Workplace structure plays a critical role for both a company and its employees. Many factors influence how a business, its style and culture ultimately develop.
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How you structure your organization &#; specifically, the layers of management you introduce into your company and how you arrange employees underneath them &#; impacts many critical aspects of how you do business:
As your organization grows in numbers of staff and complexity, it becomes even more critical that you solidify your structure &#; if you want to perform at a high level, keep your employees satisfied and provide excellent customer service.
So how do you proceed?
First, let&#;s define the two primary structures and the management style associated with each.
A company with multiple layers of management often is said to have a vertical organizational structure. This means that between top management or executives and frontline employees, there are several layers or levels of middle management.
With this structure, centralized management &#; typically a CEO &#; holds the position of power and delegates authority to leaders and managers who in turn manage employees through clear lines of authority.
Occupying the widest bottom level are your front-line and entry-level employees. As your organization increases in size, the pyramid becomes taller.
On the other hand, a flat structure eliminates many &#; if not all &#; layers of management. Top management is in direct contact with frontline employees.
These are two very different approaches to structuring your organization and managing your people.
Let&#;s examine the pros and cons of each type of organizational structure to help you understand why you would want to pick one over the other.
When the company is growing, it&#;s easy to increase personnel and add management.
It&#;s often documented in an organizational chart. Employees know exactly to whom they need to go for specific questions or help resolving issues. They also understand the chain of command that connects them to the top of the organization.
This is also commonly documented in an organizational chart. Everyone understands their function and what they&#;re responsible for, and the functions that other colleagues perform can be quickly identified.
In this scenario, it&#;s easier to document performance and ensure standards are being met. Poor performers have less opportunity to fly under the radar.
This centralized model:
Plus, with employees understanding their role, they can easily pick up greater knowledge and expand their skill sets as time goes on. There can be quite a bit upward mobility and the opportunity for advancement for those who want to make a career of a job.
This more direct, personal managerial oversight means that employees have the opportunity to enjoy greater support and closer interaction with their managers, which can result in better performance management and more professional coaching and development.
Vertical structures typically mean greater costs. Salary expenses are greater.
Because upper management and lower-level staff are separated by multiple layers of management, there&#;s the potential for a lack of transparency and visibility into the goings-on at the top of the organization. This can make employees feel like they aren&#;t getting the full picture and don&#;t have as much of a stake in the organization.
Employees can develop a too-narrow view of your company in that they focus only on their own tasks and how they support the goals of their department, as opposed to how they fit within the overall goals of your company. Cross-departmental or cross-functional collaboration can also suffer.
This can frustrate employees and diminish morale. For highly skilled workers this structured hierarchy can limit creativity.
Making decisions might be efficient but acting on those decisions &#; as well as communicating changes in policy or procedures, or announcing new strategies and initiatives &#; can be slow and cumbersome because directions have to be filtered through all the layers of management.
A lengthier and more complex approvals process &#; which involves consulting with many managers at different levels &#; can stymie new ideas and innovation.
When an organization does not have to pay so many manager wages, those funds can be reinvested elsewhere in the company.
Leaders and employees can enjoy a faster pace of business &#; such as faster response time to changing conditions or customer preferences.
The executive (or C-suite) can obtain pertinent business information directly from employees to make business changes. In addition, fewer bosses mean fewer conflicts and more agility and flexibility to accept new and different ideas.
Because this organizational structure is based on direct contact, there are fewer opportunities to misinterpret feedback or ideas.
The executive (C-Suite) can gather information directly from the source, which can limit the amount of miscommunication that occurs in the workplace. At the same time, the front-line staff receives direct communication from the executive (C-Suite), allowing each worker to make clear adjustments to their responsibilities when necessary.
Employees are empowered to make decisions, which can boost their confidence and engagement.
The level of independence is increased as there are fewer eyes looking over their shoulders or criticizing their ideas. Highly skilled workers excel in this environment as their creativity is encouraged.
The executive (C-suite) relies tremendously on front-line employees and decisions could be made based on false expertise.
This can happen to the extent that it&#;s not clear who&#;s underperforming or exceeding expectations, or where there&#;s overlap in work assignments.
When employees wear multiple hats and assume responsibilities that fall outside their formal job description, it can negatively impact their ability to focus and put in their best performance on their designated tasks.
As a result, employees lack close supervision. There are less checks and balances for individual and team productivity.
In addition, there is limited growth for highly skilled workers. There are few advancement opportunities if employees are unable to advance upward through the chain of command.
If a company experiences high levels of growth over a short period of time, there is an increased risk of negative workplace experiences such as poor decision making or unproductive behaviors.
Although access is a benefit, because there are not continuous lines of communication between varying departments or teams, a lot of time can be wasted when trying to be innovative.
Plus, there can be prolonged debates and inaction if a majority can&#;t agree.
All of these factors can create challenges for organizations as they grow.
There&#;s no right or wrong answer. No one-size-fits-all solution.
Your decision on which structure to choose hinges on what you&#;re trying to achieve as an organization. Whichever path you select, your organization&#;s structure needs to support this.
As your company grows, you have critical decisions to make. Ask yourself:
There are benefits and advantages to each option, and both have worked well for many different types of successful companies.
No matter which structure you adopt, try to incorporate the strengths of the other to mitigate weaknesses.
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For example, if you choose a vertical structure:
Likewise, if you opt for flat structure:
You have two main options for how to structure your organization: a vertical structure or a flat structure.
Both options have their advantages and drawbacks. The structure that you select and implement must align with the unique needs and goals of your business. Ideally and when feasible, you should incorporate the strengths of the other structure so you can mitigate some of the downsides of the structure you&#;ve selected.
For more information on creating a functional workplace structure &#; like having multiple layers of management &#; and supporting a positive, successful working environment, download our free magazine: The Insperity guide to being a best place to work.
Like many leading IT executives, RJ Juliano doesn't distinguish between technology objectives and business objectives but views them as one and the same.
"We need to be well past alignment to where the objectives are unified and indistinguishable," said Juliano, senior vice president and chief information and marketing officer at Parkway Corp., a parking garage operator and real estate developer in Philadelphia.
In Juliano's experience, a combined IT-business approach builds stronger teams and promotes meaningful dialogue as well as delivers competitive advantages and long-term sustainability of the company and brand.
"The right relationship accelerates and enables the achievement of company goals, engages customers and employees, and drives innovation in both product and process," he said, adding that separating technology from business outcomes typically does the opposite.
Sharon Stufflebeme, managing director in the technology consulting practice at the consultancy Protiviti, said the CIO's role today is to anticipate, influence and deliver on the company's business strategy.
Sharon StufflebemeSharon Stufflebeme
"But CIOs can't anticipate, influence or deliver on things if they don't know what those needs are," she said. For that to happen, there needs to be IT-business alignment throughout the organization.
Executives, management consultants and researchers have long stressed the need for IT and the other business functions to align their priorities and strategies.
Information technology is no longer a supporting player within the enterprise but part of the main engine. Indeed, computer technology has driven business growth for decades, with the internet and digitalization transforming both how people work and how they engage with organizations and each other. That makes IT-business alignment paramount to business success.
"It's the assurance that the technology being delivered enables the business to succeed," said Rebecca Gasser, CIO of Omnicom Health Group, of the benefits of IT-business alignment. "Some of this is foundational like networks and infrastructure, but a lot of this is the technology that provides a competitive advantage to the business," she said.
Darren TophamDarren Topham
IT-business alignment, although widely recognized as critical today, has not been the norm within most organizations until recent years, said Darren Topham, a senior research director at Gartner, a tech research and advisory firm.
In its earliest decades, the IT department focused on delivering computing hardware, software and services as a utility. Under this paradigm, technology was a tool that aided workers in their usual tasks, with reliability and uptime being the main measures of IT's success, Topham said.
However, that paradigm evolved over the years, and in particular in the 21st century, as more technology executives teamed with their C-level and business colleagues to use technology to reengineer work, products and services.
This led to a slew of disruption, as startups introduced entirely new business models and as legacy companies transformed their own processes and market offerings.
CIOs and their IT teams must still deliver utilitarian technology services, Topham said. But they must also now have the capacity to strategize how technology can shape what the enterprise offers for products and services as well as how it delivers those offerings.
"This is where alignment is manifested," he explained. "It's where everyone from both sides is bringing something to the table for communal benefits. There's no 'them' and 'us.'"
Topham added: "The ultimate expression for this is the term digital business."
IT-business alignment ensures that the IT organization and business units are working together and moving in the same direction at the required speed.
Rebecca GasserRebecca Gasser
"Technology can be exciting, but oftentimes it is expensive and not as fit for purpose as originally hoped. By partnering and being aligned, the business and the technology team can ensure the ROI is present, it is supported and it is the right fit for the business," Gasser said.
Surveys and studies back up the importance of IT-business alignment.
According to the Gartner report "The CIO's Role in Preparing for Digital Business Acceleration," more than 70% of senior leaders "recognize digital technology as integral to revenue achievement, product development, customer engagement and advancing strategic operational processes."
In its " Evolution of CIO Responsibilities Survey," Gartner noted that 83% of responding CIOs said they "increasingly work on enterprise-level initiatives beyond their traditional IT delivery executive roles."
Meanwhile, "IT's changing mandate in an age of disruption," a report from The Economist Intelligence Unit based on a survey of more than 1,000 IT decision-makers and senior business executives, found that 83% believe adapting to external change requires moderate-to-considerable IT infrastructure and apps improvement.
"IT has to serve every business function as technology has now become pervasive," said Protiviti's Stufflebeme. IT-business alignment helps ensure that the organization gets the right technology at the right time so it can meet its key performance indicators and reach its business transformation goals and objectives -- whether those are improving customer service or developing new revenue streams.
Stufflebeme said the lack of IT-business alignment creates significant barriers to market success for organizations.
"When alignment is missing, the technology might work but it might not deliver an outcome the business needs," she said. "You have solutions that end up being bridges to nowhere, you have business problems that aren't properly solved, or you have business initiatives -- whether it's a cost saving or efficiency improving [program] -- that aren't properly executed."
The alignment of IT and business brings many benefits, but challenges abound.
Experts cited the following benefits that come with having the IT department aligned with the business functions:
Jo Ann Saitta
IT-business alignment allows an organization to have an edge, said Jo Ann Saitta, managing director, EY Business Transformation Consulting, Health Sciences. "It allows [the enterprise] to stay current or even ahead of the curve."
Despite the criticality of having a strategic alignment between IT and the business functions, Stufflebeme said plenty of organizations still struggle to do that.
She and others cited a number of obstacles and challenges that executives and their teams face on this front, including the following:
RJ Juliano
To overcome such challenges, experts offered the following best practices:
Such practices, Juliano said, can eliminate any gaps between IT and its business counterparts and help the organization reach a place where the two are -- in his words -- "unified and indistinguishable."
All important goals are shared goals, he underscored, adding that the joint collaboration between IT and the business must go beyond just buy-in to common goals to include joint accountability for the results.
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