Hierarchical organization is defined as a pyramid-like structure where one individual is in charge of the company with one or more subordinates subsequently under each other.
In this type of organizational structure, there is a chain of command from top to bottom. Higher levels imply superiority in position and their domination of the lower one.
Meaning of hierarchical organization
A hierarchical organization is a structure where all the entities except the topmost are subordinate to another entity. It is considered one of the most traditional and popular structures in existence and is still dominant in governments, large organizations, religious groups, and corporations.
Hierarchy has a vertical chain of command with different levels of authority, for instance, between a superior and subordinate level in the company. The highest level of power rests at the hands of the person who sits at the top, and the power gradually lessens down from top to bottom.
Consequently, the directions and information also flow vertically although the process for direction is from top to bottom whereas information is from bottom to top where it is received, assessed, reviewed and later again sent down with further instructions.
Types of hierarchical organization
A system where responsibility and power are specifically defined and allocated as per their standing or position from top to bottom is known as a hierarchical organization.
The employees exist at several levels where one reports to another level that is above their own. The organizations with several levels are known as tall hierarchy whereas one with very few in between a flat model.
Tall hierarchy is an organizational structure which gained prominence in the early years of the 20th century as the business started growing larger and needed numerous people to control its operations.
In the early 21st century and late 1990s increased technology and globalization of products started creating a lesser workforce. This led to flatter organizations with very few commanding positions in between.
The political system is one of the most common examples of a hierarchical organization. In India, we have the president, the prime minister, and speaker, and so on.
Similarly, in the United States of America, the power starts with the president and follows through with vice-president, speaker of the house and president of the Senate and so-on.
The military is another common example of hierarchical organizational structure with army chief at the top and next to him are general, then lieutenant general and so on.
Religious groups are a prime example of a hierarchical system where one person sits at the top, and the power is gradually shifted downwards.
In a computing context, most file systems are based on a hierarchical model. The memory ranks components as per their response times with the processor registers sitting at the top of the tree and tape back-up at the bottom.
8 Advantages of hierarchical organization
The advantages of the hierarchical organization are as follows-
- The career path is clearly defined with every employee working towards achieving the level higher than his own. This is like studying in a school where you start from class 1 and slowly and steadily work upwards to reach high school and so on.
- In case of a specific product, the companies generally opt, or hierarchical system as the individual at the top can control all the aspects of distribution, manufacturing, and marketing.
- Power is centralized, and everyone is aware who holds authority over whom. As more authority is granted, so are the responsibilities.
- There are diverse tasks in a hierarchical company, and the structure enables creating several departments where particular skills and knowledge is appreciated. There is a greater chance of niche positions as expertise can be used in an effective manner
- The hierarchical organization has defined lines of communication that applies to everyone. Employees at the entry-level report to a direct supervisor who gets his orders from his supervisor and so-on until it reaches the top. It becomes easy to implement business strategies effectively.
- The structure makes it possible and easy to determine the teams that are sharing resources and thus identify duplication and responsibilities that are overlapping and thus costing the company more money.
- There is no scope for indecisiveness as there is always someone heading a department. You cannot hide from owning your responsibilities and accountability in a hierarchal organization
- The entry-level workers do not have to take excess stress as they do not have any power.
There are a number of problems related to a hierarchical organization structure. Some of them are as follows-
- Information flow is from the bottom to the top but very little from top to bottom. This can cramp any initiative shown by the lower levels
- It takes a lot of time in making and implementing viable decisions as the chain of command has to be followed, and it moves gradually and slowly.
- There is very little flexibility as the structure is not at all adaptable to change. It also reduces the chance of internal innovation as managers do not encourage the sharing of ideas from their subordinates.
- The organization is slow in reacting to environmental and competitive pressures
- The additional corporate overhead is immense as it requires a large sum to support the senior management group. This leads to low profits
- Decisions are made for the department as everyone is concerned about his role and responsibility, not the ultimate vision and goal of the company. There is a lack of collaboration as teams stay in their comfort zone within their defined structures. It becomes very difficult o accomplish collaboration outside the departments
- In a hierarchical organization, managers tend to become territorial. Instead of looking at the organization as a whole they are worried about their department only and often creates a competitive atmosphere that is not fruitful for the company
- It creates a communication barrier as you do not have direct access to the people who are way above your level.