What is corporate hierarchy?

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.

Let's explore the concept of corporate hierarchy and earn about its structure, roles, and how it impacts business operations for better efficiency.

Levels of hierarchy

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

Board of Directors 

This is the highest level of the hierarchy and while not every business has or needs a board of directors, they are usually made up of:

• A Chairperson

• Executive Directors

• Independent Directors

They govern the organisation, provide oversight for the C-suite leadership team, lead strategic business activities and represent all stakeholders.

C-suite

Below the board of directors (although sometimes within) and typically the top of the corporate pyramid is the C-suite which includes corporate officers such as:

• Chief Executive Officer (CEO)

• Chief Financial Officer (CFO)

• Chief Information Officer (CIO)

• Chief Operating Officer (COO)

• Chief Marketing Officer (CMO)

They have specific areas of expertise and help to develop company strategies, oversee performance and make high level decisions.

Upper management

Right below C-suite sits upper management and within this level there can be multiple levels of management, some positions include:

• Vice President

• Head of Departments (For example, Head of Finance)

• Senior Directors

They are responsible for setting strategies set by the C-suite, managing departments and ensuring goals are met.

Middle Management and supervisors

Acting as a bridge between upper management and operational teams, middle management and supervisors, usually manage specific functions or teams and are made up of:

• Manager of Departments (For example, Marketing Manager)

• Assistant Managers

• Seniors

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

Employees

They make up the largest and lowest level of the hierarchy and they execute the core functions of the business, providing products or services.

Each level in the hierarchy plays a critical role in the success of the business. With clear responsibilities and defined reporting structures that ensure efficiency and accountability.

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 member of the team.

Why is hierarchy 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.

To learn more about the importance of hierarchies in your business, see our article, How important is workplace hierarchy.

Communicating 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:

• Foster leadership capability at lower levels

• Invite input into the company’s strategy from employee and manager level

• 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.

To learn more about different options for your hierarchy see our article on the rigidity of corporate hierarchy.

Keeping all levels of your business hierarchy 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.