What are the levels of hierarchy?

The position of employees within a hierarchy indicates their status and authority. Those at the top are the most important and are paid a larger salary as they have more responsibility.

Level of hierarchy

Each layer of authority from the top to the bottom of the organisation is called a level of hierarchy or authority.

Each person in a level of hierarchy has the same equivalent status and authority. Tall organisation structures have many levels of hierarchy, whereas flatter structures have relatively few. As the number of levels of hierarchy increases, the organisation will face potentially negative consequences:

• Inflexibility - it will take a long time for information to move from the top management to those lower down the hierarchy.
• A 'them and us' mentality may be create as the people at the bottom of the hierarchy become increasingly remote from those at the top.

Span of Control

The span of control is the number of people directly accountable, and reporting, to one manager.

The span of control refers to the number of people that each manager is directly responsible for. A large span of control means that a manager has a large number of staff under their direct control, while a small span of control means that each manager looks after a small group of staff. This is an important topic as it is normally agreed that the wider the span of control the fewer levels of hierarchy the business needs. We can see this in figures 3 and 4.

Figure 3 A flat hierarchy - span of control

Figure 4 A tall hierarchy - span of control

A flat hierarchy, as in figure 3, will have a high span of control, whereas a tall hierarchy, as in figure 4, will have a much lower span of control.

Beware of making a statement that the CEO has the widest span because he or she is responsible for the entire organisation. The span of control refers to those reporting directly to a manager. In Figure 3, the head of the hierarchy only has a span of two people - it is the next tier down that has the very wide span

Early management writers argued that any span in excess of six would result in ineffective supervision, but later this was modified to a span of 4 to 8 for managerial functions and 8 to 15 at the lower levels of the organisation.

So why do some management theorists support wide spans of control?

• Delegation can be a more important part of how the organisation is managed.
• Those at the top of the hierarchy have less obvious control over subordinates.
• The distance between layers of management is less and those applying the decisions feel closer to those who originally made them.
• The need to be writing/communicating information is reduced as those lower down the hierarchy have the authority to carry out responsibilities.
• Costs can be reduced, as certain management functions are no longer needed. De-layering can take place.
• The subordinates may be very experienced and require less supervision

However, some theorists argue against this trend, pointing to the following as factors that need to be considered when considering a narrow span of control:

• There is less opportunity for delegation and the ultimate empowerment of employees.
• Those at the top can keep a tight control over employees.
• A distance can become apparent between those at the top and bottom of the organisation.
• A narrow span may encourage greater communication between layers of the management structure and clearer lines of communication.
• Training opportunities and personnel development can be more easily managed and attached to promotional opportunities

Whichever style is adopted, and probably most organisations develop combinations, the success of a span of control will rest largely on whether management has the ability to manage the situations that arise, motivate and direct employees to maximise their performance and whether the task lends itself to either a tight or relaxed supervision. For example, a small span of control is more likely to be effective in a production situation where close scrutiny of work is required to maintain quality.

Traditional organisations were tall with many layers of hierarchy and were often authoritarian in nature.

The first organisation chart below shows a business with four levels of hierarchy – from the Managing Director at the top, to assistants and team members at the bottom.

Organisational structures define a hierarchy within an organisation. The two most common arrangements include:

• a flat organisational structure
• a hierarchical organisational structure

Each structure has its advantages and disadvantages. The most appropriate arrangement will depend on the size and the type of your business, and the number of management levels that you need. See reasons for changing your organisational structure.

How does a hierarchical organisational structure work?

A hierarchical structure is typical for larger businesses and organisations. It relies on having different levels of authority with a chain of command connecting multiple management levels within the organisation.

The decision-making process is typically formal and flows from the top down. This creates a tall organisational structure where each level of management has clear lines of responsibility and control. As the organisation grows, the number of levels increases and the structure grows taller.

Often, the number of managers in each level gives the organisation the resemblance of a pyramid. This structure gets wider as you move down - usually with one chief executive at the top, followed by senior management, middle managers and finally workers. Employees' roles are clearly defined within the organisation, as is the nature of their relationship with other employees.

What are the advantages of a hierarchical structure?

A hierarchical structure can provide benefits to businesses. For example, it can help establish:

• clear lines of authority and reporting within the business
• a clearer understanding of employee roles and responsibilities
• accountability for actions or decisions at different management levels
• clear career paths and development prospects which can motivate employees
• opportunities for employees to specialise and develop expertise in their field
• close supervision of employees through a narrow span of managerial control
• a culture of loyalty towards teams, departments and organisation as a whole

What are the disadvantages of a hierarchical organisational structure?

Workplace hierarchies are not always effective. Common disadvantages of hierarchical structures include:

• complicated chains of command which can slow down decision-making
• inconsistencies in management at different levels which can impede work
• delays in communicating vertically through the levels and horizontally between teams
• less flexibility to adapt and react to environmental and market pressures
• disconnect of employees from top-level management
• a strain on the employee-manager relationship due to lack of autonomy
• difficulties collaborating outside of the team 'silo' or dealing with team rivalry
• considerable amount of corporate overhead to support the many management layers

Generally, tall organisations are very complex. Strategies should be in place to deal with the challenges that are likely to occur under this structure. This could include creating a decentralised organisational structure - one in which senior management assigns the authority for limited decision-making to lower levels in the organisation.

For some businesses, a tall organisational structure will not be appropriate at all. Find out more about the flat organisational structure.

If you decide to change your organisational structure, make sure that you manage the process correctly. See best practices in change management.

What are the 3 types of hierarchy?

What are the four types of hierarchy?

What are the different types of hierarchy?

What is the highest level of hierarchy?