Is your company running top-to-bottom, or flat out? We’re not talking speed here, of course (unless your staff has signed up a team for the local Terry Fox run), but management style. How a company’s decision-making is structured can make a big difference in performance; the type of management structure a company follows (or imposes, depending on the structure) plays into how successful the company is.
As Henry Mintzberg, considered a guru of management practices and organizational structures, points out, what the most efficient companies have in common is that they’ve found an approach that helps them reach their specific goals. And they revise that structure on an ongoing basis, redesigning it as needed.
The International Journal of Scholarly, Academic, Intellectual Diversity outlines five management structures identified by Mintzberg—from a more traditional approach with a strict top-down management hierarchy, to a flatter or decentralized organization where staff from different divisions or projects take part in the decision-making.
How do you figure out the management style that works for your organization? That depends on your industry, and the size of your staff.
Let’s take a closer look at some of the different management styles.
The simple structure or entrepreneurial organization
An organization built around the simple or entrepreneurial structure tends to be rather flat when it comes to management. There’s usually only one or a couple of top managers – often the business owner – making the decisions. Leadership is tightly controlled, but not necessarily hierarchical as there’s often only one management layer (and even a single person) supervising the employees. This more relaxed style is direct supervision at its best, and an example would be a start-up tightly watched over by the founder.
This is the workhorse of larger companies, particularly those in heavy industry, manufacturing, and larger government organizations. The goal of top-level managers in this style is to achieve efficiencies through the standardization of work, so the management structure is formal and top-down. Reporting lines go all the way from lower-level managers to the top tier of bosses, who keep tabs on subordinates and maintain centralized control. There’s little sideways distribution of decision-making. This style works well for companies that perform routine tasks and where following precise specifications and protocols is instrumental to achieving goals.
This management style is similar to the machine structure in that it’s tightly organized. But because this type of business relies on highly trained professionals, such as lawyers, doctors, professors, or accountants, the leadership is more concerned with the standardization of skills rather than the standardization of work processes. Decision-making is more decentralized, simply because the workforce demands autonomy to perform their duties. The goal is to offer high-quality, non-routine services to clients, and so this structure is common at larger law firms, hospitals, and universities.
Divisional or diversified organization
Imagine a large company with different lines of business or subsidiaries. An upper-level corporate team oversees and coordinates the various divisions. At the same time, each division has its own management structure, most often resembling the machine bureaucracy. The prime focus for the head honchos is the standardization of output, to ensure that regardless of division, the result adheres to the same quality standards, while each divisional leadership group focuses on the day-to-day production of goods or services. This management style lets bosses maintain control and accountability more effectively than a single machine bureaucracy would, which is an advantage for large corporations with several brands but also companies with international offices.
The innovative organization or adhocracy
The above structures are bureaucratic, complex, and centralized, and suit traditional companies better. In the new economy, where companies bid on projects and need agility to adapt and respond to new challenges, those management styles are often too rigid and limiting. Advertising agencies, film studios, and pharmaceutical companies, for instance, work on an ad hoc basis, relying on a central talent pool of experts that’s called upon to create a product on demand. Employees move from team to team, adding their skills where needed. Decision-making is decentralized, giving the company an edge in terms of responding quickly to changing needs.
As the career skills firm MindTools points out, whatever management style works for your organization, keep in mind there’s no single, or simple, answer. The structure needs to respond to your organization’s strategy as well as culture. If it doesn’t, it might be time for an overhaul or at least a tweak to maximize efficiencies.