What Is an Organizational Chart And How to Make One?

If you are going through the process of opening a business bank account, then your bank may ask for an organizational chart, or you could choose to provide one to help the bank understand your business structure and increase the chances of smoother operation.

An organizational chart can be drawn up in several formats, and each bank will have its own set of requirements when it comes to the information it wants to be displayed in the chart. 

Understanding what is expected and how to deliver the information is crucial in ensuring your bank account application is successful.

Below, we define what an organizational chart is, why banks might need it, what information it should contain, different types, how to create one, and a template for reference.

What Is an Organizational Chart?

An organizational chart (org chart) is a visual that presents the internal structures among the different departments, teams, and individuals within a business. 

It is used to give a clear insight and understanding of the chain of authority and communication that flows through an organization.

These charts typically detail each employee’s information, such as their name, designation, role, and relationship with other individuals within the firm. They can be used to display a company-wide view of a business or give a narrower look into a specific unit within a business.

Most organizational charts adopt a hierarchical model: they position the 

highest-ranking individuals (executive level) at the top of the chart and then show the lower-ranking employees beneath them.

Do Banks Need an Organizational Chart?

Banks are mandated by governments to fight money laundering and terrorism in accordance with strict regulations. This has prompted banks to implement a thorough compliance process towards their banking services, such as opening a bank account.

In this respect, when applying for a business bank account, banks will require information on all the individuals and companies involved with your company. This will enable them to assess the risk attached to each component in your company structure.

That said, specific requirements for opening a business bank account vary among financial institutions and business entities.

Most banks will request your company's business plan and often inquire about the ultimate beneficial owners (UBO), referring to individuals who directly or indirectly own or control the company.

While an organizational chart may not always be explicitly required, submitting an organizational chart along with your business plan can provide a valuable overview, demonstrating to the bank that you have a clear vision for your business structure, operation, and development.

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4 Types of Organizational Charts

Organizational charts likely serve the same purpose across companies, but each business has its unique operational structure. Essentially, there are four main types of organizational charts, each aligning with different company frameworks.

Hierarchical Organizational Charts

A hierarchy chart (a hierarchical org chart or traditional org chart) represents a structured arrangement where a single entity or individual holds the highest position, and those in subordinate roles or less power are positioned below, creating a pyramid-like structure. 

For instance, in an organization, the CEO or other C-suite executives may occupy the pinnacle, working down to perhaps directors, senior management team, middle management team, team leaders, and team members.

This hierarchical structure signifies a clear chain of command, where members communicate with the person they directly report to and with those who report directly to them.

The strength of this organizational chart structure is its capacity to offer clarity and stability. Nonetheless, its potential weakness is it may lack communication across different departments.

This arrangement may suit organizations with a top-down hierarchy, particularly large corporations and those with clear job specialization.

Matrix Organizational Charts

A matrix organizational structure (a matrix org chart) represents a more intricate organizational structure that categorizes individuals according to their shared expertise, the departments they operate in, and the various supervisors they may answer to. Simply put, matrix charts establish links between employees and teams, each having more than one manager.

For instance, picture a marketing specialist involved in two campaigns—one overseen by their primary team lead and another led by a specialized campaign manager. In this setup, the matrix chart would depict the marketing specialist linked to both leaders through vertical lines.

This organizational chart type may suit project-based organizations or businesses that need cross-functional collaboration.

Flat Organizational Charts

In a flat or horizontal organizational chart (flat org chart or horizontal org chart), everyone is on the same level, minimizing management layers. This setup is common in smaller companies, fostering close relationships between management and other employees.

This organizational chart type may suit small organizations and start-ups where agility, quick decision-making, and direct communication are crucial for success.

Divisional Organizational Chart

A divisional organizational chart (a divisional org chart) mirrors an organizational structure based on either product lines or geographical areas. Each division then has its own functional structure. 

For instance, An auto company might organize its business by dividing it into sections for making different types of cars, like sedans, SUVs, and electric vehicles. Similarly, a retail company could have separate teams for running stores in different countries or regions.

This organizational chart type may be more suitable for companies with diverse product lines or distinct geographical markets. It could be used by large enterprises operating in multiple industries or locations where each division can operate somewhat autonomously.

How to Make An Organizational Chart

Define the Purpose and Extent

Before creating your organizational chart, clarify why you need it and who will use it. 

Depending on your goal, you may want to create this chart for the whole company, a specific department, a project team, or a cross-functional group. Additionally, consider if your audience is internal or external and how much detail they need to know. 

Some questions to ask yourself are:

• Who will use or view the chart?
• How many levels and employees should be in the chart?
• How will you share it with your audience? (through email, online platforms, or by printing it)

If you're using it for a bank account application, focus on showing your business structure, ownership, and key people. The purpose is to prove to the bank that your business is legitimate, organized, and reliable. 

Pick the Organizational Chart That Matches Your Company Structure

Choose the organizational chart that fits your organization's structure. For instance, 

• Hierarchical Organizational Chart (Hierarchical org chart): This is the most common type, ideal for organizations with clear hierarchies, like corporations. It is a recommended option for most organizations.
• Matrix Organizational Chart  (Matrix org chart): A good fit for organizations juggling multiple priorities, like consulting or research firms.
• Flat Organizational Chart (Flat org chart): More suitable for organizations with a flexible and agile culture, such as startups or creative agencies. 
• Divisional Organizational Chart  (Divisional org chart): Suitable for larger organizations operating in diverse or complex environments, such as multinational companies or conglomerates.

Ultimately, the best choice depends on what type of organizational charts work best for your organizational structures.

Prepare Information for Your Organizational Structure

Once you have decided on the type and scope of your organizational chart, the next step is to gather the necessary information.

The basic information that you need for any organizational chart is the titles of the employees and the reporting relationships between them.

Depending on your purpose and audience, you may need or don’t need to include additional information. For instance, you may include elements like photos, contact details, job descriptions, and performance indicators for internal use.

However, for a bank application chart, focus on these key details

• Ownership structure (sole proprietorship, partnership, or corporation) with ownership percentages.
• Key personnel, identifying managers, leaders, and experts, along with their roles or job titles.
• Employee titles and reporting relationships, highlighting decision-making authority.

You can exclude non-essential details like employee photos, contact info, and performance indicators. As banks primarily need concise details about key personnel for identification purposes, it’s best to keep it succinct and relevant. 

Use the Right Tool or Software

The final step of making your organizational chart is to choose the tool that you want to use. If you prefer a hands-on approach, you can create it from scratch using a tool. 

• Microsoft Excel - An easy option for a basic organizational chart, Excel allows you to use shapes and connectors to craft a simple visual representation. 
• Microsoft Visio - A tool with more features and options for creating and customizing charts. 

Alternatively, you can use a template or software that is specifically designed for making organizational charts, such as Smartdraw, TemplateLAB and Lucidchart.

Best Practices for Creating an Effective Organizational Chart

Format Your Chart in One Page

A well-designed organizational chart prioritizes conciseness and readability, ideally fitting on a single page. When distributing the chart electronically, you can use hyperlinks to link to more detailed information to keep your chart simple and avoid text clutter.

Consider grouping individuals with the same title within a single box to streamline the layout further. 

Split Your Chart When Necessary 

When your organizational chart becomes overly extensive and intricate, consider breaking it into smaller, more manageable parts. Fragment it by department, project, site, or region. For instance, you may create separate charts for divisions like marketing, sales, finance, or engineering.

It's also advisable to provide a link or reference to the main chart.

Maintain Consistency

Consistency is vital for a clear and professional organizational chart. To achieve this, consider the following:

Consistent design in shape and color

• Use uniform shapes (e.g., rectangles for individual roles, circles for groups or teams).
• Employ consistent colors to highlight levels, functions, or categories (e.g., blue for managers and green for employees).
• Maintain logical order and alignment.

Avoid overuse:

• Limit the number of colors and shapes to avoid confusion.

Uniformity is key:

• Keep text in a consistent font size and style.
• Ensure all boxes are the same size and evenly spaced.

Organisational Chart Vs. Ownership Structure Chart

Although banks might not always explicitly ask for an organizational chart, they often refer to a similar document which can be confused with an organizational chart, which is an ownership structure chart. 

This specific chart outlines each individual or entity that possesses a direct or indirect share in the company submitting an application for a business bank account.

Below is an example of an ownership structure chart. The chart clearly identifies the directors of each company and the connections between the companies and their ultimate owners. 

The information normally listed is as follows:

• Full name
• Nationality
• Passport number
• Residence address

If an entity is listed in the chart, the following information will typically be used:

• Full name
• Place of incorporation
• Date of incorporation
• Incorporation number
• Registered address
• Name, nationality, and passport number of the directors

Final Note

An organizational chart is one of many steps you should fulfill when putting together your application to your bank. 

This chart helps the bank identify the ultimate beneficial owners (UBO) and key stakeholders, which are crucial information for the bank's assessment of your business. Additionally, a well-structured organizational chart conveys a sense of organization and reliability.

For business bank account applications, the chart should clearly outline company structure, roles, ownership, and reporting lines. 

Although specific requirements may vary among banks, a well-crafted chart, paired with your business plan, enhances your application's success.