After reading this article you will learn about:- 1. Concept of Organisation Chart 2. Use of Organisation Chart 3. Advantages 4. Limitations.

Concept of Organisation Chart:

Organisation chart is the result of organisation design. Organisation chart portrays graphically the structural relationship among the different func­tions (departments) and the positions (persons) in the enterprise who are responsible for those functions. Organisation chart shows – how the dynamic activities of a concern are coordinated into a working unit. Organisation chart which is also known as organisation tree is nothing but a map or drawing of the organisation.

Fig. 3.2 shows an organisation chart.

Organisation Chart

An Organisation Chart shows:


1. The interrelationship and relative position of each department of the company.

2. The lines of command, i.e., Authority and Responsibility.

3. Relationships between different managers (i.e., by virtue of their status in the organisation).


4. Kinds of managerial relationship which exist (i.e., line, staff and functional).

5. Sometimes, the names of managers along with the number of persons they supervise.

6. And brings to notice an illogical grouping of functions.

7. And pinpoints the omission of a particular function.

Use of Organisation Chart:


Besides certain weaknesses, an organisation chart serves very useful purpose especially when it is drafted by an expert.

Organization Chart of a Plant Maintenance Department

Functional Chart of the Organization of a Cost Department

Advantages of Organisation Chart:

1. An organisation chart tells quickly as who is responsible for a particular function.


2. It pinpoints the weakness of the organisation (refer points 6 and 7 above).

3. Information contained in the organisation chart supplements the details available in organisa­tion manual.

4. An organisation chart can serve as a training device and as a guide in planning for expansion.

5. An organisation chart is useful in showing the nature of organisation, and changes, if any, in the existing staff and the new-comers.

Limitations of Organisation Chart:


1. An organisation chart needs frequent updating.

2. It shows a static picture of the dynamic business.

3. It induces certain structural rigidity and may encourage red tape. This is because an organisation chart marks definite channels through which information must flow. Short cuts, sometimes, may improve efficiency.

4. It is very difficult to portray human relationships on an organisation chart.