Shuffling the Charts: Alternative Organizational Structures in Business
Businesses have long used some form of a traditional hierarchy structure to operate. This system involves employees reporting to supervisors, who then have their own supervisors — and so on. Most employees are accustomed to this structure. But is there a better way?
More and more businesses are considering alternative organizational structures. Zappos, GitHub, WordPress and countless other companies across the country are adopting structures that challenge the traditional hierarchy. Most nontraditional systems remove managers and offer flexibility that a traditional hierarchy doesn’t offer. Here are four alternative organizational structures that have been adopted by businesses around the world.
Slightly less top-down than a traditional hierarchy, flatter structure focuses on opening up communication and collaboration. It decreases the number of layers in a company, hopefully making leaders far more approachable. A flatter structure is ideal for bigger companies that still need to keep a scalable approach that can be deployed easily.
A flatter structure requires all employees to commit to using technology for collaboration and communication. It requires an understanding that managers must support employees along with employees supporting managers. Information should be moving both top to bottom and bottom to top. Companies like Cisco, Whirlpool and Pandora are using a flatter structure, according to Forbes.
A self-managed, or flat, organization has no managers, job titles or seniority of any kind. All employees are considered equal. In self-managed organizations, employees work together to list projects that should be completed. If employees want to start a project, it’s up to them to find funding and build their team. Then they go to work on it.
For obvious reasons, this structure does not seem as scalable for larger companies. There is just too much to do in a large company to have thousands of individual employees adopt projects on their own. Creating a flat structure involves significant investment and training that a corporation might not be willing to spend. But with some work, a smaller organization can adopt it far more easily.
Flatarchies are a hybrid structure that offers the layers of a flatter system but also allows for the creation of ad hoc flat teams. When a special project is underway, employees can join the flat team where all members are equal. This allows companies to be nimble when they need to be, while keeping some kind of hierarchy.
Many companies use this approach when it comes to innovation. Google, Adobe and LinkedIn are among the many tech companies that have internal innovation teams, where members work in a flat team to come up with new products or solutions. In a traditional corporation, employees are unable to have this kind of autonomy.
The basic goal of holacracy is allowing individual employees to work on what they do best. Job titles become roles structured around work, and people can hold multiple roles. Decisions are made by circles focused on a particular project; for example, marketing circles handle marketing decisions. The organizational structure is updated constantly, with circles closing and forming all the time depending on the project.
Holacracy became a buzzword among organizational experts when Zappos announced it would adopt the model. Holacracy is similar to a completely flat structure, but there is still some structure. The jury is still out on whether holacracy can work for a larger company like Zappos, with mixed opinions on how it has worked so far. For now, it’s safe to say that holacracy would be easier to implement among small and medium-sized companies.
Understanding Business Structures
Touro University Worldwide offers fully online business programs at both the undergraduate and graduate level that examine relevant topics such as trends in management and organizational structure. From our online Bachelor of Science in Business Administration and Management to our online MBA, you can discover the degree program that will prepare you to reach your career goals.