Effective organization is the cornerstone of success in the business arena. It allows employees to stay on the same page by clarifying their roles, establishing a chain of responsibility, and nurturing communication. Now, the biggest problem is that you do not possess the crystal ball for figuring out which type of organization will work the best for you. The improperly laid groundwork can make your enterprise fall like a house of cards under the pressure from market shocks, competition, and inherent weaknesses.
So, it’s a good idea to do your homework and grasp pros and cons of different organizational hierarchies. The ultimate choice depends on factors such as company’s size, industry sector, and goals. Now, there are two basic choices when it comes to an organization: You can either follow the vertical or horizontal axis. A bulk of businesses decides to go for the former principles of functional organization and its different variants such as product or customer structure.
You can think of it as a top-down flowchart or a pyramid-looking structure with various layers. Such a business organization encompasses many smaller units. They deal with different aspects of your operations and have varying relations between themselves. This dimension is what constitutes a horizontal base of the company, but upon that, the vertical dimension is built. Namely, teams are held responsible for their results by other organizational levels.
So, for example, there are sales teams, people who handle telemarketing, a handful of managers, supervisors looming over workers, and executives that stand at the top of the pyramid and to whom all other employees report. It is argued that this multi-leveled business structure makes management easier. Indeed, the company is neatly compartmentalized and the framework is easy to understand and utilize.
Block by block
However, problems arise when you have an incapable captain navigating the ship in the restless market waters. Moreover, vertical alignment can be detrimental to employee interactions and clog the lines of communication. That is why some companies, particularly in the video game and movie industry, embrace the matrix structure. It involves many departments or teams that are equal and work in tandem to accomplish tasks.
There is, however, a strong manager figure at the top that fills the role of a team leader. This demonstrates that the hierarchy does not always have to be so rigid. In fact, there is a clear shift towards more loose models of organization. Unbending corporate machinery can become sluggish when it comes to decision making. Moreover, it can be difficult to set up efficient communication channels, encourage forward-thinking, and cultivate rapid innovation.
On the other hand, a horizontal composition is more successful at achieving these priorities due to its flexibility. It leaves enough room for employees to exercise a freedom to make daily operational decisions. They still consult with managers on important issues and adhere to the company’s policies. Of course, small businesses and startups are more inclined to endorse such a model and dismantle the hierarchies that stand in the way of perpetual learning, innovation, and ideation.
Companies differ in their relations to the vertical and horizontal axis of an organization. In both scenarios, however, all the threads of the web must be well connected. Therefore, get your priorities straight, and make an informed decision, one that could make or break your success. Before committing to one type or the other, bear in mind that it’s possible to mix and match aspects of different organization types, and pull together a customized mix for maximum results.