What is a business hierarchy and does it work?

business hierarchy
business hierarchy

Business is a living organism. Its smooth operation depends on a well-formed structure and interaction that is called business hierarchy. Therefore, before starting your own business or starting to systematize an existing one, it is worth understanding how the hierarchy of business processes works.

What is a business hierarchy?

The term corporate hierarchy refers to the location and organization of persons in the corporation by the power, status, and function of work. It delineates powers and responsibilities, determining leadership over employees, departments, divisions, and other managers depending on their place in the strata.

The corporate hierarchy can also be called the chain of command because it determines the place of residence of decision-makers. It also determines who must follow these orders and who can replace and change the plans of their subordinates.

In practice, it is believed that management processes take an important and basic place. It is designed for such processes the lion’s share of the enterprise budget at the expense of which the company makes a profit. Instead, business support processes are secondary in the production and commercial activities of the enterprise.

Most corporate hierarchies resemble a pyramid, where the most powerful person is at the top and subordinates sit under it. Those with the least amount of power – usually full-time employees – sit at the bottom of the pyramid. Some firms, however, may have horizontal hierarchies where power and responsibility are more evenly distributed throughout the firm.

Modern systems analysis assumes that real companies and organizations are seen as systems that represent the unity of many different structures and different architectures. Different types of structures can arise not only in connection with the diversity of systems (material and ideal, biological and ideal, etc.) but also with the diversity of structural sections of the same system.

Working principles of business hierarchy

Business is often compared to a living organism. And any organism can work either harmoniously, or – with failures. Therefore, the task of the founder/business owner is to make all the “organs” and “systems” of this body begin to work properly and harmoniously, without failures and breakdowns.

This is important because when at least one process does not work, it demonstrates the state of the business as a whole. For example, if the company has ineffective marketing, it means that the right specialist has not been found. In turn, this is evidence that not only this process but also recruitment is not working. And recruitment does not happen, most likely, because there are no funds for this function. Well, there is no money, because there are no sales. Everything is simple.

That is why there are the next useful principles of business hierarchy:

  • development of business erudition;
  • proper prioritization;
  • the discipline of implementation;
  • expert view from the side;
  • supervision – an outside view, from a representative of another industry.

Summing up the above – do not sit in one place! And do not expect someone to take over the understanding of business processes and follow discipline instead of you. It is up to you how and how well the business will develop, who will come to the team and who will give feedback for business development in the future!