ON CONTROL LOSSES IN HIERARCHIES: A SYNTHESIS.

This article surveys various economic literature which tries to model loss of control in hierarchies. Hierarchies have been studied by sociologists, management theorists and economics over this century. In most of these studies it has been assumed that supervisory effort is observable, although, imperfectly. The idea is that if a supervisor has worked at a reasonably high level, then layers below should have worked reasonably well and consequently production ought to be reasonably good. In pure supervision models, it might be easy for the firm not to show loss of hierarchical control when it grows. This is more so when it grows and when the supervisory effort is not directly visible. in all models discussed in this paper, theorists have talked about pure hierarchies,where every employee has a unique boss. This has been done for modeling convenience, in realty one has a matrix and other forms of organization. One key problem of modeling supervision and planning together is the difficulty in objectively defining the relationship between the two.