Hierarchical Structure

• Business Management Theory
• Introduction To Organisational Structures
• Hierarchical Organisational Structure

Introduction

In a hierarchical organisation employees are ranked at various levels within the organisation, each level is one above the other. At each stage in the chain, one person has a number of workers directly under them, within their span of control. A tall hierarchical organisation has many levels and a flat hierarchical organisation will only have a few. The chain of command i.e. the way authority is organised) is a typical pyramid shape.

The diagram below shows a traditional hierarchy; senior managers make up the board of directors and are responsible for establishing strategy and overall business direction, whilst middle managers have responsibility for a specific function such as finance or marketing.

Chain Of Command and Employee Roles

A traditional hierarchical structure clearly defines each employee's role within the organisation and defines the nature of their relationship with other employees. Hierarchical organisations are often tall with narrow spans of control that get wider as we move down the structure or narrower as we move up the organisation's structure. Hierarchical organisations are often centralised so the most important decisions are taken by higher management.

Technology And Hierarchical Structure

In the past hierarchical structures were viewed by organisations as an effective way to control employees within larger organisations. However since the 1990s, (in line with technology improvements) companies have reduced the size of their workforce by using technology to complete many of the functions previously completed by humans.

Hierarchical Structure Advantages And Disadvantages

Advantages Of Hierarchical Structure Organisations	Disadvantages Of Hierarchical Structure Organisations
Authority and responsibility clearly defined	Hierarchical organisations can be bureaucratic and may respond slowly to changes in customer needs and the market
Clearly defined promotion path	Poor communication through the organisation especially in the case of horizontal communication (i.e. communication between different departments that are at the same level in the hierarchy)
A Hierarchical environment encourages effective use of specialist managers.	There is a danger of departments making decisions that benefit their department but not the whole organisation
Employees in hierarchical structure organisations can be very loyal to their department	A hierarchical structure leading to multiple managers and departments can be expensive

Conclusion

There are a number of different organisational structures each with their advantages and disadvantages. The most appropriate structure will depend on the size of the business and the type of business.

We hope you enjoyed this quick overview about hierarchical structures. Click the links below to learn more about the different types of organisational structures.

1. Organisational Structures
2. Flat Structures
3. Matrix Structure
4. Tall Structures
5. Centralised Structures and decentralised Structures