What is the right organization structure for the 21st century?

Innumerable organizational structures now provide alternatives to the traditional model that may be a better fit with modern knowledge work. The general “modern” structure is without boundaries, and places a heavy focus on networking and collaborating. Here are three of the newer structures most commonly incorporated by innovative companies today:

Flat

Flat, or self-managed, structures have no hierarchy, give no job titles and grant no seniority. Open channels of communication across the company allow employees instead to see all ongoing projects and join whichever they choose. If an individual wants to embark on a new project, it’s often up to them to secure funding and a project team.

Organization Structure for 21st century

Innumerable organizational structures now provide alternatives to the traditional model that may be a better fit with modern knowledge work. The general “modern” structure is without boundaries, and places a heavy focus on networking and collaborating. Here are three of the newer structures most commonly incorporated by innovative companies today:

Flat

Flat, or self-managed, structures have no hierarchy, give no job titles and grant no seniority. Open channels of communication across the company allow employees instead to see all ongoing projects and join whichever they choose. If an individual wants to embark on a new project, it’s often up to them to secure funding and a project team.

California-based tomato-producing giant Morning Star Company, founded in 1970, is one of the oldest firms to operate out of a flat organizational structure. Critics argue that it can sometimes lead to the creation of informal hierarchies based more on seniority than job duties.

At their worst, these hierarchies can resemble high-school cliques, which can make communication and coordination difficult. These challenges render flat structures hard for larger companies to implement. For existing hierarchical companies, switching to a flat structure requires a massive overhaul of vision, culture, roles, and communication channels—to name a few aspects to consider. Flat structures tend to work best for startups, though challenges may arise as the need for oversight and delegation increase as a company grows.

Flatter

Coined by Jacob Morgan, author of The Future of Work, “Flatter” structures open up lines of communication and collaboration while also stripping layers within the organization. This model is by far the most widely adopted today, and is the one Morgan expects to grow the most. Managers understand that they exist to support employees, not vice versa.

Flatter structures require a “central nervous system,” allowing employees to access anything from anywhere at any time. They also necessitate an understanding by executives and managers that employees do not need to work at your company; they should want to work there. And everything should be designed around that principle as a result. And finally, people within flatter structures accept the way we work is changing.

They are comfortable with flexible work arrangements, and eschew annual employee reviews and other laborious aspects of working. Cisco, Whirlpool, and Pandora have all adopted flatter structures. At Cisco employees can work from anywhere, whenever. Outside of its executive team, Whirlpool does not use traditional job titles. Instead, employees fit into one of four types of leadership roles, and anyone can contribute to the company’s robust innovation program.

Pandora devotes an entire team to work on the employee experience, which accounts for everything from the value of individuals to the ways people work to the physical work environment. This team works in addition to the HR department, which takes the goal of creating a positive employee experience one step further by striving to create an environment where every employee can be themselves and be as unique as each member of its personalized radio audience.

Holarctic

Holarctic structures are composed of teams which can be brought together and dissolved quickly to meet organizational goals. As a form of self-management a holacracy’s decision power resides in these fluid teams, or “circles,” which helps to disperse power throughout the organization. Rather than a formal hierarchy, these teams have a set of simple, explicit, and

public rules that dictate how work gets done. If anyone has an issue with a current process, they can raise and resolve them at regular group meetings. The aim of a holacracy is to distribute decision making while enabling everyone to work on what they do best. Holacracies still possess some structure and hierarchy, but it’s based more on circles and what people think of as departments rather than on people.

Zappos and Medium have been two of the most visible adopters of the Holarctic method. Zappos was the largest company to switch to a Holarctic structure when the online shoe and clothing retailer transitioned in January, 2014. While some employees complained about how learning “shiny buzzwords” did not translate into a tangible difference how they conducted work, others felt the management style enabled them to make the best use of their talents. Employees can resign from one circle and float around for a while until they join another. Only about five people within the 1,600 employee company have the authority to fire someone.

Zappos CEO Tony Hsieh, likes to equate holacracy to a city: “Cities have stood the test of time.” he said during a 2016 Q&A at The Wharton School of the University of Pennsylvania. “They’re self-organized; the mayor of the city doesn’t actually tell its residents what to do, where to live. They are resilient.

21st Century Adapting the modern organization structure

In order for contemporary organizations to thrive, leadership must be willing to critically assess whether their company’s structure aligns with its values and goals. This form of big-picture internal assessment often goes overlooked. Changing the tides is hard work.

 

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While the hierarchal model enabled industrial-age companies to thrive, the rise of the information economy has rendered this model harder to optimize. In factories, knowledge and intellect is concentrated at the top. Actual production, in contrast, requires little thought and massive coordination and repetition. Knowledge-based organizations, by contrast, require each employee to be enabled to think, communicate, and work at their best.

Contemporary businesses are facing a new generation of workers who donot like rigid structure. The flow of knowledge required in successful businesses simply doesn’t align with the slow, restrictive style that hierarchies necessitate. Research shows that the high capacity of data processing and information in the typical modern company requires explorative and exploitative business models. While it was once sufficient for structure to follow strategy, now process follows proposition. Now we foresee more of a “communication, collaboration, and facilitation” mode of conducting business in which leadership asks employees for the input and empowers them to help move the organization in the right direction.

Even some within the iron-clad structure of the military are rethinking its impenetrable framework in view of new type of cyber warfare may have to be fought.

Changing structure is not easy for any organization. There is a lag between technical reality and culture. To catch culture up, we must reframe the challenges of adapting to the 21st century as an opportunity.

Some experts go so far as to advocate for eliminating all titles within an organization, though critics wonder how employees could advance their young careers without an external step ladder of success. But eliminating titles will also help break down employees’ glass ceilings. Without parameters defining their jurisdictions and authority, they can assume more responsibility and boost their level of involvement in projects.

“Aligning an organization’s structure with its goals takes a lot of time and energy and effort,”.“Organizations must be designed to reflect not only their strategy, their values and their philosophy, but where they will need to be to achieve a competitive advantage in the future

.”Whether within the traditional organizational framework or not, the evolving work landscape of the 21st century demands we have to reinvent our Organizational Structure.

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