Corporate hierarchy structure

The structure of a corporate hierarchy describes the organisation and ranking within the company which is, nowadays, designed as a pyramid shown in the below model.

Explaining the structure it could be seen on the top of the pyramid in most companies the Chief Executive Officer (CEO) followed by the presidents of each division supported by a few Vice Presidents. Below them is the management named who reports directly to the Vice Presidents. The employees of the Management teams are responsible for the operational business.

(http://www.ehow.co.uk/print/facts_6944823_corporate-hierarchy-structure.html, 11.12.2011)

Organizational possibilities

There exist several possibilities of organizing the hierarchical structure of a company.

On the one hand the organisation can be structured taken as basis the way of instructions distinguishing the single-line system, multiple-line system and the line-and-staff principle. Within the single-line system each employee receives the commands by one line manager as per below figure.

In contrary to the single-line system each employee receives the commands by several line manager of different departments within the multiple-line system shown in below figure.

Single-line organization 

Multiple-line system

Source: http://www.teia-backup.de/Kostenlose-Kurse/Organisation-und-Technologiemanagement/1.4.3-Funktionssystem.html, 06.01.2012

 

The most important disadvantages / advantages of the multiple-line system should be named in the following:

The disadvantages in comparison with the single-line system are the missing areas of responsibility and the consequential arising of possible conflicts accompanied by a difficult root cause analysis.

In contrary the multiple-line system allows a rapid delegation of commands and tasks, less dependence of the employees on one line manager as well as better cooperation between the employees.

Following the article on e.how.co.uk the single-line system is most common in complex companies where a few people are making the decisions for the complete business. According to the article it creates obedience in many cases. Meanwhile, the multiple-line system shows a small hierarchy and much more open communication between the employees than the single-line system.

The line-and-staff principle should only be named without further explanation as the model does not play any role in the later mentioned examples.

Based on the single-line system the following organizational structures have been developed:

The functional organization designed on the functions of a company (i.e. production, purchasing, sales) and the inter-divisional organization designed on divisions. The further development of both models created the matrix organization which should have considered the advantages both of the functional organization and of the inter-divisional organization.

Resulting is a multiple – line system of equal consideration of both organizational structures as described in below model.

Matrix organization

Source:

http://finance.wiwi.tu-dresden.de/Wiki-fi/images/5/52/Matrixorganisation_final_klein.jpg, 20.12.2011

The advantages of the matrix-organization are discharge of the management, specialization of the interfaces and the company is easily adaptable to a changed environment.

The disadvantages are corresponding to the ones named of the multiple-line system and can be completed by a high demand of high qualified employees. The matrix organization is most popular for organizations working on turbulent and fast changing markets.

(http://www.eduhi.at/dl/trad_aufb.pdf, 01.01.2012, http://www.ehow.co.uk/print/info_8459434_corporate-organizational-hierarchy.html, 11.12.2011)