Managing the Transition from Hierarchical to Network Organizational Structures

Introduction

The emergence of the network-based organizational structures and a movement away from the hierarchical structures that were the hallmark of the earlier era presents its own set of challenges to Human Resource Managers (HRM) as well as Executive Leadership and Senior Management.

The key aspect of the transition from hierarchy to network and from top down to bottom up as well as from closed to open and from mechanistic to systems based structures is that this impacts the organizations at all levels and calls for astute management as well as skillful navigation of the transition.

Indeed, the way in which contemporary HR Professionals and Business Leaders manage the transition would make the difference between success and failure both in the shorter term and more importantly, the longer term.

The Challenges Inherent to Organizational Structure Transitions

So, what are some of the challenges in this revolutionary shift from authority and control to autonomy and emergence? To start with, Business Leaders have to contend with the possibility of the rank and file employees as well as the middle managers having more freedom in decision-making and which has implications for the way in which organizations function.

Indeed, when the Middle Tier becomes empowered to take decisions which hitherto were being taken by the Top Tier, the challenge is for the latter to “let go” and for the former, to act responsibly and with maturity.

Apart from this, when control is ceded by the top, the Executives must also ensure that the organizational values and culture are not compromised in a rush to autonomy and empowerment.

Maintaining Cohesion and Coherence

Second, another key challenge is to ensure that employees at all levels are aware of the overall sense of what it means to work in that particular organization.

In other words, in networked structures, it is often the case that individual managers and the units of divisions and groups must not be “detached” from the other units so that there are coherence and cohesion within the organization.

The role of the HR Function, in this case, is to ensure that all employees are on the “same page” with the Executives and the Senior Management so that the ethos and the spirit of the organization are not compromised.

Open Communication Channels and the Challenge of Clogged Arteries

Third, the challenge in terms of the transition from Flat to Networked organizations is to ensure that communication flows in a smooth and frictionless manner with no “clogged arteries” resulting in blockages and miscommunication.

In other words, the challenge for the Networked Organizations is to ensure that the individual units do not become “silos” or “Ivory Towers” wherein each unit “talks to itself alone” and not to the others or the Top.

While many management experts recommend Networked structures as a way of avoiding the “silos trap”, they are also acutely aware that even Networked structures can become clogged and hence, they strongly advise the organizations to focus more on people than the structure as organizations are made up of people and irrespective of the structure, it is they who determine the success or failure as well as the longevity of organizations.

Core Principles to be Followed during the Transition

It follows from these challenges that the transition from Hierarchical to Flat and from Command and Control to Systems based structures have to follow the principles of autonomy with accountability, freedom with responsibility, and openness with cohesion and coherence. Let us take each of these aspects one by one and explain what they mean.

First, as has been mentioned briefly earlier, autonomy also means accountability, and hence, flat or networked structures should not deviate from the core organizational principles, and more importantly, they also have to be accountable to themselves and to the external stakeholders.

Next, empowerment of the Middle Tier and the Rank and File employees also enjoins them to behave responsibly meaning that they have to ensure that the saying “With Great Power Comes Great Responsibility” is adhered to at all times.

Indeed, systems thinking entail symbiotic interactions between entities and at the same time, the entities are also required not to lose sight of the “Glue” or the “Organizational DNA” that binds them to the larger organization.

In other words, ecosystems of units must also be able to “jell” with the larger macro system and with each other.

The challenge for HR professionals when managing the transition from Flat to Networked structures is to ensure that all organizational policies are communicated to all levels and that the HR function becomes the “internal gatekeeper” which monitors and regulates the flow of communication and keeps the flock together.

In other words, unless there is a larger sense of Vision and Mission, it is easy for the Networked organization to become fragmented and a place where fiefdoms and satraps emerge and who can challenge the very foundation on which the organization rests.

Managing the Transition with Careful Planning and Meticulous Execution

Lastly, any organizational transition is tough and not easy to manage, and this is where the skill of those managing the transition plays a vital role. Further, as management theory suggests, it makes sense for organizations to move slowly initially and then pace themselves keeping with the changes and finally, rolling out the changed structure.

These calls for a thoughtful approach where detailed planning and meticulous execution are needed as well as visionary leadership and a sense of mission are required.

To conclude, structural shifts are inevitable for organizations to keep up with the larger external changes and the internal needs and how well, the reorganization is handled would determine success or failure of the transition.