Hierarchies In The Organization
This article introduces the reader to some of the hierarchies that are contained
within most organizations. We discuss uses and limitations of this information.
The Line Management Hierarchy
The typical company organogram shows the line management relationship between
two individuals. That is it shows who within an organisation reports to whom.
Within large organisations this can be extremely useful information to access.
For example when is trying to resolve a difficult decision or conflicting views
between two peers the decision is often "escalated" to the person above.
In any sized organisation it is possible to keep escalating further and further
up the hierarchy until finding a single individual who is able to make a
to resolve the issue.
In Figure 1 below, if Rosalyn and Bill cannot agree then they can escalate
their issue to Hannah for resolution. If Rosalyn and Tony cannot agree, then
they can escalate to Hannah and Mike respectively. If Hannah and Mike cannot
agree then they can escalate to Peter.
Figure 1. A Simple Organisation Chart
Whilst the process of escalating an issue through an organisation may not be always
desirable it does mean that, in theory at least, there should always be someone
in the organisation who can make a final decision.
In real-life certain behaviours can be observed the effects of these can be both
positive and negative depending on the context and culture of the organisation.
- Decision bottle-necks occur when too many decisions need to be escalated
to higher levels. This is often compounded by the fact that senior levels
of management are often extremely busy.
- Lobbying of decision makers occurs with politically astute lower level staff
members trying to ensure that their views or ideas take precedence over other ideas
being forwarded by their peers.
- Information Filtering : Peter does not get to hear the real risks and issues
from Rosalyn, Bill, Toby and Tony as they are filtered by Hannah and Mike.
- Succession Planning : Hierarchy
immediately gives the organisation a choice of succession plan. If Hannah
were to leave then Rosalyn or Bill could step into the role.
Beyond Line Management
Although most people who work in structured companies are aware of the Line
Management hierachy there are several other inherent hierarchies within organisations.
Not all will be present in all organisations and some large organisations will
exhibit all of them.
By recognising the existence of other hierarchies it is possible to take advantage
of them and build software applications that allow the organisation to take advantage
of the information contained within.
All but the smallest of companies will usually be comprised of one or more organizational
units. These can be of varying size and may or may not be based in the same
location or can be based in multiple locations.
For large multinationals the picture is complicated further with legal entities often
created to allow trading within different tax and legal juristrictions. The
creation of "Joint Ventures" between two or more distinct companies can
also add further complexity to the picture. Below is listed typical
- Group ( Or Head Quarters ) - The overall corporate structure. This is
typically the "root" node in any tree
- Segment Or Division - Large organisational units, sometimes comprising of 1000's
- Business Units - Tend to be focused around a single cohesive business activity
- Performance or Functional Units - May encompass one or more significant business
- Departments - Smaller departments, usually specialising in one specific area of
expertise. For example, telecoms or policy.
- Teams - Normally the smallest organised unit. Concentrating on a particular
- Staff - And finally we get down to the people within the organisation!
Figure 2. Below shows the organisation of an imaginary company. This is
not fully expanded as each sub group could be divided down further.
Figure 2. A Sample Company Organization Chart
In the example in Figure 2. We have a large organisation presented in a simple, accessible manner. The chart displays the number of employees and head of each unit.
By making the "unit head" a hyperlink the programmer could allow end users
to easily switch from an organizational chart to a line management chart.
We could also display key performance indicators ( KPI's ) relevant to each unit
, in this example we have used "head count".
The next hierarchy to consider is locational. Locations can be thought of
as a hierarchy starting with "The World" ( or "Global" ) as the top of the tree
and splitting down further into regions, countries, counties or states, cities
At the bottom of each branch of the hierarchy will be an actual physical
location usually with some company asset ( an office, manufacturing plant,
service centre etc ) located at it.
The organisastion can take advantage of this infromation in many ways. For
exmple a multi-locational sales based organisation could display a hierarchy of
locations with the revenue generated at each office "rolling up" through the
hierarchy. This would allow managers to compare different offices and
areas with one another and to view an overall sales figure for the organisation
as shown below
Figure 3. An Example Sales Chart