In last week’s blog post I briefly introduced my study in the topic of personnel management. We went through some basic concepts, and I shared a personal story in experiencing teamwork with all of you. This week we are going to talk about different personnel structures within a company and how they can help a business grow. There are some traditional ones that y’all might be familiar with, and there are also some innovative ones that have become more popular during recent years. Without further ado, let’s get into it.
Before we start exploring different organizational structures, I want to reemphasize the importance of personnel management: to put the right person at the right position. As I mentioned in last week’s blog post, a company is often made up of employees who are good at different tasks. Some of them might be good at dealing with financial information, while others might be more familiar with operation and management. To maximize efficiency, entrepreneurs need to know how to divide tasks up to different individuals so that the company can function smoothly with everyone enjoying working under a harmonious environment. You would never want to put someone who is quiet but good at statistics in the human resources department. Neither would you want to put a very enthusiastic speaker in the accounting department. Nobody is perfect, but that does not mean a company cannot be operated in a perfect way. As long as everyone completes his/her own tasks efficiently, a company can grow very quickly. Even for the founders: you don’t need to care about everything happening in the company at all. The only thing you need to do is to build the right team, and then work on your own tasks. Your business can still be a success even though you know very little about statistical calculations.
Now we will start exploring different organizational structures. According to Jacob Morgan, one of my favorite writers for Forbes.com, there are five major structures we can look at, and they all have pros and cons while they also suit for different types of businesses. We are going to study three of them in this week’s blog post.
The first structure we are going to look at is the traditional hierarchy. It used to be popular, but nowadays “it belongs in a management museum locked up for people to see, but not touch.”
The traditional hierarchy model makes sense for linear work where “no brain power is required.” Under such a structure, employees are obedient and submissive to the “upper class,” and one or two important figures control the whole company. Such a model used to work on some small companies; however, as nowadays more and more talents seek for intelligence independence and respect, such a hierarchy system cannot function any more. Communication is one of the many problems with such a system, as employees cannot reach the CEO directly. As a result, competitors may use different tactics to dig away the talents. It will be extremely hard for a company with such a traditional hierarchy structure to retain talented employees.
The second structure we are going to look at is the “flatter organizations.” Unlike the traditional hierarchy structure in which communication is limited, flatter organizations open up different communication and collaboration methods as they remove layers within the organization. With fewer layers, the relationship between employers and employees becomes closer, and the organization becomes more approachable and scalable. “This is the model that most large (and many mid-size) organizations around the world are moving towards.”
Even though there are still components of hierarchy within this system, flatter organizations already own a good sense of communications and cooperations. The resource allocation is more efficient and employee experiences are taken good care of. One disadvantage of such a model is that good technology and mutual trust are heavily necessary within the system. Employers have to understand that “employees do not have to work here. The only reason they work here is that they want to work here.” Also, employers have to know how to share the management tasks among themselves. In general, such a model is still quite popular and beneficial for many companies. Cisco, Whirlpool and Pandora are some good examples of companies that actively use this example and achieve success.
The third model we are going to look at is the “flat organizations.” Unlike flatter organizations, flat organization are… entirely flat! “There are usually no job titles, seniority, managers, or executives. Everyone is seen as equal.” If an employee wants to start a project, he/she will be responsible for funding and building the team. “For some this sounds like a dream for others, their worst nightmare.”
Flat structure is not something that would fit with large and established companies, just because it is hard to fairly allocate power and resources when you have a huge team behind you. For small companies such a model is something interesting to think about. There are successful examples such as Valve, the gaming company that developed many classic games such as Half-Life and Counter Strike. Just like other organizational models, flat structure also has its own challenges. For example, “the lack of structure can make accountability and reliability a bit of an issue.” And we cannot forget that those who have stayed in the company longer will naturally tend to see themselves as seniors, and the balance between individuals can be broken. I agree with Jacob Morgan that flat structure is not as good as flatter structure, especially for large and medium-sized companies. However, again, it is a model that makes sense and can be interesting to look at.
That wraps up this week’s blog post. Next week we will continue looking at two more company structures and then we will finish our study in the area of personnel management. It has been a rich and fruitful week. I can’t wait to see what next week is all about. Stay tuned!