An organization’s structure should be chosen with care. Because the structure should not only fit the size of the company but it should also support the skill set of the employees and their objectives. The (right) structure will impact everything, from how the organization works to how well information flows between employees. Organizational structures come in many shapes and sizes: matrix or network organizations, divisional or team-based organizations, and everything in between. In this article, we will focus on the challenges and benefits of the most commonly known organizational structures: the hierarchical and flat organizations. Both are each other’s opposite and, in theory, don’t go hand in hand. But the question we should be asking is: can they?
Up, down, left, right, vertical or horizontal organization’s structure?
There are many levels within hierarchical organizations where the ranking is clear. Sitting at the top of the hierarchy the director or CEO has the most influence in the decision-making. In this pyramid structure, the power decreases with each level. Hierarchical organizations have a clear career path that enables employees to gradually advance and reach more senior positions. Although many companies lose their entrepreneurial spirit. Moreover, due to the high degree of organization layers, the process to reach customers efficiently with innovative services or products slows down drastically.
On the other hand, flat organizations have little to no levels of middle management. Fewer dominant positions have a direct positive impact on participation, productivity, sense of responsibility and employee morale. A bureaucracy-proof organizational structure where employees are directly involved in the decision-making process allows companies to provide a rapid response to any issue. The less people that need to be consulted about a decision. The faster a company can act with the goal of satisfying customers.
Tackling potential challenges with the right leadership
It is clear that a flat organizational structure comes with a lot of benefits. As example a simplified internal communication flow or decreased cost structure thanks to fewer management layers. It is, however, by being aware of any potential roadblocks that companies can proactively tackle potential issues that may arise when opting for this structure.
As this organizational culture relies more on collaboration than in pyramid structures, its management can be challenging if the organization grows too much, too fast. Another challenge is unclear decision-making due to power struggles between employees. Power struggles are caused by a lack of transparency and supervision. When it is not always clear who is responsible for what or what is expected, it can cause unnecessary stress.
The right leaders can tackle these issues and turn employees into entrepreneurs. A company can come a long way by appointing leaders that have an inspiring vision and give supportive directions. But without falling into the trap of micro management. By keeping people connected, staying flexible and agile, whilst promoting risk tolerance and clarity, leaders can combine the basic principles of a flat organization with just the right amount of hierarchical elements.
3 Tips to Engage, Develop and Retain employees in your company structure
With only limited middle management positions, one could argue that there are fewer career advancement opportunities within a flat organization. Hence why it would be harder for ambitious workers to “move up the ladder”. However, by questioning the traditional “corporate ladder” and encouraging lateral transfers, employees get to expand their knowledge. Crossing organizational boundaries helps employees to get a better understanding of the business whilst gaining new skills and expertise. When implementing a horizontal career path into a flat organization, there are three guidelines to keep in mind:
Give less experienced employees a mentor
and they will be more comfortable to ask for help when facing new challenges. Mentors can help motivate employees to strive for greater levels of success. Mentors help them channel their ambitions, and teach them new ways of handling issues more effectively.
Communication is key
especially in a flat organization. In order to engage employees, a flat organization must set clearly defined missions, goals and growth plans. Via regular career conversations, people managers can find out what drives their employees and use these insights to develop a more tailored development program and career path. Some ideas: implement pay categories, like performance-related bonuses, based on the impact of someone’s work or the expertise that the role requires. The degree of autonomy can also determine the remuneration, which can be used as a motivating factor at the same time.
Create alternatives to traditional promotions
because a larger car or a better sounding title are a thing of the past. When monetary remuneration doesn’t apply, it is important to offer a more advanced professional development. As an example like the possibility to take on a new project or participate in a course to develop a new skill set.
The purpose is to create ways where workers can continuously learn and try something new even if they are not able to take on a new, official position. By being involved in projects, employees can learn about unfamiliar parts of the company . They can also use their expertise in a way that increases their contribution. When people managers know the strengths of their teams, they can organize employees and teams in such a way that it will not only optimize the team’s performance, but also contribute to the development of an individual employee’s leadership skills by letting them take on new projects.
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