Organisational Hierarchy – Definition, Meaning, Examples, Advantages

Definition of organisational hierarchy

The term hierarchy in an organization means the pecking order in the chain of command. Here every position along with all the pertaining rules and regulations from top to bottom is defined. There is no confusion about the person to whom an employee is going to report and this is applicable for every job profile and position within the company.

Meaning of Organisational hierarchy

Organizational hierarchy refers to how an organization or a company is organized. In this system, the relationship between the owner, directors, managers and all the employees within the firm is distinct and cleared from the onset.

The organisational hierarchy is not just limited to a business entity instead includes other entities like

• Charitable institutions
• An agency
• Government departments
• Educational establishment

The organisational hierarchy is established so that the existing entity can operate and help to achieve its objectives and goals viably. Remember it is the organisational structure that has the authority to outline task allocation, coordination, and supervision and how they should be directed. In an organisational hierarchy, everyone collectively works towards achieving only the company goals and objectives without deviating from their path.

The organisational hierarchy is a way to structure an entity using several levels of authority. It is often being described as a vertical link between superior and lower levels in an organization.

In a hierarchy, the power rests in the hands of the upper level and hence each upper level controls the subordinate level that is placed under it. The hierarchical structure is a formal structure that gives shape and purpose to an entity. In this interlinked structure, every level of employee is directly connected with its adjacent levels and indirectly connected with the whole organization via links.

In an organisational hierarchy, orders flow from top to next level and it goes on until it reaches the last level where all the orders are carried out and not forwarded anywhere.

In this type of entity, the directions, as well as information, flows in a vertical manner from the bottom through every level to reach the top. After receiving and assessing the data, decisions are made at the top, and the information once again flows but this time from top to bottom through every level, until it reaches its designated place where the data helps to implement the decision. In an organisational hierarchy, it is top-level that is entrusted with coordinating all the communication and relevant activities of the firm.

Entities try to create a well-tightened structure that will make things easier in good times and keep them normal during change or adverse conditions.

Examples of organisational hierarchy

Some examples of the organisational hierarchy can be easily seen in various institutions.

The corporate organisational hierarchy is visualized as an inverted tree with several levels. At the top is the board with executive officers like CEO, CTO and CFO under it and these are subsequently followed by the vice president and managers and the rest of employees.

The organizational hierarchy is a must in most of the religious groups where the supreme leader sits at the top and then is his inner circle of disciples followed by an outer circle and so on to the last level which includes the followers. In a Catholic church, you will find the Pope at the top followed by the Cardinals, Archbishops, and others.

In a democratic country, you will find the President at the top with the Prime Minister, Speaker, Deputy speaker and then the cabinet of ministers, and so on.

The military is one of the prime examples of organisational hierarchy where the order is particular from the chief at the top to the soldiers at the lowest level.

Advantages 

The numerous advantages of the organisational hierarchy are as follows-

• In an organisational hierarchy, you will find a transparent chain of command. There is no confusion amongst the employees about who is going to report to whom because each role and responsibility is defined. The employees know their supervisor and recognize his authority over their activities.
• The communication channel moves along the predictable paths without any confusion and blunder. This enables the people at the top to direct questions to the appropriate levels so that the information is received or transferred from one channel to the next very easily
• In an organisational hierarchy, everyone knows who does and who does not possess the authority to change or assign tasks. It generates defined responsibilities to maintain precise discipline over the matter
• There are clear paths of advancement and growth in the organisational hierarchy. As all the positions are defined, it becomes clear that the employee at the bottom will be rewarded with the post above him, and so on in case of advancement.
• There are diversified tasks in an organisation that can range from purchasing to sales to accounting to promotional strategies etc. The beauty of an organisational hierarchy is that it takes into account all the areas of concern and then concentrates on the particular skillset and resources that are needed for its completion.
• An organisational hierarchy takes the help of specialisation to allot the required work into different departments so that every task is completed with a minimum of fuss. When you do not have an outlined structure in place the managers have to take up additional duties and responsibilities. They become responsible for numerous tasks but in the organisational hierarchy the emphasis is on specialisation which assists the manager to divide the responsibilities to his subordinates in an effective and logical manner
• In an organisational hierarchy, it is easier to identify places where the chances of duplication are more and knowing which teams or departments are sharing resources and where responsibilities are overlapping. It helps to minimise additional costs and results inefficiencies within the company’s financial profile.
• Organizational hierarchy sets the stage for future growth and development of the company in future
• There is no indecisiveness in an organisational hierarchy because someone or the other is always responsible for an action. There is no hiding either from ownership or accountability because the structure helps to keep track of ongoing activities and no one can discount their role in it.
• As the power rests in the hands of the top-level in an organisational hierarchy, it takes away the pressure from the entry-level employees who are responsible with only deadlines and not decision-making.

Disadvantages

The disadvantages of the organisational hierarchy are as follows-

• One of the most important problems of organisational hierarchy is that there is either very little or no flexibility in its dealings. It deals very slowly with changing needs because the procedure is to follow the chain of command. It becomes impossible for a company or a hierarchical organisational structure to inhibit change and adapt to advancing technologies or new demands in the market.
• There are serious issues related to communication in the organisational hierarchy structure. As the flow is vertical it is the inter-agency or interdepartmental that has to bear the brunt of communication barriers. Due to departmental specialization, there is no shared information and this leads to a lack of proper communication even on the same level. One common problem in the organisational hierarchy is that people tend to withhold essential and decisive information and this too purposely and this harms the whole entity
• In an organisational hierarchy, the goals of departments get segregated from those of the firm because of specialization. This leads to organisation disunity and a negative impact on the company.
• There is a lack of collaboration in a hierarchical organisational structure. All the departments, as well as the teams, are interested in only their departments or personal spaces. The defined structures limit their movement so that they are confined to their relevant places only. There will be collaboration within a specific team or department no doubt but you will not be able to see such instances within the organisation and amongst various departments or their related teams. Here the collaboration outside a specific silo becomes impossible because of a power struggle in the hierarchy. No one wants to work with a team outside their zone in case the other team will get away with the brownie points. In an organisational hierarchy, the onus is not on the whole organisation but the department or the silo to which an employee must report.
• Managers in an organisational hierarchy are very territorial because of their power within the company. They tend to act defensive against colleagues or other managers. This is because they do not want to be seen as incompetent in the firm as it might lead to demotion in their power. All the issues are handled from the perspective of the related department and not from that of the company. Their approach, goal, objectives are all related to a specific department and this results in a decline in the growth and prosperity of a company as a whole
• There is very little innovation in an organisational hierarchy structure. This is because the structure is very rigid and each employee has to follow all the rules and responsibilities diligently without making any alterations in the plan. This leaves very little scope or mindset for any innovative idea or approach. Even if an employee gets hold of a brilliant idea it is unable to reach the top level which has the authority to sanction or reject them. After some time it becomes discouraging because the managers are simply not interested in handling the flow of this type of information from bottom to the top
• In small business houses, the organisational hierarchy centralizes the power structure. There is a lack of delegation and as the owner is now responsible for numerous activities at the same time the chances of mistakes, issues and blunders go on increasing. This hampers its efficiency and productivity levels
• When the direct supervisor is not available at some critical time, then it can cause mayhem and confusion in the ranks. The chain of command gets disrupted and in some cases can cause irreparable damage to the company