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Vertical division of labour refers to assigning different levels of authority for planning and decision making within an organization. This affects the structure of an organization by determining how many layers there are and how tall or flat the hierarchy is.

The number of levels in a hierarchy decreases the domain of authority and autonomy of managers. As the hierarchy increases, managers have less authority over fewer matters.

With more levels in a hierarchy, communication and coordination become harder to achieve. Issues around chain of command, slowness, filtering, and process losses may arise. It is important to divide labour vertically enough for labour control but not so much that communication and coordination become impossible.