AX2012 Workflow - Assignment

Hi

In AX 2012, suppose i would like to assign a task and if I select

ASSIGNMENT TYPE as HIERARCHY,

then under HIERARCHY SELECTION tab, i found Hierarchy type list box.

My question is Where do i define the Hierarchy type, so that it appears here. I searched in HR, but could not find anything.

also please explain in brief with an example about this functionality

regards

TP