teams.
Org charts help by:
- Improving internal communication. With a detailed, up-to-date org chart, everyone knows who does what and whom to contact.
- Clarifying leadership and accountability. Not sure who’s doing what? Worried that multiple people are doing the same thing? A clear org chart can help prevent role confusion and overlap.
- Supporting workforce planning. An org chart is useful for identifying gaps, team bandwidth, and succession planning.
- Onboarding new employees. The visual clarity of an org chart helps new hires understand where they fit in.
An effective org chart should give everyone in the organization a shared understanding of how the organization works, no matter their role or location. They can see how their team fits into the bigger picture,
Org charts for global or distributed teams
For global companies or remote-first organizations, org charts are essential for visibility across regions, time zones, and legal employment structures—for example, a direct hire versus an employee via an employer of record (EOR). These charts support coordination across international teams and compliance clarity for HR and legal teams.
FAQs
What is the main purpose of an org chart?
The primary purpose is to show a company’s structure—who reports to whom and how teams are organized—so that communication and accountability are clear.
Who creates and maintains the org chart?
Typically, the HR team or operations leadership creates and updates org charts, though software solutions can automate updates as roles change.
Are org charts only for large companies?
No. Even small businesses and startups benefit from simple org charts to clarify roles and plan for growth.
How do org charts differ in global companies?
Global org charts often include multiple layers of legal, geographic, and functional reporting. EOR-employed team members may report functionally to internal managers but remain legally employed through a third party.
What tools are commonly used to create org charts?
Popular tools include Lucidchart, Microsoft Visio, OrgWeaver, and built-in features in HRIS platforms like BambooHR or Gusto.
Ready to get organized?
When your team spans countries and time zones, you start to notice how confusing things can get. Clarity about who’s doing what and who’s reporting to whom isn’t just a nice-to-have; it’s essential.
Enter Pebl’s global HR and Employer of Record (EOR) services. We give shape to the chaos. Structure. Visibility. The kind of compliance support that lets you grow without constantly worrying about what you might be missing. You can hire almost anywhere, manage it all effortlessly, and keep every role and relationship clear. Instead of outgrowing your org chart, your org chart grows with you.
If you’re thinking about what comes next for your business, schedule a consultation today. Let’s talk through your growth and where you’re headed.
This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.
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