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A pyramid organizational structure is a hierarchy with the executive level at the top and descending levels from middle management to the lower levels of the organization. The idea behind the structure is that each upper level is able to function because of support from the lower portions of the pyramid. This is a traditional system of organizational structure that is often linked with bureaucracy.
The primary concept of the pyramid organizational structure is that the lower levels of the organization follow the commands of top level employees. In essence, the executives control all key elements of the company. This includes strategy, operations, and overall vision.
There are typically three major levels in pyramid organizational structure: executives, managers, and staff. Managers usually oversee specific departments or products and report directly to the executives. Staff supports managers by performing tasks that fulfill the directives coming from the executive level. Some organizations may have an assistant manager level between managers and staff.
Pyramid organizational structure is based on several traditional structures seen in religion, governments, and the military. The development of early corporations tended to follow this structure because it was already established in these other areas of society. While the system continues to be in widespread use, other types of organizational structure have developed in response to changes in society.
A well-executed pyramid organizational structure clearly outlines the precise responsibilities of each employee. The success of the corporation is dependent upon individuals adhering to their assigned roles. This includes obedience to upper level employees and acceptance of the policies they develop.
Workers in a pyramid organizational model have a well-defined structure for career advancement. The common path is to move from staff level to manager and executive. As there are fewer positions in the upper levels of this type of organization, not all employees have the opportunity to reach the top. The condition of an employee who is not able to move above a certain level is often referred to as the “glass ceiling” because the path to the top is clear, but not accessible.
Newer models of organizational structure reject the notion put forth by the pyramid system that the leader of an organization should have complete control over important decision making. They give more responsibility to employees by allowing greater control on a departmental level. This is primarily in response to criticism that executives on the top level of an organization do not have the same understanding of specific departmental issues as the employees who work daily in these areas.
@umbra21 - That's why they say that a benevolent dictatorship is the best form of government. A hierarchy organized around these lines can be really effective.
On the other hand, there's a reason that show where bosses have to work with the employees who are lowest on the food chain is so popular. Often people at the top of a pyramid are going to be completely out of touch with the people and operations at the bottom, which can lead to all kinds of problems.
@MrsPramm - The difference between that and a legitimate business is that pyramid schemes usually don't involve any kind of product, but just have money changing hands for a potential payoff in the long run.
A proper business is based around money coming in for a product or for services, and the structure is separate from that. It's just a way of managing the production of the product.
Personally, I like organisations that are a bit more democratic than the pyramid, but I can definitely understand the advantages of having one person at the top who is answerable for everything.
The disadvantages are that there may be less accountability so it's easy for the people in power to take advantage of the people at the bottom of the pyramid.
When I read pyramid organization my mind immediately jumped to so-called pyramid schemes. They basically work the same way, with one guy at the top who gets benefits from the work of everyone below him, except that they are not stable at all.
Because the income of everyone depends on the people "below" them in the pyramid scheme you end up with the people on the bottom seeing very little benefit and very little motivation. Eventually it just gets too top heavy to exist.
They are actually illegal in a lot of places, unlike pyramid organizational structures which are pretty much the norm for a lot of businesses.
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