With a small firm, it’s essential to establish a clear chain of command in small business management, or hierarchy of authority, to ensure quick and successful task completion. There is a hierarchy from the highest leadership level to the staff members in charge of completing particular duties. Small firms typically have fewer levels in their chain of command than bigger organizations, with the owner/founder, manager/supervisor, and employees making up the corporation’s core. An in-depth analysis of the chain of command and the duties and obligations connected with each function will be provided in this article.
What is the Chain of Command in a Small Business?
Let’s start with the knowledge of a chain of command in management. A chain of command in a small business, which creates the lines of authority, communication, and accountability among various positions within the firm, is frequently present in small businesses. This structure, depicted in a centralized organization structure, aids in defining the relationship between superiors and subordinates by showing who has decision-making authority and who reports to whom.
Some businesses favor a shorter chain of command because it enables faster communication and decision-making at lower levels. More responsibility delegation is also encouraged by this simplified structure.
A chain of command business, meaning delegation, also comes with certain risks. Managers risk losing control of their subordinates as the number of employees rises. Delegating work to subordinates without enough training can also lead to mistakes, even if they are knowledgeable in their respective sectors, because they may lack decision-making skills.
Command Chain Formation
The chain of command in a small business was purposefully included in developing an organizational structure; it was not an accident. That is the last action in this procedure by organizational designers. Planners must first take into account the objectives of the organization because the structure must be in line with the overall strategy. The next stage is to determine the tasks necessary to accomplish these objectives.
The next step is departmentalization, in which designers combine tasks to influence resource sharing and make it easier for team members to communicate and coordinate. After that, designers delegate power to specific people for particular jobs and places. Planners establish the chain of command by laying out the relationships between positions.
Chain Of Command in Organizational Structure
Businesses frequently utilize a chain of command in a small business structure to determine the degrees of authority within an organization. Senior managers or vice presidents who directly answer to the CEO often come after the company’s owner or CEO in the chain of command. While the lowest management level is accountable to their immediate boss under middle management, middle management may include certain managers or supervisors in charge of particular departments or skilled employees.
There may be additional levels of hierarchy, with the number of management levels being defined by the demands of the business, depending on the size and complexity of the organization, which demonstrates the chain of command in the organizational structure.
What are the Three Basic Elements of the Chain of Command?
The chain of command in a small business contains three aspects:
- Authority
- Responsibility
- Communication
There is a vertical flow of authority and responsibility in a functional organization structure, with higher levels holding more authority and responsibility than lower levels. These commands are followed by communication.
To show the relationships between these levels and the three aspects, a chart shows who is in a superior and inferior position. For instance, top-level, middle-level, and frontline managers could make up a hierarchical level. An employee directory is also maintained for an effective chain of command. A list of all the workers of a business or organization, including their contact information, job descriptions, and other pertinent information, is called an employee directory. Businesses frequently utilize employee directories to encourage communication and teamwork among employees and assist clients and customers in finding the correct individual for their requirements.
The top-level managers are in charge of the other two levels and have the most power. Frontline managers are under the direction of middle-level managers, who answer to top-level managers. Ultimately, frontline managers are accountable to their corresponding middle-level supervisors and must do so.
The Different Levels of a Chain of Command in a Small Business
There are three levels in a conventional chain of command in a small business structure: top-level management (CEO, COO), middle-level management (such as directors), and frontline employees (who engage with customers and execute daily operations).
- The Top Level
The top level can be referred to as the highest position(s) inside the company. CEOs, presidents, chairpersons, and managing directors, among others, might hold these positions (s). They are primarily responsible for establishing priorities, choosing wisely, and managing the organization’s strategy. From the bottom up, everyone working for the company must submit reports to these people.
- The Middle Level
Middle management refers to people who are immediately below the top person or people. It comprises managers and supervisors who monitor everyday tasks and assign them to hierarchy-level subordinates. Monitoring performance indicators and tracking advancement toward organizational goals are part of a middle manager’s job description. They work with bosses and deputies to ensure everyone accomplishes their objectives effectively and successfully.
- The Bottom Level
The frontline personnel who make up the lowest level of a typical hierarchical structure are advised by their supervisors on how to do their jobs or assignments most efficiently. It generally consists of skilled employees. Also, they might be in charge of telling their manager or supervisor about performance indicators.
What are the Advantages and Disadvantages of Chain of Command
Weighing the benefits and drawbacks of a functional organization structure is crucial when deciding whether to construct a chain of command in a small business or stick with the existing one.
Advantages of a chain of command in a small business:
A chain put in place is just one of the benefits that can be anticipated:
- Increased Efficiency
If employees confide in just one person, they can work more closely together, resulting in more effective communication and quicker problem-solving. For instance, if a team member is trying to answer a customer’s question, getting advice from a director who is more familiar with how the department runs may result in better answers. Compared to approaching a higher-level director, the supervisor can provide helpful input faster. The supervisor can raise the situation to higher management if necessary.
- Clear Direction
Employees in conflict may receive conflicting orders from different management representatives if there is no established chain of command in a small business at work. Establishing a command chain helps reduce ambiguity and gives personnel clear criteria for choosing which director to follow when working on a mission or project.
- Accountability
Working closely with their direct reports within a chain of command enables managers to better grasp their duties and responsibilities, which can eventually help the workers succeed. This improves transparency and accountability.
- Stability
Employees require supervision, clear job objectives throughout the day, and feedback on their performance. The chain of command in a small business maintains consistency and guarantees continuity in specific events. Employees feel more supported and solid in their jobs when they understand how to obtain input and assistance through the chain of command. Thanks to the chain of command, employees can better comprehend their boss’ goals and the challenges their management faces.
- Structured Responsibility
In a hierarchical organization, each person is assigned a certain set of tasks and responsibilities. Each member knows their duties and what must be done to succeed within the chain of command.
- Outside Understanding
Outside of a corporation, some names might be more respected and powerful, and people might seek out persons with these names when they need effective problem-solving or decision-making. For instance, a frustrated client might prefer to deal with a senior manager because they feel that person has the authority and knowledge to address their issue successfully.
Disadvantages of a Chain of Command:
There can be some disadvantages to an authority hierarchy in the workplace. Some instances of these drawbacks are as follows:
- Slow Communication
When a subject, issue, or concept needs many levels of top management approval, it may cause delays and slow down how quickly employees can execute responsibilities like resolving client issues or completing projects.
- Less Collaboration
Collaboration among employees may be hindered in a workplace with a hierarchical structure since people in higher positions set the norms and expectations that everyone else is expected to abide by. While staff workers and intermediate managers may have considerable autonomy in their jobs, higher-ups make the final decisions that affect how the business runs. Also, if the hierarchical structure is followed, an employee can only communicate with people higher in the chain of command.
- Decreased Employee Empowerment
An organization will likely prioritize employee empowerment and allow individuals to decide on their work or situations without a hierarchical structure. A chain of command, on the other hand, can restrict an employee’s autonomy and reduce their authority.
- More Competition
Decision-makers may engage in competitive conduct with their colleagues up and down the chain of command when trying to safeguard their personnel and exercise power over their team. This eventually creates a culture of mistrust among peer managers.
Examples of Chain of Command in Business
The following example chain of command in business management might serve as a useful starting point, even if the power hierarchy may vary depending on your organization’s industry and essential business operations.
- Marketing Agency
The organizational chart up top shows how a marketing agency is organized, with several chains of command organized by division and divided into three tiers. Individual contributions are answerable to their respective directors in this structure, who report to the CEO.
- Tech Company
There are two distinct lines of power within the sales department, as shown by the organizational chart sample for technology companies. The Chief Revenue Officer, who is answerable to the CEO, is the person to whom the Sales Manager and Vice President of Sales ultimately report. Each of these individuals has its own set of subordinates.
- Large Restaurant
The restaurant organizational chart template shows that three chains lead to the General Manager position, which is accountable to the Restaurant Owner.
Conclusion
Understanding the corporate hierarchy is important in a large organization because it makes organization and coordination toward attaining goals easier. Clarifying reporting relationships creates efficient communication channels across all organizational levels and avoids ambiguity or overlap in team members’ responsibilities. This is what comes under the chain of command in a small business. People can better navigate the corporate environment and stay competitive by understanding the structure of the chain of command.
