Hierarchical organization

A hierarchy is typically visualized as a pyramid, where the height of the ranking or person depicts their power status and the width of that level represents how many people or business divisions are at that level relative to the whole—the highest-ranking people are at the apex, and there are very few of them, and in many cases only one; the base may include thousands of people who have no subordinates. These hierarchies are typically depicted with a tree or triangle diagram, creating an organizational chart or organogram. Those nearest the top have more power than those nearest the bottom, and there being fewer people at the top than at the bottom. As a result, superiors in a hierarchy generally have higher status and command greater rewards than their subordinates.

All governments and most companies feature similar hierarchical structures. Traditionally, the monarch stood at the pinnacle of the state. In many countries, feudalism and manorialism provided a formal social structure that established hierarchical links pervading every level of society, with the monarch at the top.

In modern post-feudal states the nominal top of the hierarchy still remains a head of state – sometimes a president or a constitutional monarch, although in many modern states the powers of the head of state are delegated among different bodies. Below or alongside this head there is commonly a senate, parliament or congress; such bodies in turn often delegate the day-to-day running of the country to a prime minister, who may head a cabinet. In many democracies, constitutions theoretically regard "the people" as the notional top of the hierarchy, above the head of state; in reality, the people's influence is often restricted to voting in elections or in referendums.

In business, the business owner traditionally occupies the pinnacle of the organization. Most modern large companies lack a single dominant shareholder and for most purposes delegate the collective power of the business owners to a board of directors, which in turn delegates the day-to-day running of the company to a managing director or CEO. Again, although the shareholders of the company nominally rank at the top of the hierarchy, in reality many companies are run at least in part as personal fiefdoms by their management; corporate governance rules attempt to mitigate this tendency.

Smaller and more informal social units – families, bands, tribes, special interest groups – which may form spontaneously, have little need for complex hierarchies[1] – or indeed for any hierarchies. They may rely on self-organizing tendencies. A conventional view ascribes the growth of hierarchical social habits and structures to increased complexity;[2] the religious syncretism[3] and issues of tax-gathering[4] in expanding empires played a role here.

The demands of administration in increasingly larger systems may have assisted the flowering of bureaucracy and in the advent of the professional manager (19th century) and of the technocrat (20th century).

The organizational development theorist Elliott Jacques identified a special role for hierarchy in his concept of requisite organization.

The iron law of oligarchy, introduced by Robert Michels, describes the inevitable tendency of hierarchical organizations to become oligarchic in their decision making.

The Peter Principle is a term coined by Laurence J. Peter in which the selection of a candidate for a position in an hierarchical organization is based on the candidate's performance in their current role, rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and managers in an hierarchical organization "rise to the level of their incompetence."

Hierarchiology is another term coined by Laurence J. Peter, described in his humorous book of the same name, to refer to the study of hierarchical organizations and the behavior of their members.

Having formulated the Principle, I discovered that I had inadvertently founded a new science, hierarchiology, the study of hierarchies. The term hierarchy was originally used to describe the system of church government by priests graded into ranks. The contemporary meaning includes any organization whose members or employees are arranged in order of rank, grade or class. Hierarchiology, although a relatively recent discipline, appears to have great applicability to the fields of public and private administration.

— Laurence J. Peter and Raymond Hull, The Peter Principle: Why Things Always Go Wrong

David Andrews' book The IRG Solution: Hierarchical Incompetence and how to Overcome it argued that hierarchies were inherently incompetent, and were only able to function due to large amounts of informal lateral communication fostered by private informal networks.

The work of diverse theorists such as William James (1842–1910), Michel Foucault (1926–1984) and Hayden White (1928-2018) makes important critiques of hierarchical epistemology. James famously asserts in his work on radical empiricism that clear distinctions of type and category are a constant but unwritten goal of scientific reasoning, so that when they are discovered, success is declared. But if aspects of the world are organized differently, involving inherent and intractable ambiguities, then scientific questions are often considered unresolved. A hesitation to declare success upon the discovery of ambiguities leaves heterarchy at an artificial and subjective disadvantage in the scope of human knowledge. This bias is an artifact of an aesthetic or pedagogical preference for hierarchy, and not necessarily an expression of objective observation.

Hierarchies and hierarchical thinking have been criticized by many people, including Susan McClary (born 1946), and by one political philosophy which vehemently opposes hierarchical organization: anarchism. Heterarchy, the most commonly proposed alternative to hierarchy, has been combined with responsible autonomy by Gerard Fairtlough in his work on triarchy theory. The most beneficial aspect of a hierarchical organization is the clear command-structure that it establishes. However, hierarchy may become dismantled by abuse of power.[5]

Matrix organizations became a trend (or management fad) in the second half of the 20th century.[6]

Amidst constant innovation in information and communication technologies, hierarchical authority structures are giving way to greater decision-making latitude for individuals and more flexible definitions of job activities; and this new style of work presents a challenge to existing organizational forms, with some research studies contrasting traditional organizational forms with groups that operate as online communities that are characterized by personal motivation and the satisfaction of making one's own decisions.[7] When all levels of a hierarchical organization have access to information and communication via digital means, power structures may align more as a wirearchy, enabling the flow of power and authority to be based not on hierarchical levels, but on information, trust, credibility, and a focus on results.