Levels of hierarchy, sometimes Organizational levels, Levels in the management hierarchy is a term that characterizes the number of degrees of organizational units within the organizational structure of the organization. In other words, it is a number of horizontal layers, which can be seen in the organizational chart. Determination of the number of management levels is one of the results of organizing, like the setting span of control.
What are levels of hierarchy in practice for?
The reason for the determination of levels of hierarchy is the need for division of labor and balancing this division with a span of control. There is no universally applicable rule for determining the number of management levels - it depends on many factors: the complexity of the activities performed by organizations, on their nature and the possibility of determining the span of control. A large number of management levels is costly for the organization, because among other things, requires a large number of managers and other employees. This causes an increase of the rate of mutual coordination of organizational units and increase of the volume of overhead costs of the organization. A large number of management levels is also challenging on communication, or transfer of tasks and plans from higher to lower levels of management. According the number of management levels the organizational structures are divided into steep and flat - see typology of organizational structure.
- Tall organizational structure has high number of management levels
- Flat organizational structure has low number of management levels