How Emergent Organizational Structures Foster Innovation and Empower Individuals
How Emergent Organizational Structures Foster Innovation and Empower Individuals
Last year, I embarked on some research for my master's degree to learn more about emerging organizational structures. A topic I'm very interested in. I explored three themes: the problems with traditional management hierarchies fueling a rethink, emerging forms of organizational structure, and the benefits of self-managing organizations. I reviewed five articles (linked at the end of this article). I discovered that there's a lot of evidence to suggest that the blanket hierarchical approach that's in use today - and that used to work for manufacturing and distribution in the past - doesn't necessarily meet the needs of today's knowledge-driven organizations.
Leadership that welcomes and empowers people is what makes an organization effective. When top-down leadership structures were used in the late nineteenth and early twentieth centuries, profits and production soared, especially in workplaces with relatively stable conditions. Today, organizations place a higher value on generating value through innovation and ideas. An innovative organization creates work environments where employees feel empowered and can make a difference.
Practitioners and scholars have studied traditional management hierarchies for over half a century. It's been found that formal management hierarchies pose three critical challenges to organizations: organizations don't adapt well to change, managers don't have the expertise to solve organizational problems, and job satisfaction is on the decline because workers want more autonomy and fulfillment.
Researchers say traditional management structures stifle creativity and innovation because they're hierarchical and bureaucratic. The organizations are "top-heavy with managers and unresponsive to changing, dynamic markets, resulting in a decrease in their competitive viability."
The organizations are "top-heavy with managers and unresponsive to changing, dynamic markets, resulting in a decrease in their competitive viability."
In their 2019 study, Georges and Romme explored the debate about organizational hierarchy by identifying two distinct properties of organizational hierarchies: a ladder of decision authority that starts at the top and a ladder of responsibility that starts at any level. They aimed to make hierarchies less controversial among scholars and practitioners, claiming they cause low performance and low employee satisfaction.
It's widely agreed that traditional top-down leadership structures might have worked in the past but no longer meet the needs of today's "knowledge economy." In today's world, leaders need to be more agile and responsive to the changing needs of their employees and customers. They also need to be able to quickly adapt to new technologies and strategies in order to remain competitive. This requires a more collaborative, bottom-up leadership style based on trust, collaboration, and accountability.
In my research, I found several terms that describe emergent organizing structures involving varying hierarchies. Among them are management innovation, post-bureaucratic organizations, humanistic management (Holacracy, sociocracy), organizational democracy, and circular, flat, and self-managing organizations. According to Frederic Laloux, teal organizations are characterized by a friendly work environment, a value culture, a flat organization, employee empowerment, employee relationships, self-management, and intrinsic motivation.
Lee and Edmonson define self-managing organizations as organizations that are radically decentralized in a formal and systematic manner throughout the organization to provide a sense of control and accountability. Based on their 2017 meta-analysis of 95 articles on less traditional forms of organizing, they establish three types: post-bureaucratic organizations, humanistic management, and democratic organizations. They distinguished between organizations that have made incremental attempts at decentralizing power and organizations that have implemented radical approaches to less hierarchical management. Zappos, Morning Star, and Valve are some companies in the latter category.
Other research attempts to establish a sequence of accountability levels for all organizations and argues that organizational hierarchies are transforming, not eroding. Figuring out whether redefining hierarchies is better than reinventing them needs more validation by practitioners.
Undoubtedly, self-managing organizations hold significant appeal to employees in their ecosystems, with one of their most significant advantages being job satisfaction and increased productivity, resulting in greater profitability. There is a growing trend that “knowledge economies” are driven by the ideas from all members of an organization, which leads to innovation and success, thereby increasing employee motivation and organizational commitment. In companies that have adopted less hierarchical forms of organization, there is an improved relationship between labour and management; employees in such an environment are empowered and hold themselves responsible in a more accountable manner.
However, other scholars argue that traditional hierarchies are still relevant in organizations. For example, Fowler et al. (2019) argue that traditional hierarchical structures are still necessary for organizations to achieve their goals. Additionally, Fowler et al. argue that traditional hierarchies allow organizations to manage complexity. Barker's 1993 ethnography of ISE Communications shows how the post-bureaucratic structure led to a concerted control system that was "a lot stronger, less apparent, and harder to resist than the bureaucracy" because peer and values-based pressures felt more oppressive than the traditional hierarchy. To survive and thrive in such environments, employees must be committed to themselves, their organizations, and their peers. Barker found that employees could use the post-bureaucratic structure to their advantage by forming networks to gain organizational power and influence. This allowed them to gain a sense of ownership and control, and the pressure to conform was felt very strongly. Furthermore, the post-bureaucratic structure enabled employees to be held accountable for their actions, making resisting the control system even more challenging.
Through my exploration of the literature, there's unanimous agreement that flat, holacratic, or decentralized restructuring can benefit organizations. Leaders with less authority and employees with more freedom to make decisions result in higher productivity, higher profitability, and happier employees. Despite these benefits, the status quo of hierarchical structures is often viewed as the most efficient and effective way to manage a workplace. This is despite research showing that more decentralized organizations can be just as successful, if not more so. Lee and Edmonson concluded, "Still, the persistence of the managerial hierarchy may be explained as much by a belief in its effectiveness as by its actual effectiveness. Another factor is almost certainly a lack of perceived viable alternatives". For practical implementation to take place, traditional organizations will have to develop a willingness to explore new ways of organizing their businesses that meet the current demands of their employees and the emerging industries of the future. Ultimately, more research and implementation efforts are needed to explore the potential benefits of alternative organizational structures.