Top-down vs. Bottom-up Management Styles

by / Saturday, 03 January 2015 / Published in Business Administration and Management

Top-Down vs Bottom-Up Management Styles Header

Throughout the history of American business, one type of management style has essentially dominated workplaces: top-down management. Supervisors tell their employees what tasks to complete, and employees complete them. This is still the basis for most organizations across all industries.

However, as employers work harder to keep up with the rapidly shifting economy, some organizations have begun to move in a different direction. More companies are embracing bottom-up management styles that rely more on employee feedback. As organizations evaluate bottom-up management, it’s imperative for business leaders to understand the details, benefits and drawbacks of the two management styles.

 

Top-down Management

Top-down management is the most common management style. Top-down management is also called autocratic leadership, especially in the context of psychology.

   Definition

Autocratic leadership is “the process of upper management or the chief executive officer reaching independent conclusions that change or improve the workplace or business systems,” business writer Carol Deeb explains. These conclusions are then handed down to employees, who work to accomplish the goals on their own or with other employees. Some lower-level managers may have input into how to accomplish the end goal, but they may not have much authority to change policies without approval from the highest level of management.

   Advantages

Making decisions from the top allows leaders to be clear on goals and expectations. It also gives employees more time to focus on work duties instead of attending meetings discussing potential directions of the company. When a strong leader is at the forefront, managers can quickly and effectively take charge, assign tasks to teams or employees, and establish solid deadlines. Autocratic leadership gives companies a drive that they might not have otherwise.

Top-down decisions are often successful when they are highly researched by the leadership. All aspects must be taken into consideration, especially how a decision will affect employees. This is why autocratic leadership is especially beneficial to organizations with talented and knowledgeable leaders.

   Disadvantages

When used correctly, top-down management can help establish a clear vision for company direction. But it can just as easily be viewed as bossy or dictatorial. Particularly with a weak leader, employees can grow resentful and challenge unilateral decisions. Thus, autocratic leadership is not best for businesses struggling to implement change effectively. With only the senior executives making decisions, their conclusions may be seen as lacking creativity and being harmful to overall performance.

   What Companies Use Top-down Management?

A better question might be: What companies don’t? Most organizations operate with some kind of top-down management style; some well-known examples are the Trump Organization, Helmsley Hotels and Martha Stewart Living. These companies are good examples because they were led by three highly powerful and knowledgeable individuals who were able to successfully make all of 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.

 

Bottom-up Management

In some situations, a top-down management style is simply impossible. There may be a large amount of brainpower among employees to draw upon, or executives may be unable to appear knowledgeable. Sometimes another path may be better. Enter bottom-up management.

   Definition

Wrike, a project management solutions firm, describes bottom-up management as a process where “team members are invited to participate in every step of the management process.” This system allows managers to communicate goals through milestone planning, and team members are encouraged to come up with the steps needed to reach the milestones on their own. How tasks are performed is up to the teams, and they feel involved in project development.

   Advantages

Bottom-up management allows all levels of an organization to become a part of the process and helps make everyone feel a large part of the goal. This can help build morale and improve productivity. Employees are more open to work and strive harder to reach goals and objectives in the ways that work best for them.

Bottom-up management styles allow for the full talents of employees to be used. A lower-level employee may have unique insight on how to solve a common problem. Employees can share their solutions and perhaps pass them on to others in their team. This kind of collaboration can improve processes in new ways.

   Disadvantages

Allowing all employees to engage in decision-making does have possible pitfalls. Becoming engaged in the process can bog down employees and lead to too many unproven ideas being suggested. With too much input, managers may have a harder time finding an effective plan for reaching goals. This may lead to an inability to choose one plan and stick with it or constant altering of processes and goals.

In a highly competitive environment, employees may struggle to separate ego from the bigger goal. This could lead to significant divides between employees and teams as well as possible conflict that may have a negative effect on productivity.

   What Companies Use Bottom-up Management?

More and more companies are using the bottom-up management style in their daily work. Companies like The New York Times, Ernst & Young and IBM are implementing 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. Defined by the APA as the “scientific study of human behavior in organizations and the work place,” many advances in the field have found that common hierarchies are not as conducive for productivity and employee happiness.

The Hawthorne Experiments

According to Reference for Business, psychologists as early as 1924 found that attention paid to employees was important to productivity. Researchers at an electric company plant found that employees who received changes in the lighting at their workstations were more productive. Those who were 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.

Emergence of Bottom-up Thinking

The true beginning of a kinder and gentler employer came in the middle of the 20th century as Harvard Business School professor Elton Mayo began the human relations movement. This way of thinking that focused on improving the social aspects of the workplace is the reason why every organization has a human resources arm. It also helped inspire the first iterations of bottom-up management.

Today’s I/O Psychology

The field of I/O psychology constantly encourages employers to make bottom-up communication and management a priority. The APA’s first tip for employer communication is to include these practices and “tailor policies to meet the needs of employees.” The Society for I/O Psychology also regularly touts the importance of allowing for employee input through specially designed programs and, more recently, work-life merging.

The response from the business world has included more adoption of bottom-up management, and the development of radical new hierarchies like Holacracy. As the workplace continues to evolve, I/O psychology will no doubt become a part of the change.


The Future of Management

As companies reevaluate their management structure, creative alternatives using bottom-up management will be considered. Business leaders should understand both top-down and bottom-up management approaches and how to best use them in their workplaces.

 

The online business degrees at Touro University Worldwide offer students insight on how to lead and excel in all kinds of work environments. Specifically, a Master of Arts in Industrial and Organizational Psychology or a Doctor of Psychology in Human and Organizational Psychology can give students a deep 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. Learn more today.

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