You have probably seen an organizational chart for your business at some point. And we can probably guess what it looked like. The typical organizational structure resembles a pyramid, with C-level executives at the top and lines leading to middle management, then staff members. Â.
However, not every business benefits from having a hierarchical organizational structure. Due to the diversity of organizational structures, there are numerous types of organizational charts. Â.
Let’s go over the seven common types of organizational structures and the justifications for each one.
Hierarchical Organizational Structure | Meaning | Advantages and Disadvantages
What Is a Hierarchical Structure?
A company’s chain of command can be described as having a hierarchical structure.
This particular form is the one that businesses use the most frequently. When viewed as an, it creates a diagram in the shape of a pyramid that represents the authority within an organization.
When a company uses a hierarchical structure, there will be one person at the top in charge of the entire business. Then, an increasing number of lower management and supervisors come after that.
Typically, a business will have a manager that each division refers to. Once that happens, these managers will have a manager or supervisor to answer to. Up until the board members submit a report to the CEO or business owner, this continues.
This might entail one or two department heads who answer to the owner in a small business. This can develop into a complicated system of branch managers, area managers, division supervisors, and so forth in a larger company.
Employees who report to their superior or supervisor but do not have any specific duties of their own will be at the bottom of the organizational structure.
The chart below illustrates a simplified hierarchical format. It demonstrates how there are fewer employees at each level until there is eventually just one person at the top.
Companies that use hierarchical structures include:
Example of a Hierarchical Structure
We don’t just see hierarchical structures within the workplace. Using an example from daily life may make it simpler to explain the system.
Within a school setting, a straightforward illustration of a hierarchical structure would be.
Students are at the bottom of the system. They answer to the teachers but are not directly accountable for the management of the school.
The teachers are in charge of teaching the students, but they also have to submit reports to their department heads.
Each department head would be in charge of monitoring the development of their subject and determining how to approach the curriculum. They would update the principals and deputy principals on their performance and any problems.
The principals are in charge of overseeing the entire school and upholding standards. They are answerable to the school board.
Given that hierarchical structures are the most prevalent type of management model used in businesses, it is safe to assume that these structures have benefits. After all, businesses would find a substitute if it didn’t work.
Some of the advantages of using a hierarchical structure include:
There are various levels of control within the company that are determined by a hierarchical structure, but everyone is aware of their level of control.
Large decisions regarding budgeting, expansion, and mergers will be made by higher management.
The day-to-day operations of the company, customer experiences, and employee performance are managed by those in the lowest ranks of the organization.
Each individual within a hierarchy is aware of their current position as well as the positions above and below them.
Many employees will gain from this system because it ensures that they are aware of the steps necessary to advance in their careers. They also understand the position they will hold following promotion.
When a business establishes specialized divisions to handle various tasks, such as finance, human resources, or bidding, you also develop a more specialized workforce within these divisions.
Departments are more effective and less prone to errors when they have staff who are particularly skilled in their work.
This organizational design provides a direct route for communicating, reporting information, and raising concerns.
Everyone on the team is aware of the proper reporting channels. Because everyone is aware of their responsibilities and there is typically only one person assigned to handle this information, reporting and complaint handling are made much easier.
When you collaborate with others, you develop a sense of loyalty. Staff want their team to do well and be rewarded. These sentiments of loyalty can enhance employee productivity and morale in all departments.
Managers Who Can Deal With Relevant Issues
Since there is a specific person in charge of ensuring the smooth operation of each department or area, they are in the best position to address any problems that may arise.
Problems can be quickly resolved without going through other departments in a well-run organization because managers fully comprehend their own departments.
As with any structure of authority, nothing is ever perfect. There are disadvantages as well as advantages.
The following list of potential drawbacks for a business using a hierarchical structure:
Response times may be delayed if several managers are handling different policies, complaints, or reports.
A very large hierarchical structure entails having numerous distinct departments, each with their own managers and supervisors. A company may end up paying more in the long run as a result of having to hire more employees and pay higher management salaries.
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FAQ
What is hierarchical structure example?
The most prevalent type of organizational structure is a hierarchy, in which the chain of command starts at the top (e g. , the CEO or manager) down (e. g. Each employee has a supervisor (including entry-level and low-level employees).
What companies use hierarchical structure?
Due to its size, Amazon is an example of a company with a hierarchical structure. The company, which is the biggest online retailer, currently has about 560,000 employees worldwide. Due to the organization’s hierarchical structure, Jeff Bezos, the company’s founder and CEO, is above all other employees.
