Four organisational structures unravelled
CA Today takes a look at some common (and more uncommon) organisational structures and how they operate.
“The hierarchy belongs in a management museum locked up for people to see, but not touch,” wrote author Jacob Morgan on forbes.com.
But what are the alternatives and do they have any merit in the real world? We examined some structures - and terms - you may be familiar with and a few which are less common.
1. The traditional hierarchy
This pyramid structure features several layers of management, with power and communication flowing in one direction, top to bottom. It creates a clear sense of command and control and prioritises operational efficiency.
However, critics say the one-way flow of information can stifle innovation, discourage collaborative working and leave employees feeling disengaged. All of which could result in a company that is sluggish to change and vulnerable to competitors.
Where do you find it? The hierarchy can often be found in large, traditional and linear businesses, particularly in manufacturing.
2. Flatter and...flat
As many businesses seek to create a more open, democratic organisational structure, they gradually strip away all the layers of bureaucracy. Where the traditional hierarchical structure is ‘tall’ - i.e. multiple layers caused by a high ratio of managers to employees - most modern businesses seek to shorten the chain of command and remove layers of middle management.
Additionally, ‘flatter’ organisational structures encourage the two-way flow of information, so that employees on the ‘shop floor’ can drive change through direct customer experience.
Taking things to their ultimate conclusion, a minority of companies choose to go entirely flat, or ‘self-managed’. This means no job titles, no managers, no superiority. Or does it? Research suggests that many flat organisations are home to informal hierarchies based, for example, on experience, and groups based on personality and friendship are common and counterproductive. Furthermore, flat structures are often lacking in strategy, accountability and reliability.
How flat can an organisation go? It really depends on the organisation. Large, complex businesses tend to require more strategic drive and organisational efficiency, whereas small, creative organisations may benefit from the entrepreneurial spirit supported by flat structures. Flat may also be well suited to organisations made up of professionals, such as partnerships run by accountants, GPs and lawyers.
3. What is a flatarchy?
Odd name, but not such an odd concept. The flatarchy aims to combine the organisational strengths of the hierarchy with the innovative freedom of the flat structure. It’s not so much an organisational structure as an ad-hoc way of working.
For example, this method is favoured by many companies with in-house incubators or innovation teams. The overall business maintains a relatively traditional model, but teams of people are allowed to create flat spin-offs for specific projects. This leaves employees free to explore new ideas in a more fast-paced, open environment. Tech firms such as Google have used such a practice to great effect.
An ideal fit for …? Companies wishing to maintain a traditional structure whilst driving innovation could encourage ‘flat’ spinoff teams to work on specific projects.
4. New kid on the block: Holacracy®
The brainchild of entrepreneur Brian J Robertson, Holacracy® has been widely misrepresented in the media as a flat structure without managers.
In fact, Holacracy® maintains hierarchies but shifts power from individuals in the pyramid to circles (or departments, to use more familiar terms). Each employee has a role instead of a job title, and within the circle these roles are regularly reviewed and transferred.
Decision-making power rests entirely with each circle, though they overlap and feed into the overarching company strategy.
The Holacracy® leaves nothing to chance: everything from the rules of the organisation to the structure of meetings is set out in clear, detailed policy documents. This aims to create transparency and efficiency, but makes the system mind-blowingly complex in its detail. The Financial Times said: “If this is revolutionary, it’s the most tedious revolution yet.”
Do you dive in or dip your toes? The Holacracy® offers a compelling model of distributed decision-making and transparency, but the level of prescriptive detail will be off-putting for most businesses. Many consultants suggest cherry-picking the elements that most suit your organisation rather than throwing the baby out with the bathwater.