Corporate Hierarchy

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Definition of 'Corporate Hierarchy'

A corporate hierarchy is a system of organization that ranks employees according to their level of authority and responsibility. The hierarchy is typically depicted as a pyramid, with the CEO at the top and the lowest-level employees at the bottom.

The corporate hierarchy is important for several reasons. First, it helps to ensure that there is a clear chain of command, so that employees know who to report to and who is responsible for making decisions. Second, the hierarchy helps to create a sense of order and structure within the company, which can be helpful for productivity and efficiency. Third, the hierarchy can help to promote accountability, as employees are held responsible for their own work and the work of those below them.

There are a number of different types of corporate hierarchies. The most common type is the functional hierarchy, which organizes employees according to their functional area, such as sales, marketing, or finance. Another common type is the geographic hierarchy, which organizes employees according to their geographic location. Finally, there is the product hierarchy, which organizes employees according to the products or services that they work on.

The type of corporate hierarchy that a company uses will depend on a number of factors, such as its size, industry, and culture. However, regardless of the type of hierarchy that is used, it is important that the hierarchy is clear and well-defined, so that employees understand their roles and responsibilities.

In addition to the formal hierarchy, there is also an informal hierarchy that exists in many companies. The informal hierarchy is based on factors such as seniority, experience, and personal relationships. The informal hierarchy can be just as important as the formal hierarchy, as it can influence how employees are treated and how decisions are made.

The corporate hierarchy is a complex system that can have a significant impact on the way a company operates. By understanding the different types of hierarchies and how they work, managers can create a more effective and efficient organization.

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