Organizational chart: how to structure it (with template)

The dilemma is divisive. On one side is the idea that "we all know each other here, we know who does what": an organizational chart seems unnecessary, if not a way of imitating large corporations. On the other is the feeling, recurring on the days when something isn't working, that too many decisions go back up to the founder, that responsibilities overlap, that a new hire takes months to figure out who does what.

An organizational chart is the graphic representation of a company's organizational structure: it shows how people are grouped, who reports to whom, and where responsibilities fall. It is not a description of duties — that is the job description — nor a process map: it is the map of roles and lines of responsibility.

The available evidence indicates that more productive companies adopt more structured management practices — well-defined performance measures and explicit accountability for targets [2] [5]. Yet in Italy 94.9% of companies in industry and market services have fewer than ten employees, with an average size of 4.0 employees (2022 data) [1]: at this scale the structure stays implicit for a long time, and an explicit organizational chart is a choice, not a consequence of growth.

This article describes when an organizational chart is really useful in a small or mid-sized company, how to choose the most suitable type among the available alternatives, a five-step process to build it, how to keep it up to date without letting it become a dead document, and the most common mistakes to avoid. At the end of the article you will find a downloadable PowerPoint template to adapt to your own company.

The goal is not to produce a document to file away, but an operational tool that survives the first reorganization.

When a company really needs an organizational chart (and when it's just paper)

"We all know each other here, we don't need an organizational chart" is a common line in Italian companies with fewer than twenty employees — and it is partly true. There are thresholds below which a formalized organizational chart adds little; there are thresholds above which its absence starts to cost in measurable ways. The Bank of Italy [2] and the World Management Survey [5] show that structured management practices — including well-defined performance measures that are communicated rather than kept confidential, and explicit accountability for achieving targets — are associated with higher productivity. But the real usefulness depends on three variables: size, growth stage, and the rate of people joining and leaving. This section identifies the four situations in which formalizing the organizational chart creates concrete value and the two in which it remains marginal.

When a new hire takes more than three weeks to figure out who they report to, the problem rarely lies with the new hire. It is a symptom that the map in the founder's head has never been transferred to paper — and everyone draws their own as best they can.

Four situations in which an organizational chart creates concrete value:

1. Passing 10-15 employees. Below this threshold, tacit knowledge of who does what spreads through direct contact. Above it, the informal network becomes insufficient: decisions start to slow down and responsibilities start to overlap. ISTAT, Italy's national statistics office, reports that Italian companies with 10 to 19 employees generate 52.1 thousand euros of value added per employee, below the national average of 56.6 thousand and far from the 74.0 thousand of companies with 50 to 249 employees [1]; the OECD in turn finds that Italian micro-enterprises are about 30% less productive than their European counterparts and that small family-run businesses often suffer from a shortage of management skills [3].

2. A phase of rapid growth. When the company hires frequently — more than three or four people in six months — the organizational chart becomes a tool for accelerated onboarding. It reduces the time a new hire needs to understand the decision-making architecture, without requiring the founder to explain it every time.

3. Frequent employee turnover or systematic onboarding. In contexts with high staff turnover — seasonality, high-mobility sectors — an explicit organizational chart is an operational asset that cuts the cost of every onboarding cycle.

4. Generational succession or a change in leadership. The World Management Survey places family firms run by a family member and firms still run by their founder among the ownership categories with the lowest management scores, and finds that in Italy about 60% of the firms in the sample fall into these categories; the authors' observation is that a mature company needs to move beyond informal rules [5]. Without an explicit map of roles and responsibilities, the founder's tacit knowledge does not get transferred.

Two situations in which an organizational chart remains marginal:

• A stable micro-business with fewer than seven employees, where all communication channels are direct and responsibilities are known through long-established habit.
• A phase of accelerated strategic pivoting, in which roles change every quarter: in this case, updating the organizational chart takes an effort out of proportion to the benefit.

Four semantic boundaries to clarify — terms that readers tend to confuse with the organizational chart:

• Organizational chart vs job description. The organizational chart shows where each person sits in the structure (who reports to whom, in which function); the job description describes what each person does (tasks, responsibilities, expected outputs). They are complementary but answer different questions.
• Organizational chart vs process flowchart. The organizational chart is a static map of roles; the business process flowchart is a dynamic map of activities. One shows "who is there"; the other shows "how the work moves".
• Organizational chart vs organizational model. The organizational chart is the graphic representation; the organizational model is the underlying structural logic (functional, divisional, matrix). The same model can be drawn with different organizational charts; the same organizational chart can hide profoundly different models.
• Organizational chart vs hierarchy. Hierarchy is one of the possible contents of an organizational chart, not the only one. There are flat, network, and cluster organizational charts: they all represent a structure, but not all of them represent a vertical hierarchy.

Choosing the right type of organizational chart: hierarchical, functional, matrix, flat

There are four types of organizational chart relevant to small and mid-sized companies: vertical hierarchical (classic top-down logic), functional (grouping by specialization: production, sales, administration), matrix (dual reporting line, functional and project), and flat (few levels, direct reports to the founder). Each one works in a specific context and falls short in another. Mintzberg [4] codified the criteria for the choice; this section translates them into three practical variables — current size, homogeneity of products/services, stability of the context — and proposes a matching matrix. A company of about twelve people with a single product rarely needs a matrix structure; a company of eighty people with four business lines rarely holds together with a flat organizational chart.

In most cases, a company's current organizational chart was not chosen: it formed through layering. An organizational chart that was never chosen is an organizational chart that was never thought through.

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For an in-depth look at the theoretical logic behind each type, including Mintzberg's divisional and adhocracy structures, see organizational models.

The 5-step process to build your company's organizational chart

Building a useful organizational chart is not a graphic exercise: it is an act of organizational clarity that requires explicit decisions. The process, summarized in five steps — map the real roles, separate them from the people, define the reporting lines, validate with the leadership, communicate to the team — produces an operational document, not a decorative one. The difference between the two shows up months later: the operational organizational chart gets consulted, the decorative one gets filed away. The five steps below describe each phase with its concrete output and the indicative average time in a company of twenty to fifty employees.

If the founder were away tomorrow for two weeks with no phone coverage, would the team know who decides what? The answer to this question is the most reliable test of the quality of the organizational chart — far more than the document itself.

Step 1 — Map the real roles (not the titles). Start from what people actually do, not from their formal titles. In many Italian companies, a "sales manager" also handles legal negotiations; an "operations director" signs supplier contracts and onboards new hires. Mapping the real roles means asking each person what they decide, what they approve, and what they report on — not what is written in their contract. Estimated time: 2-4 hours of structured interviews or questionnaires.

Step 2 — Separate role and person. A role can be filled by several people; a person can fill several roles. The distinction is critical: if the organizational chart shows "Mario Rossi — Production and Purchasing Manager", the chart is already obsolete the day Mario Rossi leaves the company. The role must be designed to outlive the person who holds it. In cases of a temporary dual role (common in companies with fewer than thirty employees), mark it clearly with "a.i." (ad interim) or an explanatory note.

Step 3 — Define the reporting lines with attention to span of control. Each role must have a single direct superior (dual reporting must be made explicit and justified, as in the matrix structure). An excessive concentration of reports on a single manager is a sign of a structural bottleneck. How many reports are sustainable, however, is not a measured threshold: in Mintzberg's synthesis [4] the size of the unit — what the literature calls span of control — is a variable that depends on the coordination mechanism, because where work is standardized less direct supervision is needed and more positions can sit under a single manager, while where coordination happens through mutual adjustment the unit stays small. The signal to read, then, is not exceeding a number, but the slowing down of the decisions that pass through that person. In this phase you also identify which operational decisions can be made autonomously at each level, without going back up to the top.

Step 4 — Validate with the leadership. Before communicating the organizational chart to the team, you need an internal validation cycle with the function heads. The goal is to verify that the reporting lines match how things really work, that no critical role has been left out, and that the "as-is" map is shared before discussing the "to-be" map (the desired organization). Confusing these two maps is one of the most frequent causes of organizational charts that never get applied.

Step 5 — Communicate and share. The validated organizational chart is presented to the team with a short explanation of the "why" — not of the content, but of the logic that guided the structural choices. Communication reduces uncertainty and prevents passive resistance. The document must be made accessible to everyone (shared folder, intranet, a copy physically posted in the office, depending on the context).

The downloadable PowerPoint template supports this process: it contains the four standard structures already set up, with placeholders for the roles and reporting lines typical of a company of fifteen to fifty employees.

How to keep the organizational chart up to date without letting it become a dead document

Most organizational charts in Italian companies are obsolete within six months of being created. Not out of bad faith: because there is no update mechanism. Someone gets promoted, someone else changes function, a new manager joins — and nobody touches the file. Six months later, the document is a map of a territory that no longer exists. This section proposes three simple maintenance rules: a fixed review cadence, trigger events (the update starts every time a specific event occurs), and a single owner of the document. It is less intuitive than the initial build, but it is what separates a living organizational chart from an archived document.

When was the organizational chart currently in use last modified? If it was more than six months ago, the organizational chart in use is not the one in the file: it is the one each person has rebuilt in their own head. And each person has rebuilt it differently.

Rule 1 — A fixed six-monthly review on the calendar. Twice a year, on a set date (for example early January and early July), check that the organizational chart matches the real structure. The review takes less than an hour if done regularly; it takes days if it has been put off for years. The fixed cadence turns the review from an exceptional task into an operational routine.

Rule 2 — Automatic trigger events. The organizational chart is updated every time one of the following events occurs: a new hire, a resignation, a promotion, a change of function, the reorganization of an area. Trigger-based updates do not replace the six-monthly review, they complement it: they capture individual changes before they pile up into a misalignment that is hard to recover from.

Rule 3 — A single owner of the document. The organizational chart must have a named owner: the HR function if there is one, otherwise the operations manager or senior management. The owner updates the document, controls its current version, and makes sure that the copy everyone can access is the updated one — not a version saved locally months earlier.

Generational succession is the extreme case in which these three rules become a necessary condition, because it is the moment when the company has to replace informal rules with written ones [5]. Without an explicit and recent map of roles and responsibilities, the founder's tacit knowledge remains uncodified, and the risk of losing information becomes structural.

Common mistakes when building a company organizational chart

The most common mistakes in building an organizational chart in an Italian company repeat themselves regardless of the sector. The organizational chart copied from a large corporation, the "ideal" organizational chart disconnected from operational reality, the manager with too many direct reports, the lack of an accompanying job description, the rollout without change support. Each one produces a recognizable symptom and has a concrete fix. The following table collects them in a "mistake → signal → fix" format so they can be recognized quickly.

Does the company's official organizational chart match the one the team actually follows every day? When the two diverge, the problem is not which one is "true": it is the very fact that there are two. And this divergence is the first mistake to fix.

Using the downloadable organizational chart template and adapting it to your company

The downloadable PowerPoint template accompanies the content of this article: it contains four pages, one for each type of organizational chart (hierarchical, functional, matrix, flat), already set up with placeholders for the roles typical of a company of fifteen to fifty employees. It is not meant to be used as is: it is meant to be adapted. This section sets out the three minimum customization steps and the level of adaptation worth doing before using it as a shared tool.

A template that is downloaded and not adapted remains an example, not a tool. The act of adapting it alone — even just thirty minutes — is the phase in which the document stops being a generic model and starts reflecting your specific company.

Three minimum customization steps:

1. Replace the placeholder roles with the real roles. The template contains generic roles (e.g., "Function A Manager", "Sales Team Lead"). The first step is to replace them with the actual roles in your organization, using the internal name — not the formal contract title, if it differs from the one in use.

2. Delete the pages that aren't relevant. The template includes all four types of organizational chart. After choosing the right type (see H2 #2), delete the pages that don't apply. Keeping all the versions in a single file creates confusion about which one is the "official" one.

3. Add the owner and the date of last modification. Every page of the organizational chart should state who is responsible for the document (name and function) and the date of the last modification. This lets anyone who receives the file know whether they are looking at the current version or an obsolete copy.

The template is freely available: no sign-up form is required. It is designed to be downloaded, adapted, and used directly — customization is its intended use, not an advanced option.

Limits and conditions of applicability

The guidance in this article is based on established organizational principles and on empirical evidence from the Italian and international context. Some conditions of applicability are worth making explicit:

• The size thresholds given (7, 10-15, 40-50 employees) should be understood as operational heuristics, not universal thresholds. The degree of complexity of an organization also depends on the variety of products/services, the rate of change in the context, and the geographic distribution of the team.
• The evidence from Bloom and Van Reenen [5] documents a correlation between structured management practices and productivity, not a direct causal relationship, and was collected on manufacturing firms with 100 to 5,000 employees. The organizational chart is a necessary tool, not a sufficient one.
• Neither the Bank of Italy survey [2] nor the OECD report [3] directly measures the presence of a formalized organizational chart: the link between explicit structure and structured management practices is an operational inference.
• Mintzberg's classification [4] dates back to the 1980s and has been updated in the literature, but it remains solidly valid as a guiding framework. Very recent contexts (distributed teams, fully remote organizations) may require adaptations not covered by the original classification. It should be noted that this source contains no numerical threshold for direct reports: the size of the unit is treated as a variable that depends on the coordination mechanism. A previous version of this article attributed to Mintzberg a limit of "five to seven direct reports" that the source does not contain; the figure has been removed.
• The attached template is designed for companies with standard structures. Organizations with complex governance models (e.g., family businesses with several branches, cooperatives, companies with widely held ownership) may require significant adaptations or different formats.

Frequently asked questions (FAQ)

Do you need to update the organizational chart every time there is a small change of role? It depends on the scale of the change. For significant changes (a new hire, a promotion, a change of function) it is advisable to update it within the week. For internal micro-adjustments, you can wait for the fixed six-monthly review, as long as you keep track of them in a note.

Should an organizational chart be public internally, or can it stay confidential? As a general rule, all employees should have access to the updated version: it reduces uncertainty, makes onboarding easier, and prevents informal versions from multiplying. Information on pay levels or individual evaluations does not belong in the organizational chart and naturally remains confidential.

Which software tool is best for building the organizational chart? There is no universally preferable tool. The most common options include PowerPoint/Keynote (for companies that already use these tools), Lucidchart, Miro, Canva, and the organizational chart modules built into some HRIS platforms. The choice depends on the setup already in use, not on absolute preferences. The attached template is in PowerPoint format to ensure maximum compatibility.

Does a company of five people need an organizational chart? Rarely in a formal sense. What can be useful even below this threshold is a simple document that clarifies lines of responsibility and decision-making areas — not necessarily in graphic form. The organizational chart format becomes relevant when the first managers come on board.

Operational summary

The organizational chart is an operational tool when it is built on real roles, chosen consistently with the company's size and life stage, and maintained with a fixed cadence and a single owner. It becomes dead paper when it is copied from external models, describes an ideal organization that nobody follows, or is produced once and never updated.

The five-step process (map the real roles, separate role and person, define the reporting lines, validate with the leadership, communicate to the team) produces a document people actually consult. The three maintenance mechanisms (six-monthly review, trigger events, single owner) ensure its operational longevity.

The downloadable template offers a starting point in the four main formats: the value is not in the preconfigured document, but in the act of adapting it — which is the very act of deciding how your company is structured today.

Sources and references

1. ISTAT — "Annuario statistico italiano 2025 — Capitolo 14: Imprese" (2022 data). Available at: https://www.istat.it/storage/ASI/2025/capitoli/C14.pdf

2. Baltrunaite, A., Formai, S., Linarello, A., Mocetti, S. — "Proprietà, governance, management e performance delle imprese: evidenze dalle imprese italiane". Banca d'Italia, Questioni di Economia e Finanza no. 678, March 2022. Available at: https://www.bancaditalia.it/pubblicazioni/qef/2022-0678/QEF_678_22.pdf

3. OECD — "OECD Economic Surveys: Italy 2024" (January 2024). Available at: https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/01/oecd-economic-surveys-italy-2024_18011b9d/78add673-en.pdf

4. Mintzberg, H. — "Structure in 5's: A Synthesis of the Research on Organization Design". Management Science, vol. 26, no. 3, 1980, pp. 322-341. doi: 10.1287/mnsc.26.3.322 — peer-reviewed synthesis of the five organizational configurations, consulted in full text; replaces the reference to the book Structure in Fives (Prentice-Hall, 1983), which could not be accessed as a primary source.

5. Bloom, N., Van Reenen, J. — "Why Do Management Practices Differ Across Firms and Countries?". Journal of Economic Perspectives, vol. 24, no. 1, 2010, pp. 203-224. Available at: https://www.aeaweb.org/articles?id=10.1257/jep.24.1.203

Prodability editorial team

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