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The chain of command is the relationship that exists between the set of superiors on whom information flows and decision making.
The chain of command is related to the command unit. The command unit states that each employee receives orders from a single superior. The chain of command concept is an even broader concept than a unit of command. Establishes the relationship between superiors until reaching the director of the company or organization.
In other words, the chain of command indicates on which superior each accountant must report.
Goal of the chain of command
The chain of command does not take the same form in all organizations. However, on a regular basis, it is common in companies in which the hierarchy is strongly entrenched.
The following are the main objectives of establishing a chain of command:
- Avoid saturation of information: Imagine for a moment that the CEO From a large company I would receive reports from each store individually. He would have thousands of reports to handle. Therefore, the logical thing is that each store sends its report to the director of the area, region or country and that this, in turn, report the most relevant to the CEO.
- Improve the transmission of information: When several people report the same to a superior, there is a risk of receiving different interpretations. Although a single informant does not ensure that your information is true, it avoids conflicts.
- Optimize time and decision making: The amount of information processed is lower and usually more relevant. This allows to optimize decision making and improve the use of time.
Logically, not all are advantages. What on the one hand could save time for certain managers of the organization, could result in something negative for parts of the business.
Chain of command example
In the following example about the chain of command we will explain the case of an idea that a store clerk has. The store sells clothes and is part of a large textile company.
Thus, the employee proposes to undertake an investment that will improve the store. In order for the financial director to accept the proposal, the process follows the following steps:
- Employee notifies store manager.
- Store manager notifies zone manager.
- Zone director informs regional director.
- Regional director proposes financial director.
- CFO values it and comments to the CEO.
- The CEO offers a positive response to the chief financial officer.
- The financial director returns to inform the regional director and this in turn to the superiors of lower scale until arriving at the store manager who is the one who will finally undertake the investment with the assigned budget.
In some organizations it may take months to receive a response. The traditional chain of command also has negative aspects and does not adapt equally to any type of company. Therefore, it is recommended that the pros and cons of adopting it be taken into account.