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Advantages of Implementing a Hierarchical Organizational Structure

By Sthitaprajnya Panigrahi

A common way to organize a business, a hierarchical organizational structure enables a vertical framework where every person within the organization, except the one at the top, is a ranked secondarily to another single individual or entity. Visualized as a pyramid structure or sometimes into a tree-like diagrams, the person at the highest with most power would be placed at the top of this chart, while those with the minimum power would systematically appear on the bottom of the list. Most of the organizations follow a Hierarchical Organizational Structure and it yields numerous benefits for the company administration. Some of the advantages of implementing a hierarchical organizational structure in businesses are as follows:

  • Proper Communication: By implementing a hierarchical organizational structure, the communication becomes easier and clearer for everyone. Within this system the top position holders will assign the work to their subordinates to complete them within a stipulated time period. The work will be divided and distributed amongst the workers at various levels and the immediate top-level members will remain accountable for the workforces working beneath them. As clear lines of communication are established for everyone, this process continues moving top to bottom until it is received by every individual in the structure. By implementing this strategy, it is easier to plan and implement business decisions quickly, assuming employees stick to the structure.
  • Distributed Authorities within the Organization: In the hierarchical organizational structure, there is a proper distribution of authorities which makes work process easier. With the proper flow of communication between the internal and external parties within the organization, the responsibilities are assigned and tasks are executed. This not only creates a vibrant structure for reporting and feedback, but also allows the consistent movement of information up and down the chain of command. For those youngsters who intend to advance their career, this chart forges a path that they can follow and prosper.
  • Transparency: While following the hierarchical organizational structure, everyone within the organization has the clarity about their area of operation and the deadlines they have to follow. By generating a clear picture of who has authority and who does not in the organization, this process makes it transparent and easier to identify about the authorization to assign resources, reward achievements, or initiate disciplinary action proceedings. There is no misunderstanding about who is the concerned person in charge and who is responsible for the execution of certain tasks. All these information can be very useful during crisis situations.
  • Avoids Chaos and Confusions: The hierarchical organizational structure enables everyone within the company with their work profile and the tasks they need to complete by avoiding any chaos or confusion. It not only identifies which teams share resources, but also recognizes the job responsibilities which might overlap, saving the organization a lot of money. It creates more competences within the financial segment of the company and encourages the growth of the organization within an economy of scale over time.
  • Easier to Keep Track of Activities: By following the hierarchical organizational structure, the actions or decisions that are made within the company are easily traceable. This not only avoid data redundancy but also ensures that there is no hiding from this accountability, even if someone tries to blame it on someone else. There is an absolute transparency and clear communication about who is in charge of what projects. As a result of which this design also makes it easier to keep track of ongoing projects, the status of projects, the amount of completed work as well as the remaining work to be completed.

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