In large business organizations as you move from the top to the bottom of the hierarchy, there are more and more people at each level. This is because it is not possible for one person or a group of directors to do all the work by themselves.
What is hierarchy?
Hierarchy refers to a ranking system of positions in an organizational structure within a business organization.
It describes the different levels in an organizational structure with the most powerful and authoritative positions at the top and the least powerful at the bottom.
Level of hierarchy
Level of hierarchy is a single layer in the organizational structure. Employees who are on the same level have the same equal status.
Each hierarchical level refers to a different rank with its associated degree of authority and responsibility.
In fact, each level in the hierarchy is a layer of management except for the bottom level which includes workers (operatives) who do not have any managerial responsibilities.
Levels of hierarchy
At the top of the hierarchy there are the most knowledgeable, skilled and experienced employees including Chief Executive Officer (CEO) and Board of Directors (BOD) at the top. Read more about CEOs at: https://www.investopedia.com/ceos-4689829
In the middle there are middle managers and perhaps supervisors below them. They are needed to control employees at the lowest level. The tasks become simpler as you move down the hierarchy.
At the bottom of the hierarchy there are the most unskilled employees in the organization such as production workers.
Lower ranks are subordinate to superiors of a higher rank.
Number of levels of hierarchy
Each level in the hierarchy represents a grade or rank of staff. In general, the greater the number of levels of hierarchy, the greater the number of different grades or ranks in the business organization.
- Many levels of hierarchy. These are present in tall organizational structures with narrow span of control. Passing information from the top to the bottom can become slow with messages becoming distorted. There will be higher sense of remoteness on lower levels from the decision-making power at the top.
- Few levels of hierarchy. These are present in flat organizational structures with wide span of control. Passing information from the top to the bottom will be fairly quick. There will be lower sense of remoteness on lower levels from the decision-making power at the top.
Hierarchical organizational structure shows clear lines of communication within the business. This can improve productivity of workers. Hierarchical organizational structure can also establish departments or teams to create a sense of belonging in the workplace. This can improve motivation so act as a form of motivation.
Hierarchical organizational structure means departmentalization. This can make the workers feel isolated as only assigned to their official teams. Hierarchical organizational structure means inflexibility. This prevents making flexible structural changes in the organization when there are changes in the external business environment.
In summary, hierarchy in a business organization is pyramid-like ranking of employees where every level (except the top and the bottom ones) has one higher and one lower neighbor. Higher levels have greater authority than lower levels and vice versa.
