What is a top-down organizational structure? Are there other types of organizational structures? Which is best? <\/p>\n\n\n\n
A top-down organizational structure is the default for many businesses and other organizations. But many argue that a top-down organizational structure isn’t actually the most effective. <\/p>\n\n\n\n
Find out more about top-down organizational structures, and alternatives based on OKRs. <\/p>\n\n\n\n\n\n\n\n
Generally, there are two approaches to alignment: top-down and bottom-up. In the top-<\/b>down<\/strong> organizational structure, directives start with the CEO and cascade down through the ranks to the junior employees. In the bottom-up approach<\/a><\/strong>, junior employees working on the frontlines, the people who often have the most access to customers and product issues, identify pressing needs and relay them up the chain of command to the CEO.<\/p>\n\n\n\n There are benefits to both systems, and the most effective companies are aligned in both directions. However, there are more problems with a top-down management structure<\/a> than with bottom-up organizational structure. <\/p>\n\n\n\n The benefit of a top-down management structure and goal-setting system is that it ensures everyone\u2019s goals are aligned with the company\u2019s vision. But there are five problems that outweigh this benefit:<\/p>\n\n\n\n Before the manager can set goals for his team, he has to wait for the department head to give him his own goals, and the department head has to wait for her own marching orders from the executive team. This process of goal-setting can take weeks, and with markets that are constantly changing, companies need to pivot quickly.<\/p>\n\n\n\n Related to Problem #1, top-down goals are hard to change mid-cycle if they\u2019re not working. If a department head realizes that he needs to adjust his goal to meet the needs of changing circumstances, all the employees in tiers below him will have to scramble to revise their own goals to align with his. This kind of system isn\u2019t sustainable.<\/p>\n\n\n\n Often, employees at the lowest tiers have the most interaction with the market, and they may be the first to know that a company\u2019s strategy isn\u2019t working.<\/strong> A top-down system can marginalize these employees and make it difficult for them to communicate their concerns to those with the power to change things.<\/p>\n\n\n\n While these systems provide a clear path from the top of the organization to the bottom, they don\u2019t connect people with employees from other departments. Consequently, the organization loses valuable opportunities to foster interdepartmental collaboration.<\/p>\n\n\n\n Because employees don\u2019t have a say in developing their own goals, they take less responsibility for achieving them. You\u2019re much more likely to reach a goal you set for yourself. Additionally, when employees don\u2019t feel ownership over their goals, their bosses often find themselves micromanaging in order to get things done, and this keeps them from focusing on their own goals.<\/p>\n\n\n\n Top-down alignment isn\u2019t all bad. In fact, about half of employees\u2019 OKRs should come from objectives established by top management. At its best, top-down alignment makes cascading goals clear. Below, the head coach\u2019s key results<\/a><\/em> become the objectives<\/em> of the coaches working under him. This is an effective use of top-down alignment. In turn, each coach has his own specialized key results that support his objective. <\/p>\n\n\n\n Objective: <\/strong>Win the Super Bowl<\/p>\n\n\n\n Key Result #1: <\/strong>Offense gains at least 300 yards per game<\/p>\n\n\n\n Key Result #2: <\/strong>Defense allows no more than 17 points per game<\/p>\n\n\n\n Key Result #3: <\/strong>Special teams unit earns a ranking in the top 5 for coverage of punt returns<\/p>\n\n\n\n Objective: <\/strong>Offense gains at least 300 yards per game<\/p>\n\n\n\n Key Result #1: <\/strong>Achieve a rate of 60% pass completion<\/p>\n\n\n\n Key Result #2: <\/strong>Allow no more than 2 interceptions per game<\/p>\n\n\n\n Key Result #3: <\/strong>Hire a quarterback coach by the end of July<\/p>\n\n\n\n Objective: <\/strong>Defense allows no more than 17 points per game<\/p>\n\n\n\nProblems with Top-Down <\/strong>Organizational Structure<\/h4>\n\n\n\n
Problem #1: Top-Down Systems Aren\u2019t Efficient <\/h5>\n\n\n\n
Problem #2: Top-Down Systems Aren\u2019t Flexible<\/h5>\n\n\n\n
Problem #3: Top-Down Systems Don\u2019t Value the Insight of Frontline Employees<\/h5>\n\n\n\n
Problem #4: Top-Down Systems Don\u2019t Connect People Horizontally<\/h5>\n\n\n\n
Problem #5: Top-Down Systems Fail to Motivate Employees<\/h5>\n\n\n\n
Benefits of a Top-Down Organizational Structure<\/strong><\/h4>\n\n\n\n
Head Coach<\/h5>\n\n\n\n
Offensive Coach<\/h5>\n\n\n\n
Defensive Coach<\/h5>\n\n\n\n