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What is a Hierarchical Organization?

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A hierarchical organization is an authority structure whereby everyone in an organization reports to a manager or board of directors who is responsible for their performance. Hierarchies are by far the most common way to structure large and mid-sized organizations.

Direct vs Indirect Reports

Each manager in a hierarchy is responsible for the performance of a number of direct reports. If direct reports have people reporting to them, the manager is accountable for their performance too. This relationship is known as an indirect report.

Managers Without Direct Reports

In many cases, employees are considered directors and managers in terms of their position but have nobody reporting to them. Their job title simply reflects the authority they require to do their job. It is also common for highly skilled knowledge workers to have a higher salary than a manager who is simply administering a team. As such, job titles may be arranged to reflect the status and salary of individual contributors. For example, a technology firm may employ a single economist with no reports who may sit at the same level in the org chart as a director who has hundreds of reports.

Tall vs Flat

A tall hierarchy is an organization with a complex organizational structure with a large number of middle managers. A flat organization is a structure with a small top, little or no middle and a large bottom layer.


An IT consulting firm has a CEO who reports to a Board of Directors, 12 directors who report to the CEO, 10 managers who report to several of the directors and 200 working level employees who report to the managers.
Overview: Hierarchical Organization
An authority structure whereby everyone in an organization reports to a manager or board of directors.
Related Concepts

Organizational Structure

This is the complete list of articles we have written about organizational structure.
Back Office
Business Unit
Company Departments
Contingency Theory
Cost Center
Cost Centers
Decision Authority
Direct Reports
Division Of Labor
Flat Organization
Formal Authority
Front Office
Functional Areas
Functional Structure
Indirect Reports
Job Grades
Job Levels
Line Of Business
Management Authority
Management Structure
Matrix Management
Middle Management
Middle Office
Organization Design
Organizational Attributes
Organizational Planning
Profit Centers
Reporting Lines
Top Down
Work Responsibilities
Work Roles
Working Level
More ...
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