iStockphotos.com

Top-down v. Bottom-up Corporate Structure

Created on 2017-09-28 14:01

Published on 2017-09-28 14:08

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. Enter bottom-up management. Bottom-up management is 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. 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 produce 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.

Emergence of Bottom-up Thinking

I’m sure you’ve seen this trend already. The headlines scream “no-bosses, no-titles!” The org chart shows a series of concentric circles, a constellation of stars, or even a tree of life. The stories and anecdotes that circulate around the movement are usually about how small groups of peers self-organize — without the tyranny of managers — to create breakthrough results.

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.

In today’s economy more of the workforce are desiring a life-work balance. Most employees in Top-down systems have no time and little money. Bottom-up organizations that embrace the phenomenon of connecting people with needs through social networks offer both a share of the profits and flexible work schedules. The “office” job is disappearing simply because technology allows us to work efficiently from anywhere there is a Wi-Fi connection.  Companies that want to thrive in the millennial economy should make bottom-up communication and management a priority. The first tip for employer communication is to include these practices and “tailor policies to meet the needs of employees.” The response from the business world has included more adoption of bottom-up management, and the development of radical new hierarchies like Holacracy.

Holacracy® is a self-management practice for running purpose-driven, responsive companies. These type of companies function by empowering people to make meaningful decisions and drive change, the Holacracy practice unleashes your organization’s untapped power to pursue its purpose in the world. In this model there is less of an organizational tree and more of a network of circles/groups of people assigned to tasks that lead to the growth of the company.

In his book Team of Teams: New Rules of Engagement in a Complex World, General Stanley McChrystal describes the journey toward more self-management on which he led the Joint Special Operations Command during his tenure in Iraq. When he was given command in 2003 of the Joint Special Operations Command Forces, they were losing ground to Al Qaeda — despite having superior training, weapons, support, and satellite intelligence. Al Qaeda was just too agile, and did not employ the traditional top-down military command-and-control to make decisions. They relied on small groups of leaders to drive the mission toward their common objective. In this rapidly changing environment, General McChrystal realized he had to evolve how the military had traditionally operated. He began breaking down the existing silos among soldiers, and support personnel to create loose autonomous, cross-functional teams. To speed up decision making, he delegated life-or-death kill decisions to the forces closest to the action. He then reinforced positive behaviors by demonstrating to the teams that if they were transparent in their decisions and actions, and also followed a set of core operating principles or values, he would give them tremendous autonomy to make on-the-spot decisions and complete their respective missions. But if a team was found to have held back information, operated rogue, or violated the core principles, then he would drop the hammer of military justice on their heads.

It worked. The changes implemented under General McChrystal’s leadership began to transform the Joint Special Operations Command into a more agile, cross-functional, and effective fighting force.

 Should you run a top-down or a bottom-up organizational design?

Choosing “top-down” means giving the roles at the top of your organization significantly more control over key decisions than those lower in the hierarchy. Choosing “bottom-up” means having little to no centralized control so that those doing the work are free to organize, make decisions, and perform as they best see fit. Both camps have their own justifications.

Tomorrow’s successful companies will employ a strategy of bottom-up holacracy, where strategies or plans are first conceived at the top of the organization and then cascaded down into the organization for implementation with the purpose of structure, not to control but to delegate. Many bad or ineffective leaders and managers today still misunderstand this simple fact about structure. They look at a structure and rather than think “How much can I delegate or empower?” they think “How much can I personally control?” As a result, they end up micro-managing what they should delegate.

So who’s right? The market will decide. We can see the development of a hybrid successful self-managed organizations in companies like AES, PRI Financial Services, MorningStar, Patagonia, Whole Foods, Zappos 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.

Are you looking for a simplified guide to architecting your own self-managed organization? Well good luck, I’m sorry to say there’s no such thing. Every company and situation is unique and needs to develop its own model based on resources and objectives. I suggest that you find inspiration from other companies but then find the right approach that works for your company. Enrolling in one of the Freedom Performance Group’s (ChangingMyFuture.com) seminars or on-line courses could help you to begin asking the right questions will help you find the way.

§ Is your mission, vision and strategy still aligned with the changing world?

§ Does your structure have good checks and balances? Is it collapsing too much under one personality?

§ Is our culture strong and vibrant and are we being effective? If not, what changes do we need to architect into the system?

§ Are you hiring people that are taking initiative to drive the business forward and design their own work processes?

The hardest part of the journey to becoming a more design-centric leader is that the further you go into the process, you influence and communicate more but actually do less and less. In many ways, this is a process of letting go. Don’t underestimate how hard it is to make this individual journey from a traditional lead-by-doing style into a lead-by-designing style. Despite your best intentions, it’s very easy to step back into the drama, to take action and solve problems for people, and even to feel personally powerful by saving the day.

The best practice to shift your mindset and behaviors is to find a mentor or a coach who has successfully made that transition and understands it. This relationship gives you a private and independent ear to process through the many conflicting feelings and hard choices, and hopefully to find the inner clarity and continued conviction needed to make the transition.

By now, you should realize that this is a false question and that neither extreme of the top-down nor bottom-up camp is a workable approach to building a successful organization. Instead, the ideal approach would be a fusion of the best of both…You decide.

Additional Reading

§ An Inside Look at Holacracy (a “buzzy” approach to self-management that I think embraces efficiency too much at the cost of effectiveness)

§ The Culture System (things to think about when architecting culture)

§ Lifecycle Strategy (I wouldn’t even try to build a true self-managed organization until the early Scale It stage)

§ The Physics of Fast Execution (I didn’t discuss this but “gathering the mass” is the same as “seeking advice,” a concept embraced by all self-managed companies)

                                          Sources: Team of Teams, Lex Sisney