As a company or a business grows larger and expands, it becomes increasingly necessary and essential to define an organizational structure that establishes the rules in terms of authority, policy making, responsibility and general communication throughout the organization. Put simply, these rules determine who’s in charge of whom, who take leadership and how do they interact with the rest of the company. Most commonly an organization takes up either a hierarchical (pyramid) structure or a non-hierarchical (flat) structure. Let’s explore the reasons why. Non-hierarchical
A ‘flat’ organization means that the organizational structure contains few or no levels of management between staff and their managers / overlords. In such a model all staff have an increased involvement in the decision-making process and collectively share responsibility for it, while minimizing the amount of supervision given to staff from management. Such a model is advantageous because it facilitates quick communication between employees while eliminating excess bureaucracy (and consequently eliminates the salaries of additional management).
While such a model may be advantageous for small organizations or those with an informal atmosphere (look at tech start-ups, smaller science and medical service companies for example), the model does need to be reconsidered for larger organizations as employees may have difficulty defining their specific role or ‘specialist function’ within the company, which can be more easily controlled with rigid hierarchical structuring. Often the situation in such structures is that friends of friends already work in the same environment and may end up stagnating the company’s long term growth by wasting time on maintaining the status quo and engaging in nepotism, often manifesting as lower qualified staff and in-fighting between employees. Large companies have succeeded in non-hierarchical models in the past and it shouldn’t be discouraged, however the implementation is often difficult, and may require ‘segmenting’ the company into smaller, easier to manage divisions responsible for specific functions. Hierarchical
Colloquially referred to as a ‘pyramid structure’, a hierarchical organization follows the layout of - you guessed it - a pyramid. Starting from the CEO, every level below the CEO is subordinate to someone above them in the pyramid, with usually the staff level employees at the bottom of the pyramid. Such a model is advantageous since it does not suffer from ‘ambiguous’ leadership, since every employee knows who to report to. Such schemes are also useful for motivating employees to ascend the pyramid via promotions, which are often specific to the function of that employee, facilitating the creation of ‘specialists’ versus ‘generalists’ that can occur in flat-styled models of leadership. However, in such a model communication between departments may be hindered or even antagonized as departments may be in competition with each other rather than considering the growth of the company as a whole. Bureaucracy also inevitably increases (as do generous salaries to accommodate the increasing bureaucracy) and slows the decision making process, made by senior members of the executive board that enact sweeping changes to organizations and departments they may not individually understand, stunting growth all the same.
No leadership structure is perfect, but amongst the pros and cons of both models, strive to find a balance that helps your organization – rather than hinders it.
The Buddha said it best: “Know well what leads you forward and what holds you back, and choose the path that leads to wisdom.”
By: Alec Droujinine