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Ahierarchical organization orhierarchical organisation (seespelling differences) is anorganizational structure where every entity in theorganization, except one, issubordinate to a single other entity.^[1] This arrangement is a form ofhierarchy. In an organization, this hierarchy usually consists of a singular/group ofpower at the top with subsequent levels of power beneath them. This is the dominant mode of organization among large organizations; mostcorporations,governments, criminal enterprises, andorganized religions are hierarchical organizations with different levels ofmanagement power orauthority.^[2] For example, the broad, top-level overview of the hierarchy of theCatholic Church consists of thePope, then theCardinals, then theArchbishops, and so on. Another example is the hierarchy between the four castes in theHindu caste system, which arises from the religious belief "that each is derived from a different part of the creator God’s (Brahma) body, descending from the head downwards."^[3]

Members of hierarchical organizational structures mainly communicate with their immediate superior and their immediate subordinates. Structuring organizations in this way is useful, partly because it reduces the communication overhead costs by limiting information flows.^[2]

A hierarchy is typically visualized as apyramid, 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 theapex, and there are very few of them, and in many cases only one; thebase may include thousands of people who have no subordinates. These hierarchies are typically depicted with atree ortrianglediagram, creating anorganizational 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.^[2] As a result, superiors in a hierarchy generally have higherstatus and obtain highersalaries and other rewards than their subordinates.^[4]

Although the image of organizational hierarchy as a pyramid is widely used, strictly speaking such a pyramid (or organizational chart as its representation) draws on two mechanisms:hierarchy anddivision of labour. As such, a hierarchy can, for example, also entail a boss with a single employee.^[5] When such a simple hierarchy grows by subordinates specialising (e.g. inproduction,sales, andaccounting) and subsequently also establishing and supervising their own (e.g. production, sales, accounting) departments, the typical pyramid arises. This specialisation process is calleddivision of labour.

Governmental organizations and mostcompanies feature similar hierarchical structures.^[4] Traditionally, themonarch stood at the pinnacle of thestate. In many countries,feudalism andmanorialism provided a formalsocial 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 ahead of state – sometimes apresident or aconstitutional 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 asenate,parliament orcongress; such bodies in turn often delegate the day-to-day running of the country to aprime minister, who may head acabinet. In manydemocracies, 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 referendums.^[6][7][8]

Inbusiness, thebusiness owner traditionally occupies the pinnacle of theorganization. Most modern large companies lack a single dominantshareholder and for most purposes delegate the collective power of the business owners to aboard of directors, which in turn delegates the day-to-day running of the company to amanaging director orCEO.^[9] 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 theirmanagement.^[10]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^[11] – or indeed for any hierarchies. They may rely onself-organizing tendencies.A conventional view ascribes the growth of hierarchical social habits and structures to increased complexity;^[12]thereligious syncretism^[13]and issues oftax-gathering^[14]in expanding empires played a role here.

However, others have observed that simple forms of hierarchicalleadership naturally emerge from interactions in bothhuman andnon-humanprimate communities. For instance, this occurs when a few individuals obtain more status in theirtribe, (extended)family orclan, or whencompetences andresources are unequally distributed across individuals.^[15][16][17]

Theorganizational development theoristElliott Jaques identified a special role for hierarchy in his concept ofrequisite organization.^[5]

Theiron law of oligarchy, introduced byRobert Michels, describes the inevitable tendency of hierarchical organizations to becomeoligarchic in their decision making.^[18]

ThePeter Principle is a term coined byLaurence 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.

David Andrews' bookThe 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 informallateral communication fostered by private informal networks.

Hierarchical organization is a phenomenon with many faces. To understand and map this diversity, varioustypologies have been developed. Formal versus informal hierarchy is a well-known typology, but one can alsodistinguish four hierarchy types.

A well-known distinction is between formal and informal hierarchy in organizational settings. According toMax Weber, the formal hierarchy is the verticalsequence of official positions within one explicitorganizational structure, whereby each position or office is under the control andsupervision of a higher one.^[19] Theformal hierarchy can thus be defined as "an official system of unequal person-independent roles and positions which are linked via lines of top-down command-and-control."^[20] By contrast, aninformal hierarchy can be defined as person-dependent social relationships of dominance and subordination, emerging from social interaction and becoming persistent over time through repeated social processes.^[20] The informal hierarchy between two or more people can be based on difference in, for example,seniority,experience orsocial status.^[20][17]The formal and informal hierarchy may complement each other in any specific organization and therefore tend toco-exist in any organization.^[17] But the general pattern observed in many organizations is that when the formal hierarchy decreases (over time), the informal hierarchy increases, or vice versa.^[20]

A more elaboratetypology of hierarchy in social systems entails four types: hierarchy as a ladder of formal authority, ladder of achieved status, self-organized ladder of responsibility, and an ideology-based ladder.^[21] The first two types can be equated with the formal and informal hierarchy, as previously defined. Accordingly, this typology extends the formal and informal hierarchy with two other types.

This type of hierarchy is defined as a sequence of levels of formalauthority, that is, the authority tomake decisions.^{[21][22][23][2]} This results in a ladder that systematically differentiates the authority to make decisions. A typical authority-based hierarchy incompanies is: theboard of directors,CEO, departmentalmanagers,team leaders, and otheremployees.^[21] The authority-based hierarchy, also known as the formal hierarchy, to a large extent arises from the legal structure of the organization: for example, the owner of the firm is also the CEO or appoints the CEO, who in turn appoints and supervises departmental managers, and so forth.^[21]

Also known as the informal hierarchy (defined earlier), this type of hierarchy draws on unofficial mechanisms for ranking people.^[24][25] It involves differences instatus, other than those arising from formal authority. Status is one's social standing or professional position, relative to those of others.^[26][27] In anthropology and sociology, this notion of status is also known asachieved status, the social position that is earned instead of beingascribed.^[28][29] The underlying mechanism issocial stratification, which draws on shared cultural beliefs (e.g. regarding expertise and seniority as drivers of status) that can make status differences between people appear natural and fair.^[30][31] A ladder of achieved status issocially constructed, which makes it fundamentally different from the ladder of authority that (largely) arises from an underlying legal structure.^[21] The social-constructivist nature of status also implies that ladders of achieved status especially arise in groups of people that frequently interact—for example, a work unit, team, family, or neighbourhood.^{[32][33][25][27]}

In the literature on organizationdesign andagility, hierarchy is conceived as arequisite structure that emerges in aself-organized manner from operational activities.^{[21][5][34][35]} For example, a small firm composed of only three equivalent partners can initially operate without any hierarchy; but substantial growth in terms of people and their tasks will create the need for coordination and related managerial activities; this implies, for example, that one of the partners starts doing these coordination activities. Another example involves organizations adoptingholacracy orsociocracy, with people at all levels self-organizing their responsibilities;^[34][35][36] that is, they exercise "real" rather than formal authority.^[37] In this respect,responsibility is an expression of self-restraint and intrinsicobligation.^[38][39] Examples of self-organized ladders of responsibility have also been observed in (the early stages of)worker cooperatives, likeMondragon, in which hierarchy is created in a bottom-up manner.^[40]

In a hierarchy driven byideology, people establish themselves as legitimateleaders by invoking some (e.g., religious, spiritual or political) idea to justify the hierarchical relationship between higher and lower levels.^[41][42][43] Ideological hierarchies have a long history, for example in the administrative hierarchies headed bypharaohs inancient Egypt or those headed bykings inmedieval Europe.^[44] The mainlegitimacy of any pharaoh or king arose from the strong belief in the idea that the pharaoh/king acts as theintermediary between the gods and the people, and thus deputizes for the gods.^[44] Another example is the hierarchy prevailing until today in theBalinese community, which is strongly connected to the rice cycle that is believed to constitute a hierarchical relationship between gods and humans, both of whom must play their parts to secure a good crop; the same ideology also legitimizes the hierarchical relationship between high and low castes in Bali.^[43] Ideological ladders have also long sustained the way theCatholic church and theHindu caste system operates.^[4] Hierarchies of ideology also exist in many other settings, for instance, those driven by prevailingvalues andbeliefs about how the (e.g. business) world should operate.^[45][46] An example is the ideology of "maximizingshareholder value", which is widely used inpublicly traded companies.^[10] This ideology helps in creating and sustaining the image of a clear hierarchy from shareholders to employees—although, in practice, the separation of legal ownership and actual control implies that theCEO together with theBoard of Directors are at the top of the corporate hierarchy.^[9] Given that public corporations (primarily) thrive on ladders of authority; this example also demonstrates how ladders of authority and ideology can complement and reinforce each other.^[21]

The work of diverse theorists such asWilliam James (1842–1910),Michel Foucault (1926–1984) andHayden White (1928–2018) makes important critiques of hierarchicalepistemology. James famously asserts in his work onradical 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.^{[citation needed]} 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.^{[citation needed]}

Hierarchies and hierarchical thinking have been criticized by many people, includingSusan 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 byGerard Fairtlough in his work ontriarchy theory. The most beneficial aspect of a hierarchical organization is the clear command-structure that it establishes. However, hierarchy may become dismantled byabuse of power.^[47]

Matrix organizations became a trend (ormanagement fad) in the second half of the 20th century.^[48]

Amidst constant innovation ininformation and communication technologies, hierarchical authority structures are giving way to greaterdecision-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^[quantify] research studies contrasting traditional organizational forms with groups that operate asonline communities that are characterized by personal motivation and the satisfaction of making one's own decisions.^[49]When all levels of a hierarchical organization have access to information and communication via digital means,power structures may align more as awirearchy, enabling the flow of power and authority to be based not on hierarchical levels, but on information, trust, credibility, and a focus on results.^{[citation needed]}

• Hierarchy
• Organizational structure
• Corporate governance
• Bureaucratic organization

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