When setting up a management system, most organizations must choose between a top-down vs. bottom-up approach. For most of the history of American business, a straightforward, top-down management has dominated: supervisors give employees tasks, and then employees complete them within a set time frame.
Top-down management remains the basis for most organizations across all industries. However, in recent years more organizations are shifting to a bottom-up approach that relies more on employee feedback.
When choosing between a top-down vs. bottom-up approach to management, it’s essential to consider both benefits and drawbacks.
The online business degrees at Touro University Worldwide offer students insight into how to lead and excel in both a top-down and bottom-up work environment. Specifically, a Master of Arts in Industrial and Organizational Psychology or a Doctor of Psychology in Human and Organizational Psychology can give students an in-depth understanding of human behavior and employee performance. With experienced faculty members, Touro can help business professionals succeed in a competitive job market and complex economy.
The Top-Down Management Style
Top-down management remains the most common management style. It involves creating a hierarchy in which top executives and managers make strategic business decisions and hand down tasks to employees that help the organization achieve its goals. Some lower-level managers may have input into how to accomplish the end goal. Nonetheless, they may have little authority to change policies without approval from the highest management level.
Advantages of Top-Down Management
A top-down management approach allows leaders to set clear goals and expectations. It also gives employees more time to focus on work instead of attending meetings to discuss the potential direction of the company. With a smart, respected leader at the top, managers can quickly and effectively take charge, assign tasks to teams or employees, and establish solid deadlines.
The key to successful top-down management is the managers themselves. If they have the trust and respect of employees, they often prove effective in driving the company to success. Wise leaders research their decisions, considering all potential outcomes, especially how they affect employees. This is why a top-down approach to management is especially beneficial to organizations with talented and knowledgeable leaders.
Disadvantages of Top-Down Management
Top-down management can help establish a clear vision for company direction. But employees may also view it as bossy or dictatorial. Employees can grow resentful and challenge unilateral decisions, particularly with a weak leader. Top-down management is not best for businesses struggling to implement change. With only the senior executives making decisions, their conclusions may be seen as lacking creativity and harmful to overall performance.
What Companies Use Top-down Management?
Most organizations operate with some type of top-down management style. Well-known examples include Helmsley Hotels, Martha Stewart Living, and Apple. These companies are good examples because they are led by compelling and knowledgeable individuals who make all the decisions about company direction. Companies in highly regulated industries are also more likely to use top-down management, such as banks and financial institutions.
The Bottom-Up Management Style
In bottom-up management, team members participate in every step of the management process. This approach allows managers to communicate goals through milestone planning. Leaders then encourage team members to develop the steps needed to reach the milestones on their own. Teams decide how to perform tasks, and they feel involved in project development.
Advantages of Bottom-Up Management
Bottom-up management allows all levels of an organization to become a part of setting and achieving strategic goals. This can lead to better employee morale and improved productivity. Employees are more engaged in their work and strive harder to reach goals and objectives in the best ways.
Bottom-up management styles allow for the use of each employee’s full talents. A lower-level employee may know how to solve a common problem. Employees can share their solutions and pass them on to others. This kind of collaboration can improve processes.
Disadvantages of Bottom-Up Management
Allowing all employees to engage in decision-making does have possible pitfalls. Becoming immersed in the process can bog down employees and lead to suggesting too many unproven ideas. With too much input, managers may have difficulty finding a practical plan for reaching goals. This may lead to constant altering of processes and goals.
In a highly competitive environment, employees may struggle to separate egos from the bigger goal. This could lead to significant divides between employees and teams and potential conflict that could negatively impact productivity.
What Companies Use Bottom-up Management?
More companies than ever now use the bottom-up management style in daily operations. Companies like The New York Times, Ernst & Young, IBM, and Google implement elements of the management style throughout their hierarchy. These companies each offer unique methods of including employees at all levels of the decision-making process. The popularity of the bottom-up approach is growing, but many organizations are still hesitant to adopt it.
Impact of Industrial and Organizational Psychology
Part of the trend moving towards new bottom-up management styles involves the growth of industrial and organizational psychology or I/O psychology. The American Psychological Association defines I/O psychologists as those who study and assess individual, group, and organizational workplace dynamics. They apply their research to enhance the well-being and performance of organizations and employees.
Through the years, research done by I/O psychologists has led to significant changes in how people work.
The Hawthorne Experiments
According to Reference for Business, psychologists as early as 1924 found that attention paid to employees impacted productivity. Researchers at an electric company plant found that employees who received changes in the lighting at their workstations became more productive. Those not granted the changes were less productive. This challenged the top-down management’s point of view that efficiency was paramount. They also concluded that employees would work harder for a company that valued them.
The Emergence of Bottom-up Thinking
The true beginning of a kinder and gentler employer came in the mid-20th century as Harvard Business School professor Elton Mayo began the human relations movement that focused on improving the social aspects of the workplace. The movement is why every organization now has a human resources department. Mayo’s work also helped inspire the first iterations of bottom-up management.
How I/O Psychology Impacts Top-Down vs. Bottom-Up Debate
I/O psychologists work tirelessly to improve communication and collaboration between employees and management. The APA wrote that I/O psychologists look at questions like “how are decisions made” and “how effective is communication.” Knowing the answers to these questions helps business leaders change systems to make their companies more efficient and profitable.
Working in the I/O psychology field has also led to the business world becoming more open to a bottom-up management style and developing radical new hierarchies like Holacracy. As the workplace continues to evolve, I/O psychology will continue to drive many changes.
As companies reevaluate management structures, creative alternatives using bottom-up management will become more popular. Current and aspiring business leaders should understand both top-down and bottom-up management approaches and how to use them in their workplaces best.