Are Traditional Functional Hierarchies Dying?
What does your organizational chart look like? Do you see hierarchy, top-down management style, control, one place of work, and so on? And is your organization facing issues like employee engagement, culture, innovation and digital disruption? It’s possible that these issues have something to do with your organization chart.
Most organizations operate under traditional functional hierarchies. But can these organizations hold on when the waves of digital transformation, rapid change and frequent disruption come crashing? Seem unlikely because overly centralized management structures slow down the decision-making process. They aren’t agile enough to innovate/deliver to shifting consumer requirements, keep pace with fast moving technology, or satisfy employee expectations of ownership and recognition.
Organizations need to be increasingly agile and responsive to the needs of all stakeholders else they run the risk of losing out to competition in the long run. To achieve this, many organizations are shifting from traditional functional hierarchies to a ‘network of team’ model.
Dynamic networks of highly empowered teams are formed around specific business objectives such as customer, market or innovation needs vis-à-vis traditional business functions. These teams function from concept to delivery. The ‘network of teams’ deliver results faster, engage people better, and stay closer to their mission. Rather than sending messages up and down the corporate pyramid, teams use web or mobile apps to share goals, communicate and coordinate.
This model of ‘network of teams’ is redefining job roles, internal mobility, goal setting and compensation structures. There is a greater emphasis on developing and learning skills. This also means that role of leaders will evolve.
Leaders don’t need to be top-down controllers anymore – they need to be facilitators. Their role will be to plan, strategize, and provide vision to the organization, apart from encouraging cross-team communication. But are senior executives prepared to give autonomy to teams and give up control?
It’s time to challenge traditional organizational structures. But changing the organization chart is only a small part of the challenge. The larger part is to change management’s mind-set and the way organizations actually work.