Chain of Command
In an organizational structure, chain of command refers to a company's hierarchy of reporting relationships – from the bottom to the top of an organization, who must answer to whom. The chain of command not only establishes accountability, it lays out a company’s lines of authority and decision-making power. A proper chain of command ensures that every task, job position and department has one person assuming responsibility for performance.[1]
The chain of command is the unbroken line of authority that ultimately links each individual with the top organizational position through a managerial position at each successive layer in between. The concept of chain of command stems from two basic principles: unity of command and the scalar principle. Unity of command means that an individual should have only one boss at any given point in time. The scalar principle states that there should be a clear line of authority from position of ultimate authority at the top to every individual in the organization.
A chain of command is shown in the diagram illustrated below. If decision making in the organization is at higher level of the chain then the organization is called a centralized organization usually small organizations follow such type of structure and if the decision making is at various levels in the organization. In this structure organization is said to be decentralized as many people have an authority of making decisions.[2]
Traditional Chain of Command[3]
The chain of command is a very traditional way of structuring a company's authority levels. It's common to see the same chain of command structure at various organizations, from customer-based businesses to government entities.
A business owner or CEO holds the position at the top of a chain of command because they hold the top position at the company. The next level down usually includes senior executives or individuals who are in vice president roles over a part of the organization. These individuals report directly to the owner or CEO.
Under the upper management level, you may find individual managers or supervisors who are responsible for an entire department or group of employees. These employees would appear under the middle-management level and at the bottom of the chain of command to represent that their authority figure is their direct supervisor. It's also common to find several ways to break down the hierarchy even further, depending on how large a company is, how many departments it has and more. There may be more management levels or fewer, depending on business needs.
The important thing to remember is that the farther at the bottom of the hierarchy your position is, the less authority you may have. Those at the top of the hierarchy possess more control over organizational developments and are in the position to make important decisions. They also carry more accountability and responsibility for the company's success and all the individuals who fall under them in the chain of command.
While there is a traditional structure to a chain of command, you may find the language used in a company's hierarchy to differ from one business to another. Some companies use traditional terms like "superior" and "subordinate" to describe members of a company's hierarchy, while others use "team members," "employees" or actual job titles.