Hierarchical Organisation/Structure

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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 (ie the way authority is organized) is a typical pyramid shape.

Diagram: Hierarchical Organisation

Above : 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.

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, which gets wider as we move down the structure. They are often centralised with the most important decisions being taken by senior management.

In the twentieth century as organisations grow bigger, hierarchical organisations were popular because they could ensure command and control of the organisation. However with the advent of globalisation and widespread use of technology, in the 1990’s tall hierarchical organisations began to downsize and reduce their workforce. Technology was able to carry out many of the functions previously carried out by humans.

Advantages of Hierarchical Organisations	Disadvantages of Hierarchical Organisations
Authority and responsibility and clearly defined Clearly defined promotion path.	The organisation can be bureaucratic and respond slowly to changing customer needs and the market within which the organisation operates.
There are specialists managers and the hierarchical environment encourages the effective use of specialist managers.	Communication across various sections can be poor especially horizontal communication.
Employees very loyal to their department within the organisation.	Departments can make decisions which benefit them rather than the business as a whole especially if there is Inter-departmental rivalry.

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