Module 2.

Planning and Organizing

 Definition of Planning
● Planning is the fundamental management function.
● According to O’Donnell, “Planning is deciding in advance what
to do, how to do it, when to do it and who is to do it. It bridges
the gap from where we are to where we want to go”.

● It is an intellectual process which lays down an organisation’s

objectives and develops various courses of action, by which the
organisation can achieve those objectives.

● It chalks out exactly, how to attain a specific goal.

 Failing to plan
is
Planning to fail!!
●
Nature of Planning
● Primary Function
● Contributes to objectives
● Intellectual activity
● Results in higher efficiency
● A continuous process
● Flexible
● Unity and consistency
● Basis for all managerial functions
● Getting coordination
● Considering limiting factors
Importance/Significance of Planning:

● 1. Planning provides Direction:

● Planning makes clear what employees have to do, how to do and the
like. Planning provides direction for action. Employees know in advance
in which direction they have to work. This leads to Unity of Direction
also. If there were no planning, employees would be working in different
directions and organisation would not be able to achieve its desired
goal.
● 2. Planning Reduces the risk of uncertainties:
● Planners try to foresee the future by making some assumptions regarding
future keeping in mind their past experiences and scanning of business
environments. Plans also include unexpected risks such as fire or some
other calamities in the organisation.
● 3. Planning reduces over lapping and wasteful activities:
The departmental plans are derived from main organisational plan. As a
result there will be co-ordination in different departments. There will be
integration in the activities. Plans ensure clarity of thoughts and action
and work can be carried out smoothly.
● 4. Planning Promotes innovative ideas:
Planning requires high thinking and it is an intellectual process. So, there
is a great scope of finding better ideas, better methods and procedures
to perform a particular job. Planning process forces managers to think
differently and assume the future conditions. So, it makes the managers
innovative and creative.
● 5. Planning Facilitates Decision Making:
Planning helps the managers to take various decisions. As in
planning goals are set in advance and predictions are made for
future. These predictions and goals help the manager to take
fast decisions.
● 6. Planning establishes standard for controlling:
If there is no planned output, then controlling manager will have no base to
compare whether the actual output is adequate or not.
● 7. Focuses attention on objectives of the company:
When employees follow the plan they are leading towards the achievement
of objectives. Through planning, efforts of all the employees are directed
towards the achievement of organisational goals and objectives.
Limitations of planning
● Difficulty of accurate premising: Future is unknown. So, premising is
subject to a margin of error.
● Problems of rapid change :Rapid change in environment .Planning
activities taken in one period may not be relevant for another period as
the conditions in both periods may be different.
● Internal inflexibilities :The set of variables with which managers have to
work provide less flexibility which is needed to cope up with the
changes in environment. Eg. Policies and procedures, psychological and
capital investment.
● External inflexibilities: Managers may not have control over economic,
political, technological and social forces.
● Time and cost factors: Managers can spend unlimited time for a large
number of variables ,if there is no time limit. Planning is costly to the
enterprise .
● Failure of people in planning :People tend to fail at times .It may be due
to lack of commitment to planning and lack of clear objectives.
● Purpose or Mission:
● It expresses the basic function or task of an enterprise.
● A statement which is used to communicate the purpose of
an organization.
● The mission is the reason for the existence of an organization.
● The mission is developed by top-level management, which defines the
fundamental unique purpose that sets an organization apart from other
organizations of a similar type.
● Vision:
● A vision statement is a description of the desired future state of the
company.
● Eg. Christ University:
● Vision: Excellence and Service
● Mission: CHRIST (Deemed to be University) is a nurturing ground for an
individual's holistic development to make effective contribution to the
society in a dynamic environment.
● Objectives:
● The results to be achieved are called as objectives.
● Objectives are the ends toward which activity is aimed.
● Objectives are planned results to be achieved. These are accomplished
by destinations that an organization plans to reach.
● Objectives specify what is to be accomplished and by whom and should
be shown in quantitative terms.
● Objectives should be consistent with the mission of an organization.
● Strategies:
● General programs of action and deployment of resources to achieve
comprehensive objectives.
● It is one of the important parts of the hierarchy of planning in
management.
● The strategy is a comprehensive master plan stating how an organization
will achieve its mission and goals.
● It determines the basic long-term objectives of an organization’s
adoption of the course of action and allocation of resources necessary to
achieve advantages and minimize the desired goals.
● Policies:
● General statements or understandings which guide or channel thinking
in decision making.
● The policy is a comprehensive guideline for decision making that links
the formulation of strategy with its implementation.
● It defines the area within which a decision is to be made and ensures
that decisions will be consistent with objectives.
● Managers develop policies to make sure that employees of the
organization make decisions and take actions that support the mission,
goals, and strategies.
● Procedures:
● Plans that establish a required method of handling future activities.
● They are guides to action .
● Procedures are the sequential steps that describe in detail how a
particular task is to be performed.
● They generally indicate how a policy is to be implemented and carried
out.
● They are the guides to action and detail the exact manner in which
certain activity must be accomplished.
● Rules: Rules spell out specific required actions or non actions allowing
no discretion. They are the simplest type of plan.
● Rules are detailed guides to action.
● They are specific and rigid and are strictly to be obeyed by all the
members of an organization. It is essential to operate an organization in
an orderly way.
● Rules must be followed precisely and observed strictly. The violation of
rules is associated with disciplinary action.
● Programs :
● Program is a statement of activities essential to accomplish a single-use
plan.
● It is a comprehensive plan consisting of a complex set of goals,
procedures, rules, resource flow, etc.
● It is an aggregate of several related action plans that are designed to
accomplish a mission.
● It is a complex of goals , policies , procedures , rules , task assignments
to be taken, resources to be employed, and other elements necessary to
carry out a given course of action.
● They are ordinarily supported by budgets.
● Budget:
● A statement of expected results expressed in numerical terms.
● The budget is a short-term financial plan, which is presented in terms of
money.
● It is designed to allocate the resources of an organization.
● It is the basis of measuring actual performance achieved with that of
standard and identifying the variance.
Steps in the Planning process
Being aware of opportunities
Being aware of opportunity
● Awareness of opportunities in the external as well as internal
organization is important.
● Awareness of our own strengths and weakness
● What problem we wish to solve
● Why
● What we expect to gain
Establishing objectives
● Establish objectives for the entire enterprise and then for each
subordinate work unit.
● Establish objectives for the long term as well as for short term.
● Objectives specify the expected results.
Developing premises
● Establish ,circulate and obtain agreement to utilize critical planning
premises such as forecasts , applicable basic policies and existing
company plans.
● They are assumptions about the environment in which the plan is to be
carried out.
● All managers involved should agree on the premises.
Determining alternative courses
● Search for and examine alternative courses of action ,especially those
not apparent.
● An alternative plan , though not more obvious may prove to be the best.
Evaluating alternative courses
● List out various alternative courses of action.
● Examine their strong and weak points.
● Weigh them in the light of premises and goals.
● Evaluation is usually very difficult.
● Eg.A company’s new product line just for the sake of prestige.
● Operations research ,mathematical and computing techniques have
their primary application here.
Selecting a course
● This step is the real point of decision making.
● After evaluation, two or more alternative courses may be advisable .
● The manger may decide to follow several courses rather than one best
one.
Formulating derivative plans
● Various other plans to support the main plan is taken up. This plan is
called as derivative plan.
● Also called as supporting plans.
Numberizing plans by budgeting
● The sequence of plans is determined, so that the plans are put into
action.
● It can be decided who will do what, at what time.
● Convert the selected plans to budgets, which is a means of adding
together the various plans and also set important standards against
which planning progress can be measured.
Features of a good plan:
1. Linked to long term objectives
2. Direction for action
3. Consistent
4. Feasible
5. Simplicity
6. Flexible
Strategic plan
● A strategic plan is the company’s big picture.
● It defines the company’s goals for a set period of time, whether that’s
one year or ten, and ensures that those goals align with the company’s
mission, vision, and values.
● Strategic planning usually involves top managers, although some smaller
companies choose to bring all of their employees along when defining
their mission, vision, and values.
Tactical Plan
● The tactical strategy describes how a company will implement its
strategic plan.
● A tactical plan is composed of several short-term goals, typically carried
out within one year, that support the strategic plan.
● Generally, it’s the responsibility of middle managers to set and oversee
tactical strategies, like planning and executing a marketing campaign.
Operational Plan

● Operational plans encompass what needs to happen continually, on a

day-to-day basis, in order to execute tactical plans.
● Operational plans could include work schedules, policies, rules, or
regulations that set standards for employees, as well as specific task
assignments that relate to goals within the tactical strategy, such as a
protocol for documenting and addressing work absences.
Contingency plan
● Contingency plans wait in the wings in case of a crisis or unforeseen
event.

● Contingency plans cover a range of possible scenarios and appropriate

responses for issues varying from personnel planning to advanced
preparation for outside occurrences that could negatively impact the
business.

● Companies may have contingency plans for things like how to respond to
a natural disaster, malfunctioning software, or the sudden departure of a
C-level executive.
 Management by Objectives (MBO)
● MBO is a comprehensive managerial system that integrates many key
managerial activities in a systematic manner and that is consciously
directed toward the effective and efficient achievement of
organizational and individual objectives.
● A system where the superior and subordinate identify themselves
● An effort to achieve organizational and individual objectives
● A result centred exercise to utilize the resources effectively
● Mutually agreed objectives form the basis for performance evaluation
● Periodic review of objectives by the superior and subordinate
Features of MBO
MBO is a philosophy
● Guides and influences all aspects of management
Objectives Decided Collectively
● Objectives of the organization and the the individuals are decided
collectively by the superiors and subordinates. These objectives become
the targets to be achieved. Review of objectives is also done periodically.
Basis for measuring performance
● The corporate, departmental and individual objectives are used as a
yardstick to measure performance.
Regular review of performance
● The periodic review emphasizes the initiative and active role by the
manager who had achieved the objectives.
Objectives
● Measuring performance
● Increasing growth of subordinates
● Encouraging efficiency
● Relating individual performance to organizational goals
● Basis for deciding the compensation for the employee
● Improving communication among superiors and subordinates
● Device for organizational control
Process of MBO
● Setting objectives at the top level
● Clarifying organizational roles
● Setting subordinates objectives
● Periodic reviews
● Assessing final performance
Benefits of MBO
● Better management
● Clarifying organization
● Encouraging personal commitment
● Developing controls
● Improves communication
● Improves efficiency
Weakness of MBO
● Failure to teach MBO philosophy
● Failure to give guidelines to goal setters
● Difficulty in setting goals
● Emphasis on short term objectives
● Danger of inflexibility
 Management by Exception (MBE)
● Management should not concentrate on things of minor nature rather it
should involve only when there are exceptions
● Minor deviations should be taken care of, at the lower levels itself.
● When the top management is burdened with the small deviations, it
distracts them from focusing on the major issues
● Hence, top management should be involved only when there are
exceptions or major deviations

● MBE is a control technique used to decide what is to be reported to the

top management
● MBO is a philosophy of decentralization and participative management
 Organizing

● An organization represents a group of people who have come

together to achieve a common purpose.
● Organizing is the process of defining and grouping the activities
of the enterprise and establishing authority relationships
among them.
● The 4 steps in organizing process are:
○ Identification and classification of required activities
○ Grouping of activities necessary for attaining objectives
○ Assignment of each group to a manager with the authority to supervise
it
○ Provision for coordination horizontally and vertically
Nature of Organizing
● It is a process - Each member is assigned a work and required to fulfill it.
● A structure of relationships is created in organizing.
● It is one of the basic functions of management.
● Organizing clearly defines the responsibilities and authority of
employees.
● Division of work is seen in organizing.
● Cooperation is the essence of organizing.
● It is a continuous process subject to change.

Organization Structure
● Organizational Structure defines the manner in which tasks are divided,
grouped and coordinated in organizations .
● It specifies the roles ,responsibilities and reporting relationships of
members.
 Types of organizations

Formal organization
● The intentional structure of roles in a formally organized
enterprise .
● It is a system of well defined jobs ,each bearing a definite
measure of authority ,responsibility and accountability

Informal organization
● A network of interpersonal relationships that arise when
people associate with each other.
Characteristics of formal organization
● Properly planned
● Laid down by top management
● Based on the principle of division of labor
● Focuses on performance of jobs

Principle of the Span of Management

● There is a limit to the number of subordinates a manager can
effectively supervise, but the exact number will depend on the
impact of underlying factors.
Organizational Levels and the Span of Management
● Levels are expensive
● More effort and money is required to manage them
● Levels complicate communication – omissions and misrepresentations occur
● Levels complicate planning and control
Types of formal organization
● Line organization
● Line and staff organization
● Functional organization
● Matrix organization
● Project organization
● Network organization
● Virtual organization
Line organization
● Also known as military or scalar organization
● There is hierarchical arrangement of authority
● Managers have direct control over their subordinates
● Each department is self contained and independent.
● Each subordinate reports to only one superior.
Line and staff organization
● There are both line and staff managers
● Line managers are ultimately responsible for achieving results.
● Line managers have authority to decide and implement decisions.
● Staff officials have expert and specialized knowledge.
● Staff can only give advice or guide managers but have no authority.
Functional organization
● Activities of the firm are classified based on functions such as
production ,finance ,marketing and human resources.
● Firms can derive the advantage of division of labor and specialization.
● Speed and efficiency of employees are increased.
Matrix organization
● Functional and product departments exist simultaneously
● Functional departments are permanent whereas product or project
teams are created when the need arises.
● Any organization that employs a multiple command system that includes
not only a multiple command structure , but also related support
mechanisms and an associated organization culture and behavioral
pattern .
Project Organization
● It is the most suitable form of organization to manage projects in an
efficient manner.
● Each project is managed by a project team.
● A project team has members who are experts in various fields.
● The project manager plans ,coordinates and controls the team members.
Network Organization
● It is a network of autonomous ,legally independent organizations which
perform functions based on their specialized skills.
● The firms are connected by communication and internet technologies.
● Functions of the organization are outsourced to specialist firms (
subcontractors)
● The headquarters coordinates and monitors the work performed by
subcontractors.
Virtual or Boundaryless Organization
● Latest form of organizing
● Advent of Internet has enabled virtual organizations
● It is a network of companies
● Employees and customers are connected for mutual benefit
● Their relationships exist as long as the opportunity exists.
● Firms are not tied to one or specific partners . They can enter into
multiple partnerships.
● High degree of interdependence.
● Organization Chart :
● It is a diagrammatic representation of the organization structure . Also
called as organogram.
● It is an indication of how departments are toed together along their line
of authority.
● Advantages :
○ To understand essential reporting relationships
○ The chart maps lines of decision making authority
○ It reveals to managers and new personnel how they tie into the entire structure
● Organization Manual :
● It is a guide to the company’s organization.
● It consists of top management decisions ,practices and procedures.
● Prepared by experts who have detailed knowledge about the
organization.
● Limitations :
○ A chart shows only formal authority relationships and omits the many
insignificant informal relationships.
○ It does not show how much authority exists at any point in the structure.
○ Individuals may confuse authority relationships with status.
○ Charts should not be allowed to become obsolete.
Informal Organization
● Informal organization brings cohesiveness to a formal organization . It
brings to the members of the organization , a feeling of belonging, status
of self respect and satisfaction.
● Advantages :
● Provides a sense of belongingness to employees ,enables bonding
,creates cooperation among employees
● An useful channel for communicating information which may not be
possible through formal channels.
● Provides the right feedback to managers
● Disadvantages :
● Clash of organization’s objectives and group’s objectives
● May affect organization’s performance
● The informal organization may resist any change implemented by the
management.
● They are breeding ground for rumours.
Committees
● Committee refers to a group of people who have been assigned some
task for completion.
● Committees can also be set up for discussion, decision and
implementation of certain issues.
● Committees pool together the knowledge , experience and problem
solving abilities of a number of persons.
● Also known as task forces ,commission or board.
● Types : Standing Committee, Adhoc committee,Line and Staff
committee, Executive committee and Advisory Committee
● Functions of a committee :
○ To make members work as a team
○ To enable bringing together the collective knowledge and skills of members
○ To secure unity of action
○ To solve problems and discuss issues
○ To resolve conflicts
 Centralization & Decentralization

● Centralization :
● It refers to concentration of authority with the top management
● There is no distribution of authority among the organizational units.
● Decisions are taken by the top management and employees are just
expected to follow them.
● Louis A.Allen, “Centralization is the systematic and consistent
reservation of authority at central points within an
organization.Decentralization applies to the systematic delegation of
authority in an organization wide context”.
● Advantages :
● Develops strong leadership
● Ensures discipline
● Uniformity of policies ,procedures and plans
● Ideal structure for organizations going through crisis situation
● Efficient usage of facilities and resources
● Disadvantages :
● May lead to autocracy
● Subordinates may lose initiative to contribute to organization
● May lead to abuse of power
● Does not foster creativity
Delegation

● Delegation : A single individual cannot perform all tasks .Therefore , the

responsibility and authority to perform has to be shared with others.
● Authority is delegated when a superior gives a subordinate discretion to
make decisions.
● Louis A.Allen , ” It is the entrustment of a part of the work of
responsibility and authority to another and the creation of
accountability for performance”.
● Process of Delegation :
○ Identification of activities : Capacity of subordinates is noted.
○ Assignment of duties : Resources are also given
○ Grant of authority : Authority is the right granted to a person to perform tasks.
○ Creating accountability : Creating an obligation on the subordinates .
○ Review : Monitor performance of subordinates
○ Feedback :Subordinate should know the areas of good performance and area to
improve , thereby motivating them to perform better.
Features of delegation :

● A superior can delegate, only the authority that he has.

● After delegation , the superior still has authority
● Authority delegated can be modified
● Delegation of authority does not mean delegation of responsibility-the
superior remains responsible for the task.
● Delegation may be temporary or permanent
● Delegation may be oral or written
Need for delegation :

● Development of subordinates
● Motivation to employees
● Creating next level of leadership
● Enables MBE
● Enables diversification into new areas for business growth
● Key for decentralization
● Better usage of superior’s time
Barriers to Delegation :
● Barriers by Superiors:
○ Lack of confidence on subordinates
○ Dominating Attitude
○ Lack of planning : Not able to decide what to delegate
○ Fear of loss of power
○ Fear of Exposure :Fear that their incapacity may be exposed
○ Superiority Complex :
● Barriers by Subordinates :
○ Insufficient incentive
○ Lack of guidance
○ Fear of failure
○ Avoid responsibility
○ Past bad experiences
○ Inadequate resources
○ Lack of decision making skills
 The art of delegation
● Delegation is an elementary act of managing.
● Why delegation fails?
● Personal attitudes toward delegation
● Receptiveness: Give other people’s ideas a chance. Managers must be able
to welcome new ideas from others and compliment them for the
ingenuity(smartness , intelligence)
● Willingness to let go: Release the right to make decisions to subordinates
.Some managers would like to continue making decisions for positions they
have left.
● Willingness to allow mistakes by subordinates: Allow employees to learn
from their mistakes. Such costs due to mistakes must be considered an
investment in personal development.
● Willingness to trust subordinates: Subordinates must be trained enough if
superiors feel they don’t have the necessary experience . Or, superiors must
select others who are prepared to take the responsibility.
● Willingness to establish and use broad controls : If authority is delegated
there must be mechanism to take feedback.
Decentralization
● According to Louis A.Allen ,”Decentralization refers to the systematic
effort to delegate to the lowest levels all authority except that which can
only be exercised at central points “
● It is the systematic delegation of authority within an organization
● The purpose is to achieve organizational goals in a more effective
manner.
● It would be effective if there is a balance between distribution of
authority and control.
Factors influencing degree of decentralization
● Size of the organization :Large organizations opt for a high degree of
decentralization to manage the large business size
● Growth characteristics : Organizations in the growth stage go for high
degree of decentralization.
● Extent of operations :Organizations geographically spread out go for
decentralization as they would be able to serve individual markets better
● Nature of external environment : If the external environment is
unstable, then they can go for decentralization.
● Type of growth :Organizations which have grown from within tend to be
centralized . Those grown by mergers and acquisitions tend to be
decentralized.
● Control systems : If the firm has effective control systems, then
decentralization is possible.
● Top management attitude :If top management is traditional
,centralization is followed. If they are open minded , with a modern
outlook, decentralization would be adopted.
● Type of leadership : Democratic leaders would opt for decentralization
while autocratic leaders would opt for centralization.
● Merits of decentralization :
● Saves management time
● Enables quick decision making
● Enables training of subordinates
● Enables flat organizations
● Aids growth of the organization
● Demerits of decentralization :
● Difficulty in coordination
● Loss of control
● Increased costs
● Requires capable personnel
● Unsuitable for small firms
Authority :
● It is the right to demand others to do things and get work from them.
● It is based on the position and not on the person.
● According to Henry Fayol , “authority is the right to give orders and the
power to exact obedience . It may be derived by position or by the
personality of the manager”.
Power :
● Power refers to the ability to influence the attitudes and behavior of
others .
● People having power have access and control over resources as well as
information.
● Power need not arise from the position held in the organization.
● Sources of power :
● Legitimate power : The power associated with a particular position in an
organization . Eg. Traffic police
● Knowledge(expert) power : The ability of a person to influence another
by his knowledge ,skills and talent. Eg. Doctor , lawyer
● Referent power : Personal attributes are the basis of referent power
.Eg. Charisma , service mentality, oratorical skills,
● Reward power : It is the power of one person to reward another for
carrying out his orders . Eg. Teachers
● Coercive power : It refers to the power of one person to punish another
for not carrying out his orders.
Authority
● Authority is depicted in the organization chart
● Moves from top to bottom
● Dependent on the position held in the organization.
● Has clear guidelines regarding what has to be done and what cannot be
done.
● Exercised to achieve goals of the firm.
● It is the right to command and get things done.
● Exercised in the formal organization.
Power
● Power cannot be depicted in the organization chart
● Can move in any direction
● Need not arise from the position in the firm . Can arise due to personal
factors too.
● Not well defined.
● Can be used for personal needs too.
● It is the capacity to command.
● Exercised in formal as well as informal organizations also
● Influence :It refers to the ability or power to effect changes in the
attitude ,behavior and actions of one or many persons.
● It can be positive or negative
● Responsibility : It is the obligation of a subordinate to carry out tasks
assigned to him in the manner prescribed . Eg. A sales man is
responsible for increasing sales in his territory.
● Superior subordinate relationship is the essential requirement for the
assignment of responsibility . If responsibility is given ,authority should
also be given.
● Accountability : It refers to the obligation of the subordinate to be
answerable to his superior for the work assigned . A person cannot be
held answerable for the acts not assigned to him by his superior.
Departmentation
● Dividing the work to be performed and grouping of activities on a logical
basis is known as depart mentation .
● It is the process through which a large organization is split into small
manageable units.
● It can be on the basis of function ,process , product , customer or time.
● According to Louis A.Allen, ”Departmentation is the means of dividing a
large and monolithic functional organization into smaller ,flexible
administrative units”.
● Objectives :
○ Distribution of work on a scientific and logical basis
○ To enable better supervision, coordination and control
○ Provide autonomy to managers
○ Development of managerial talent
Types of Departmentation
• By Functions
• By Product
• By Process
• By Territory
• By Customers
Types of departmentation

• Departmentation by enterprise function: Grouping of activities according to the

functions of an enterprise , such as production , sales and financing.
• This is suitable for companies with a single product line or narrow product range.
• Not suitable for large and complex organizations
• Departmentation by territory or Geography :
• Grouping of activities by area or territory is common in enterprises operating over
wide geographic areas.
• Territorial departmentation is adopted by organizations which operate in different
geographical areas.
• Departmentation by Product
• Suitable for large organizations producing a variety of goods and services.
• For each product , a separate department is created with a separate
manager
• Product departmentation is suitable when each product requires raw
materials, technology different from other products.
• Departmentation by process :
• Activities are grouped on the basis of the production processes involved.
• Generally applied to manufacturing organizations and process industries
like textiles ,sugar and chemicals.
• Departmentation by Customer Interest group :
• It is followed by organizations that sell a variety of goods to satisfy needs
of different customer groups.
• Eg.Banks have different departments for individual customers ,
corporates, agriculturists.
• Departmentation by time :
• Activities are grouped on the basis of time and performance.
• Eg.If a demand for a product increases, the firma can run extra shifts in
his factory or set up new factories.
Emerging Trends in Corporate Structure
● The traditional hierarchy
● Flatter organizations
● Flat organizations
● Flatarchies
● Holacratic organizations
 Traditional hierarchy
● This model was quickly adopted by the military as a way to show a chain
of command and of course we have all seen and experienced this within
our organizations
● This type of a model makes sense for linear work where no brain power
is required and where the people who work there are treated like
expendable cogs
● Communication typically flows from the top to the bottom which means
innovation stagnates, engagement suffers, and collaboration is virtually
non-existent. This type of environment is riddled with bureaucracy and
is extremely sluggish.
● The greatest strength of the hierarchy used to be that it was so reliable
at maintain the status quo, which was exactly what companies wanted
decades ago. However what was once it's strength is now it's greatest
weakness.
● The hierarchy is a very resilient management structure that has been so
embedded in how we work that most organizations around the world
are having a tedious time getting rid of it.
 Flatter structure
● A "flatter" structure seeks to open up the lines of communication and
collaboration while removing layers within the organization
● There are fewer layers and that arrows point both ways.
● For larger organizations this is the most practical, scalable, and logical
approach to deploy across an entire company. This is the model that
most large (and many mid-size) organizations around the world are
moving towards.
● In flatter companies there is still a strong focus on communication and
collaboration, improving the employee experience, challenging the
status quo around traditional management models, and the like.
● But instead of completely reinventing the entire company and
introducing a radical new structure and approach to work, it achieves
similar results in far shorter term and with much less effort and resource
allocation.
● This type of model cannot exist without a few crucial things. The first is a
robust set of technologies that act as the central nervous system of the
company. These technologies help make sure that employees can
collaborate and access each other and information anywhere, anytime,
and on any device.
● The second thing this model requires is an understanding by executives
and managers that employees don't need to work at your company, they
should want to work there and as a result everything should be designed
around that principle.
● The third thing that is required is an understanding that managers exist
to support the employees and not vice versa.
● The organization must accept that the way we work is changing and
must therefore be comfortable with things like flexible work
arrangements, getting rid of annual employee reviews, and challenging
other outdated ways of working .
Flat Organizations
• There are usually no job titles, seniority, managers, or executives. Everyone is
seen as equal. Flat organizations are also oftentimes called or referred to as
self-managed organizations
• Is not practical or scalable for larger organizations when we think about the
future of work. Smaller and some medium size companies might be able to
operate in this type of an environment but when you get to organizations
with thousands of employees then it becomes challenging.
• Challenges :Informal hierarchies automatically get created based on
seniority, people who are at the company longer just tend to be viewed as
being more senior.
• The lack of structure can also make accountability and reliability a bit of an
issue as well.
• Finally, the company tends to develop cliques (think high school) where
groups of people tend to support and work with each other but oftentimes
prefer to stay to themselves, this of course can cause challenges for
communication and collaboration.
• The "flatter" structure is the most scalable and practical for most
organizations
Flatarchies
• Somewhere in between hierarchies and flat organizations lie flatarchies.
These types of companies are a little bit of both structures. They can be more
hierarchical and then have ad-hoc teams for flat structures or they can have
flat structures and form ad-hoc teams that are more structured in nature.
• Organizations with this type of structure are very dynamic in nature and can
be thought of a bit more like an amoeba without a constant structure.
• The most common type of example with this structure is a company with an
internal incubator or innovation program. In this type of an environment the
company operates within an existing structure but usually allows employees
to suggest and then run with new ideas. Ideas that company allows
employees to move forward with usually result in separate teams being
formed.
• Google, 3M, Adobe, Linkedin, and many other companies all have internal
innovation incubators where employees can try to get their ideas funded and
then developed into new products or services.
• The main benefit here is the focus on innovation which is quite a strong
competitive advantage in the future of work.
Holacratic organizations
• The basic goal with this structure is to allow for distributed decision
making while giving everyone the opportunity to work on what they do
best.
• There is still some form of structure and hierarchy but it's not based on
people as much as it based on circles or what most people would think of
as departments.
• Information is openly accessible and issues are processed within the
organization during special and ongoing meetings.
• The man who created it Brian J. Robertson.