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What is the functional organizational chart of a company used for?
Explore what a functional organizational chart is and its importance to a company, in addition to the different types of business organizational charts.
Marcos Lopez
HR Consultant
17 of February, 2025
When thinking about constructing a company organizational chart, a pyramidal structure likely comes to mind. Or some other static one showing levels of stable hierarchies over time. However, reality tells us that such a map can hardly resist the fluctuations of the present. Due to the dynamics of markets and industries, frequent modifications are inevitable. 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 org charts, which integrate in a harmonious and organic way
What is a functional organizational chart?
A functional org chart is a scheme that displays and specifies, in the greatest detail, the functions, attributions, and competencies of each department within a company. It is truly useful for designing training and development policies and for easily adapting time management strategies, among others.
In this era, with the advent of remote work, for example, companies have had to flex and modify their organizational charts. This is so that members can more easily grasp the changes. These changes are regarding the new modality of remote work, but also their new functions, tasks, and responsibilities. For this, a functional org chart proves more than indispensable.
Characteristics of a functional org chart
- Clearly indicates the way in which functions are divided within a company. Thanks to this, it is easier to delegate work and control the activities to carry out.
- Determines authorities and levels of hierarchy, showing who should direct or give orders in a department. It helps to avoid misunderstandings in command chains and helps employees know which instructions to follow.
- Facilitates company analysis for decision-making executives in the long, medium, or short term.
- Is a useful tool when expanding a company, making it easy to evaluate which departments can take on more responsibilities or which need to start hiring more staff or resources.
Benefits of having a functional org chart
Having now understood the definition of a functional org chart in detail, it’s time to discover why we should choose this type of scheme. Below, learn about some of its advantages:
- It is clear and precise in defining an organization’s structure.
- It allows employees to understand which group they belong to or which boss they should report to.
- Creates a chart that establishes hierarchy levels.
- Any employee, whether new or old, can understand it.
- Tasks or responsibilities can be assigned according to department labels within the company.
- It makes it easier to expand the company with this instrument’s help.
- Optimizes the decision-making process.
- It is more intuitive than an extensive report or endless listing.
Types of functional org charts
Vertical org chart: This is the most common and well-known type. Its structure is designed to be read from top to bottom. Worth noting is that the CEO of a company will always be first. Then, the list will descend according to ranks beneath him.
Horizontal org chart: In this specific case, the org chart is read from left to right. For example, the person with the highest rank will always be found on the left, with the rest of the team on the right. Among them, you can find the departments or individuals that make up the company.
Mixed org chart: A fusion between vertical and horizontal org charts. In terms of leadership, this one is read from top to bottom, while left to right lays out the different departments. To create an org chart like this one, it is important to note that it is implemented in companies of significant size or with a high number of workers.
Circular org chart: The axis of its structure is based on a person or a department. The one further inside the circle has a higher rank than the rest, with the outer one having the least. These types of structures benefit integration between various departments of the same organization.
Last but not least, if you wish to design and structure a functional org chart, you’ll need a software specialized in creating org charts. In this regard, HR software like Sesame HR can be your best alternative. With it, you can quickly develop org charts in a matter of minutes, so your employees are constantly aware of the company’s organizational structure. Undoubtedly, creating a company org chart has never been easier.
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