Hierarchical Structure: Advantages and Disadvantages

A hierarchy is a method to structure a business by departments and categorise people specialising in the areas according to their skills. Organisations promote employees to higher positions based on their hierarchy. When the organisational structure is drawn on a chart, it forms a pyramid. It is also known as a tall organisation structure. Here, the top-level management develops a strategy and directs the company through several programmes and performance targets. 

A hierarchical structure shows us how the chain of command flows within the company, from the chief financial officer to top-level management, mid-level management, and bottom-level management. It is the chain of command from the top-level executive to the general employees. 

If someone at the bottom of the hierarchy wishes to make a decision, they will send a request up the chain of command. 

This structure is most appropriate when fewer projects generate large volumes, so it has control and perception over the strategy, quality, manufacture, and supply of goods. 

Advantages of a Hierarchical Structure

1. Clear Career Paths

When organisations have clear advancement opportunities, it helps to retain and attract talented professionals. Promotions also help employees stay motivated and increase their morale and productivity. Also, clear career paths help employees understand their roles and responsibilities. Organisations can plan manpower requirements when necessary and create consistent policies across departments. 

2. Department Loyalty

Companies with an effective hierarchy structure divide employees into teams and departments. The employees develop a sense of attachment and are encouraged to work together to achieve the organisation’s goals and objectives.

3. Effective Leadership

Having a hierarchical structure helps employees understand the various levels of leadership. The leaders are accountable for their work to their respective superiors. Authority and decision-making power increase with higher levels. The organisation develops a hierarchy to achieve its goals and objectives. When the job is done ineffectively, the manager questions it, ensuring it is completed within the stipulated time. 

4. Delegation 

A hierarchical structure delegates power to different employees. This level of job distribution helps manage the daily performance and level of work of general employees. Superiors must have a delegation plan when delegating a work plan to their subordinates. 

5. Encourages Specialisation

Specialisation ensures the organisation can use employees in one particular field. The various departments in the organisation help employees develop expertise in the functional area they are working on. Employees must know how to further their careers based on their specialisation in work.   

Disadvantages of a Hierarchical Structure

1. Cross-Department Rivalry

A hierarchical structure requires many departments; organisations employing this technique employ several managers and superiors. Department loyalty creates a sideload for employees and creates a rivalry between departments. 

2. Expensive

The hierarchal structure requires multiple departments, and employing these people requires higher education levels and experience and higher salaries. Hierarchical structure plans are expensive and require proper planning for the positions. These positions also include accountability and responsibility towards their superiors. The organisation will have many layers, and each layer requires people with specific skills and qualifications. The span of control becomes narrow when managers have fewer subordinates. 

3. Slower Decision-Making

Differing opinions will lead to slow hiring decisions that lead qualified candidates to apply elsewhere. A hierarchical organisation has to prevent this by delegating decisions to specific management teams and limiting the amount of input across the organisation. 

Organisations are flexible and have to adapt and reach the standards of a dynamic environment. A slower decision-making process does not help companies take adaptive measures promptly. 

4. Ineffective Communication

Having a hierarchical structure helps employees understand the various levels of leadership. But dividing employees into different departments enables a communication gap and affects interdepartmental collaboration. The communication has to go through multiple levels, which makes it slower to reach the intended person. 

Frequently Asked Questions

1. What is a hierarchical structure?

A hierarchical structure in an organisation divides various positions in the company into several levels or hierarchies. It outlines the communication flow from the superior to the bottom-level management. 

2. Why are levels of hierarchy important?

Each position has different roles and responsibilities. The position holders must understand who they are responsible for and whom they should report to. The company develops a hierarchy to make decisions and allocate human resources. 

3. What is the three-level hierarchy model?

The three levels of the hierarchy model are the upper, middle, and lower levels. The authority and responsibilities flow from top to bottom. 

Closing Thoughts

A hierarchy structure functions properly when each position’s roles and responsibilities are assigned to perform procedures. Organisations have a hierarchical structure to map out the different levels and where authority, decision-making, and responsibility flow to each. The hierarchy level shows how the chain of command flows within the organisation. The employees in the organisation understand who they are responsible for and who they report to.  The levels in an organisation’s hierarchy describe how authority and responsibility flow within the organisation. 

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