Hierarchical structure of a company

The hierarchical structure is a type of organizational structure that defines the chain of command in a company in hierarchy levels.

It is proven, through theories of organizational behavior, that the more levels the hierarchical structures have, that is, the more pyramidal it is, the more bureaucratic, slow, inflexible and heavy the company becomes.

In this regard, Jacob Morgan, states in Forbes.com, that the pyramid model “makes sense for linear work, where mental capacity is not required and where the people who work there are treated as a totally expendable gear.”

The hierarchical structures pyramidal high levels is now a matter of the past. At present, there is even talk of flat or circular structures to promote adaptability, dynamism, collaborative work, empowerment, as well as a true and direct link with the corporate mission and vision, the list of business values, within the organizational climate. and objectives of the firm.

Let’s explore the definition of hierarchical structure and the levels that commonly comprise it.

Definition of hierarchical structure

A hierarchical structure is a type of organizational structure composed of different levels of subordination, which obey a single source of authority emanating from the immediate superior level; This forms a hierarchy or pyramid structure, from the lowest operational levels at the bottom to the highest hierarchical level at the top of management.

The hierarchical structures, but have lost boom in modern and emerging companies, remains the leading figure in government, militias, religious organizations, and even in large and corporate enterprises.

And although they are questioned by the rigidity and bureaucracy that they implement in the processes, they are erected to give control and orientation to the command line, as well as to give formality to the roles and functions of each level.

In a hierarchical pyramidal structure, transcendental strategies and decisions are dictated and made by the directive or senior management; These are transmitted through formal and informal communication channels in a descending way at the different levels.

If actions involving a certain level of decision must be taken at a middle or lower level, the request must be raised to the higher chains of command for evaluation, approval or rejection. This involves administrative procedures and takes time.

The Accountingtools.com site highlights the current trend of moving away from hierarchical structures, migrating towards flexible, flat or circular and decentralized organizational structures, which provide empowerment to operational areas, speed in decision-making and adaptability to dynamic and highly competitive markets.

This does not mean that a hierarchical structure in a company is totally inadequate and should disappear completely. Furthermore, every organization, however modern it may be, must maintain at least three levels of hierarchy: at the managerial level, in the management train and at the operational level.

Levels of a hierarchical structure

The site Hierarchystructure.com resembles the hierarchical structure to the image of an inverted tree, where the root represents the upper part (board of directors), provides support to the rest of the structure, highlights a central stem (CEO) from which the branches (managerial level) on which the leaves and fruits (employed personnel) that correspond to the lower levels rest.

The fundamental levels of a hierarchical structure are represented by a board of directors, executive officers, the managerial or supervisory level and the operational level corresponding to the employees.

The board of directors

The board of directors is the head of the corporation and is represented by a group of people of high rank and preparation; its members are appointed by a shareholders’ meeting.

Among the duties of a board of directors is to meet periodically to make important decisions and evaluated by executives when they consider it. The members of the board of directors usually appoint a President who directs them.

The Executive Chairman

In some companies, in the absence of a board of directors, it is the CEO (Chief Executive Officer) or executive president who has the highest authority. The CEO in some corporations may also preside over the board of directors.

As the person of greater authority in the executive president, the general performance of the company falls, the decisions of greater rigor, and even, the appointment and dismissal of other senior executives.

Vice presidents

The next in line of command of a hierarchical structure are generally the vice presidents.

Companies with multiple divisions may have multiple vice presidents, each in charge of a key division or area, such as sales, finance, production, marketing, and so on. Each vice president reports directly to the executive president.

Management or supervision plan

Below the vice-presidencies, in a hierarchical structure, is the management team, which is made up of positions with some autonomy at the decision level in certain areas or specific functions of a particular department.

These supervision teams are hired for each specific area and report to the vice presidents. They correspond to supervisors who are hired to ensure that the daily tasks of the company are carried out in a timely and efficient manner.

In some cases, more than decision areas, they are seen as operational plans with a certain level of employee supervision. In others, the level of autonomy and empowerment can lead them to have truly managerial roles.

The employees

The lowest level in the hierarchical structure of the company are the employees, who execute the daily tasks of the company in each of its departments or areas of assignment. They follow instructions from supervisors or managers.