Times are changing, and we need to change with them. For example, the top-down organization chart is obsolete. Today, we can compare three types of organization structure: top-down, horizontal and informal.
With the rapid increases in speed of communications and transportation, organizations need to be more flexible and responsive in taking advantage of opportunities. Operations will migrate from traditional practices to embrace the uncertainties and use it to their advantage.
Top-down management structure is easy to chart, but is cumbersome in today’s uncertain world. It often leads to excessive layers of management that inhibits communication. Every additional layer adds another roadblock to timely and accurate information. Some organizations have so many layers of management that top management has little knowledge of what is really going on in the organization.
Top-down management may lead to dictatorial style of management. It can create vertical segments, or silos, in the organization that compete with each other and present opportunities to place blame on one of the other silos. It can inhibit communication by forcing people to go through the chain of command to talk to others who might help with a problem.
I was in an organization once where engineering and manufacturing departments were so hostile to each other that their respective vice presidents actually issued edicts to forbid anyone in their department to talk to someone from the other department.
The horizontal organization structure is harder to chart because it requires top management to really understand how the organization works. It could also be called process management. It requires an understanding of what happens internally from the input from the suppliers to the output to the customers.
Major processes that take place from the beginning to the end are identified, and leaders are recognized for each of them, who now report to top management. Individual processes within the major processes are identified and a leader for each of them. Each of them will have an internal supplier and customer. Leaders should gather to collaborate and bond which will lead to accountability, understanding, transparency, and trust in the organization.
The successful CEO in a horizontal structure will have a more direct connection to the action leading to fewer layers of management. The new organization structure will be a network of process leaders. This leads to small groups working together with process leaders to accomplish the desired goals.
Some organizations attempt to bridge the change from top down to horizontal management by creating a hybrid organizational chart – overlaying one over the other and actually having both. That is questionable in my mind, but some like it.
The informal organization is impossible to chart, but exists in every organization. It is impossible because it is different for every employee. People naturally want to perform good work, and sometimes they need help from outside their area. Over time, they find people who are willing and able to provide that help, regardless of their position. They want to do good work and if that means helping someone else, so be it.
People remember who is helpful and useful and start their own personal network. Different employees will develop personal networks who help make things happen, and thus, you have the informal organization structure. It exists, bypassing the chain of command, regardless of how the formal structure is charted.
The informal organization will exist no matter what, but the need is less with a horizontal organization. The comparison then is reduced to the difference in top down and horizontal structures and which will lead to less overhead, higher productivity, faster response time and better performance of employees.
What cannot be overlooked is that people resist being managed, but will follow a leader.
Lou Schultz is a Certified SCORE Mentor and can be reached by email at email@example.com.