What is corporate hierarchy?

Up until the twentieth century, companies were usually family affairs

Corporate hierarchy reflected family responsibility, and in some businesses that’s still the case.

However, most organisations today are much more complex. To make sure that all business functions are carried out, and that each staff member understands their role, a degree of order and hierarchy becomes necessary.

Levels of hierarchy

There are four main levels of hierarchy commonly found within businesses:

Directors such as the Chairman, Executive Director and non-Executive Director. They lead strategic business activities and have ultimate financial responsibility towards all stakeholders.

Corporate Officers can include the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Information Officer (CIO) and others. They have specific areas of expertise and responsibility.

Managers are responsible for day-to-day running of specific areas of the business. Some organisations have more managerial levels than others.

Employees are the largest group, carrying out essential functions as directed by managers.

Larger organisations are more likely to have all of these levels, and to have more people at each. However, smaller companies will probably still use a structure that reflects the one above, with ‘big picture’ decisions sitting with the highest ranking staff.

Why is structure important?

A carefully designed structure can help a company work more effectively, because each of its staff has a clear line of responsibility. Employees can focus on the task at hand rather than stock market performance. Directors are free to concentrate on stakeholders’ interests over individual customers.

Communicating about your hierarchy

To work effectively, your company’s structure should be clear and understood by all employees. Organisational charts are commonly used for this purpose. They visually explain the levels of responsibility within the company, with labels giving the name and job title of each employee.

Your organisational chart should be easily accessible by all staff, and updated regularly (or whenever somebody leaves or joins the company).

Changes in hierarchy today

Nevertheless, hierarchy might be considered somewhat old-fashioned. Many companies today favour a more flexible or ‘flat’ approach. To break with tradition, they might:

  1. foster leadership capability at lower levels
  2. invite input into the company’s strategy from employee and manager level
  3. identify influential staff and use them to bring about ‘change from within’

This is particularly relevant as companies become increasingly digital and ‘social.’ For example, employees at a lower level are now able to communicate to a global audience at the stroke of a key. This gives them unprecedented power to influence opinion — power that would normally be reserved for the upper tiers of a company.

Keeping levels in touch

Even where traditional hierarchy exists, it can be beneficial to bring together various levels of staff for discussion and brainstorming.

Employees ‘on the ground’ usually have valuable insight into customer behaviour and problems with processes. Staff at Chief or Director level might help resolve conflict by explaining in person why changes have been made, or praise staff for their help with recent successes.

As with all effective corporate structures, it’s about allowing staff at each level to play to their strengths.


Share this article

More on culture and performance

Performance Management Cycle

It is in the best interests of an employee, their manager and the organisation they are a part of to lay out clear goals. Goals can include…

What is company culture and why is it important?

‘Company culture’ and ‘business culture’ are defined by the values, goals, and structure of your business. In short, your company culture is…

What is a psychological contract?

What is a psychological contract? A psychological contract is probably the most abstract thing you'll read about all day. It covers the…

The importance of employee monitoring software

If you want to keep track of your workforce on a daily basis, you can use technology to keep track of their activities. Fully automated…

What is the value of core company values?

Yet in many cases core values seem to be just words on a page, written up by an expensive consultant and then forgotten. That’s a real…

Bring your own device policy

It’s not surprising in this age of gadgetry that your employees will bring some of their products into work. This can create some concerns…

What is employee relations?

Employee relations focuses on the rapport that you have with your employees. The better this rapport is, the more likely that your…

Teamwork

Teamwork is what happens when a group of people come together and collectively achieve something. Teamwork offers organisations and…

What is staff turnover?

Put simply, staff turnover is the number of employees that leave your company and need replacing in a set amount of time. But which is…

Retention

It’s in your company’s best interests to try and keep them there. Retention is the art of ensuring that this happens. Retaining staff can…

What is a mission statement?

This is a short notice of why your business exists and what your goal is. In your business mission statement, you should make it clear what…

What HR issues does your business currently face?

Today we’re going to look at some of the biggest issues in human resource management. Whether you own a small local business or a global…

How to create a staff engagement survey

If you want to make sure your employees feel valued at work, good business practice is to provide them with a chance to air their views…

What is equity theory?

Equity theory is a concept belonging to John S. Adams , a behavioural psychologist. The theory helps explain why your employees’ motivation…

The workplace dress code

Do you have a dress code at work? Are you trying to put one into effect but don't know where to start? Don't worry, we're here to help. What…

Appraisals

In a whirlwind of deadlines and meetings, it’s not always easy for employees to take a step back and think about how their job’s going…

What are core values?

Would they be able to answer the question? And if you asked twenty different employees, would they all give the same reply? Their answers…