A company's organizational chart doesn't have to be just a piece of paper with outdated information about who reports to whom. Nor does it need to be a pro forma exercise, dictated by an employee handbook and executives. It can be a powerful tool to help with issues such as succession planning, payroll and identifying structural problems.

To start with, a sophisticated organizational chart can reflect the increased complexity of today�s businesses. �It�s not as simple as, �You report to one person,�� said Jim Candler, vice president of global customer success for HumanConcepts, a manufacturer of org-chart software. An employee may have a direct supervisor but have a different person in charge of his or her budget. If the employee works in a different location from his or her boss, he or she may also have a local supervisor. Matrix structures, contractors and dotted-line relationships add to the complexity.



�The new view of the world is that it�s virtual, it moves,� Candler said. It�s increasingly important to be able to visualize these complex structures.



Software can help create the actual charts. But even with a powerful program, you�ll still face some tricky issues. Experts offer these tips for making the most out of your org charts:



Make a company-wide chart. Each department may focus on its own area, of course, but it helps everyone see the big picture if all the separate departmental charts can be put together. �This creates a single version of the truth,� Candler said.



Don�t reinvent the wheel. Most companies already have org charts in some form, which can provide a good starting point for revisions. But even if it seems like you�ll need to start from scratch, you probably have the necessary information somewhere. Candler said his company's clients almost always have �an electronic hierarchy� available somewhere, often in the HR database, that can be used as a starting point.



Ask for help. Once you have a draft of the org chart, show it to people who can help find mistakes. �Expose that in all its glory so that people can correct it,� Candler said.



Be open. Experts say some companies are hesitant to publicize their org charts, often out of fear that competitors will find them and use them in their recruiting efforts. Some businesses also want to be sure everything is correct before they publicize their charts, though showing them to many people is one of the best ways to find errors. �In order to get it right, you have to deploy it,� Candler said.



Candler said the decision on how open to make the org chart is �very cultural with regard to the company. Do they keep things close, or are they free and open about everything?�



In addition to concerns about competition, some companies may worry about morale problems arising from too much focus on their org charts. The charts do place a lot of emphasis on hierarchy, an issue many businesses try to avoid dwelling on.



Still, experts advocate letting all employees see the chart. �I don�t think it�s good to hide that information from anyone,� said Jason Kovac, practice leader for compensation at WorldatWork, a nonprofit educational and professional association.



Kovac also pointed to the benefits of having all employees understand how the company is organized: �It helps new employees see who�s in what department, who really does what, what the structure is.� This, in turn, helps those workers build internal relationships and understand how the business operates.



Don�t let it stay static. Review the org chart periodically, especially after promotions or hiring. If there haven�t been many personnel changes, Kovac recommended re-evaluating the chart once a year, at the same time you do performance evaluations.



This review should have two focuses. First, make sure that the information is accurate and up-to-date. Second, use the org chart to help you evaluate whether your organization is structured the way you want it. For example, you may have a target for how many people should report to a single manager. The actual number that you want to aim for will vary depending on the industry and the company. But you can use the org chart to see where you have managers with too many or too few reports.



An org chart review may also help you find problems with job titles, Kovac said, such as managers reporting to other managers.



Don�t be afraid of complexity. Org charts have traditionally shown only one reporting relationship per person. Although Kovac recommended that each employee have one boss who is in charge of his or her performance evaluation, it can also be useful to let the org chart document other relationships, such as a secondary boss who is in charge of one part of an employee�s work.



An up-to-date org chart, then, can be much more than a snapshot of your company�s structure. It can be a tool for improving that structure and communicating it to your employees.



And if your company merges with another, or decides to consolidate two departments into one, an org chart can be very helpful for visualizing possible new structures. �An organizational chart really helps identify underlying issues,� Kovac said.