Corporate Hierarchy and Its Importance
Every company has its own structure of working, communication channel, and reporting relationships. It often varies depending on the size of the business. Small organizations have simple, while the large ones have a complex structures. This article will discuss company hierarchy, how it works, its importance, and its role in a company.
What is Corporate Hierarchy?
The term defines the arrangement and management of people within an organization system, authority, job role, and position. In simple terms, it is like a pyramid structure used in the company to organize the people at different levels. This structure is followed in organizations because it has various departments, sectors, and levels.
How does The Hierarchy work in a Company?
The employees are organized as per their roles, authority, skillset, and position in an organization. Employees with authority and decision-making are placed at the top of the pyramid, and the descending levels are employees based on their skill set, level of experience, and job role.
The top-level management is responsible for making decisions and creating strategies; middle-level people manage, implement, delegate tasks, and are responsible for end-to-end completion of those tasks while the bottom-level people have to execute the tasks based on their skillset.
Levels in Company Hierarchy
Primarily there are four top hierarchies found within an organization:
Directors
Directors are Chairman, executive director, and non – executive director. They have the responsibility to make strategies and ultimate responsibility towards all shareholders.
However, the corporate officer’s list includes the chief executive officer (CEO), chief information officer, Chief financial officer, and others. Those people have unique expertise in working in a specific sector and are designated with responsibility.
Employees
It is the largest group carrying out all the essential functions in a business and is directed by the managers. In a corporate hierarchy, all employees have a common role, and their responsibility is to give the best work so the employer can decide based on it.
Managers
The manager is involved in hiring, recruiting, and interviewing people. They manage all the work assigned to different employees and create deadlines for the project, so the employees are accountable for their work. Managers deliver valuable information from higher authority and provide it to employees.
Shareholder
A shareholder is the owner of a company and financially invested in a business. Some companies consider shareholders a part of the business because they believe in their mission and growth ability.
Importance of Corporate Hierarchy
1. Creates Authority and Unity
The type of hierarchical structure is often called ‘the hierarchy of authority. However, the employee’s level of authority is more significant and higher in the hierarchical structure. Wherever leadership is required, power is also needed.
The proper authority of work ensures that employees within the organization follow the work commands adequately and dedicatedly working towards the organizational goal. Without hierarchical authority, the companies fail to achieve their goal.
2. Discipline
Having an established hierarchy in an organization will ensure that all the people follow a proper work methodology and follow the discipline. Due to work discipline, all the people are naturally liable to work and follow regulations, especially in a large organization.
3. Accountability
Without adequate structure, all the employees cannot perform their work efficiently. An effective hierarchy system makes the leader accountable for results and provisions for replacing the failures with new and internal promotions. Accountability established the protocol that informs everyone from top-level to bottom how to address any issues in a company.
4. Maps Out Career Path
In many companies, people will start their journey from the bottom level, where they hold the least authority. Therefore, hierarchies will enable them to raise their position in a company. The hierarchical structure will allow employees to promote and develop their careers that will drive the motivation and feeling of job satisfaction.
5. Provides Effective Organization
A famous saying, ‘too many cooks spoil the broth.’ The hierarchy places few people at the top level and below the other people working towards achieving a common goal. Due to this, this hierarchy system creates the most effective kind of organization.
That’s how the hierarchy process works, and it ultimately serves and leads the organization towards a successful path, including each member of the company.