When start-ups and new businesses begin their organizational charts, they have options. Traditional charts that start from the top down are giving way to new management ideas born in IT company development with unified staff that rotate management responsibilities and perform their specializations with the clients’ ever changing needs as a critical task management focus. Contemporary managers are studying the benefits of a flat organizational structure as opposed to the typical American business pyramid-shaped organizational charts.
Explain the Difference?
Factors that can impact a business of any size, such as new technologies, customer needs, or company growth illustrate the need for a dynamic organizational structure. The effectiveness of your organizational model is never more evident than whe these factors begin to impact the goals you have in place. Effectively adapting to internal and external changes, re-organizing communications, and distribution of responsibilities pro-actively are the best survival skills and stabilizers for your company structure.
The Traditional Pyramid Model
Larger corporations function well using a top-down hierarchy of various level managers, with each employee answering to a person on the next level up. This chain of command often satisfies the need for accountability, a division of labor, and compartmentalization communications. There can be a centralized core structure from top office down, some departments sharing equal authority which creates the widening effect toward the bottom. A variation of this model is a wider horizontal level with several smaller pyramids that represent different departments or logistical regions. One model that illustrates this example is a department store where the vertical structure is repeated for each functional area, headed up by a vice-president of sporting equipment, a vice-president of fashion, and a vice president of electronics, and so on. The staff would be specialized in duties and expertise according to their departments.
In this type of structure, instead of having a centrally structured Human Resources department, for example, each V.P. would have their own H-R specialists trained to hire specific talent that would enhance their specialized department. The significance would be H-R specialists would hire the automotive repair crews while and H-R staff recruiter in the fragrance and fashion department would be interviewing for those specialized skill sets.
The Horizontal Model
The chain of command is essentially a shared responsibility intent more on the productivity of actual tasks at hand. An example of work flow benefits of horizontal structuring would be most IT software development firms. The entire team on a project needs to know hour by hour what directional changes occur as a natural part of software design and code creation. It is common for IT employees to speak directly with decision makers of client companies directly on a daily basis or even more often as they are designing specific functions of a custom software platform. Waiting for the consensus of a CEO or Vice President discussing details with the client means constant downtime, bottlenecking of productivity and less efficient project management. The work flow is more continuous and predictible, direct communications are more accurate and efficiency means lower costs, because technicians and engineers are maintaining a two-way a flow of direct information sharing
A well-chosen, multi-talented team of IT professionals work more effectively with a horizontal organizational structure and they tend to develop a strong sense of corporate identity and company loyalty.
It is fair to say that both management strategies have benefits and practical aspects, in either instance, using the opposite structure would be less cost effective and could result in wasted employee time.