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Managing organisations - Understanding people and hierarchies

A hierarchy is a group of people graded in order of importance according to some classification system. The classification or ranking system of management hierarchies in organisations is based on three broad set of criteria; the power a person is given to affect the activities of others; the authority a person is given to take decisions on behalf of the organisation; the accountability or responsibility of a person for the results of the organisation or parts of it...

The owner of an organisation is theoretically able to affect what everybody else does in it, he or she can commit the organisation totally by his or her decisions, and is judged totally accountable for its success or failure.

A chief executive of an organisation, say a plc, would not have such broadly based powers because there is probably a level beyond which he or she could not commit the organisation before he or she has to go back to the board for authority. The board is usually held responsible for the success or failure of the company, although executive board members, those who hold board positions as well as staff positions in the organisation, are generally deemed to be more accountable than non-executive directors.

In most organisations the hierarchical structure is divided approximately into these management levels:

    Board or the owner
    Chief Executive
    Top team
    Senior managers

All kinds of variants can of course exist; the top two layers can be a single group (or person), the third and fourth layers can be a single group, the fourth and fifth layers can be a single group and so on.

Much more elaborate hierarchies can exist as well. Middle managers are not uncommon between senior managers and managers, and there are sometimes supervisors or team leaders between managers and workers.

In general, management hierarchies are smaller because the modern tendency is for fewer layers of managers within the organisation.

Some companies have reduced themselves to two layers; a top team and the rest. The kind of hierarchy is, however, a rarity. Most companies still find it necessary to operate a chain of command which converts ideas, decisions and strategy into purposeful action. Most find it necessary to have the capacity to supervise and monitor the work that goes on inside them, and most feel the need to have a means of training, developing and motivating their people. For these reasons hierarchies still persist, though for the most part in flatter organisations.

Excerpts from The University of Leicester Diploma in Management Resource Development International (RDI) Jamaica.
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