All the important decisions are taken by senior managers at high levels of the hierarchy
often working in a head office
Decision-making powers are delegated to managers at lower levels of the hierarchy often
acting as branch or divisional mangers
Advantages – Centralised
Centralisation enables quicker decision making.
Advantages – Decentralised
Enables workers and managers to gain greater levels of responsibility therefore linking
into Herzberg’s satisfiers.
Also enables mangers to focus on strategic decisions rather than tactical, day-to-day
A hierarchy describes the structure of the management of the business, from the top to
the bottom of the business.
The hierarchy is usually best understood by drawing an organisation chart showing which
levels of management and employees report to whom.
Hierarchy can be both formal and informal. In a formal hierarchy job roles are clearly
Formal hierarchy – advantages
Workers have a clear understanding of their roles, accountability and channels of
Informal hierarchy – advantages
Small or new businesses may not have a formal hierarchy because the business will
evolve quickly and need to change.
This allows a company to react quickly to changes.
An informal hierarchy also helps a small business because it encourages workers to
multi-task and take on a number of roles. This is important because there may not be
enough work for each specific section of the business as it starts out.