hierarchy

Hierarchy

In human relations, governance in which who is in power over whom is clearly defined. For example, a hierarchy may exist with a company owner and three employees in that the owner is in charge of the employees. Hierarchy is easy to understand; power structures are marked and followed. It may be contrasted with a heterarchy, but one may exist within the other.

hierarchy

1. any pattern of social relationships where some individuals have AUTHORITY over others.
2. the vertical structure of an ORGANIZATION. Generally there will be a number of management levels in the hierarchy with each having authority over the one beneath it. In a very small organization there might be only two levels in the hierarchy – the manager and the managed. In larger organizations the number will be greater, though it is rarely above eight. Organizations with a high number of levels are said to be tall whilst those with only two or three are said to be flat. There is an inverse relationship with the SPAN OF CONTROL. Where the latter is high, i.e. each manager supervises a large number of subordinates, there will be a tendency towards a flat structure. For the same number of total staff, a low span of control will be associated with a tall structure. See ORGANIZATION CHART, DE-LAYERING.

hierarchy

the ORGANIZATION of economic activities within the FIRM. The internal hierarchy of management levels within the firm can, under certain circumstances, take responsibility for economic transactions rather than conduct them at arm's length through external MARKET relationships. See INTERNALIZATION.