Flat or Pyramid Governance Structure for Effective Business Decisions?
from Business Concern Hosted by Rick Riebesell
Governance of businesses generally consists of two structures: hierarchical (pyramid) or nonhierachical (flat). Can it be determined that one structure is more conducive to effective decision-making than the other? The hierarchical structure is the traditional legal governance structure of the corporation. That structure creates an overall executive officer (president or chief executive officer), a vice president, secretary, and treasurer. Other officers are added to the structure for administration of other common departments such as human relations and technology. Below the officers in the structure are managers who are charged with operations and report to the officers. This structure may be multilayered and quite complicated. Nonhierarchical structures generally use teams, where each team has a responsibility or project. Team members are encouraged to self-direct and to be innovative. There are few levels of authority. Multiple teams can make organization and coordination of teams difficult. Advocates of nonhierarchical structures believe the structure makes businesses more adaptable and able to act quickly. Examples of businesses using a nonhierarchical structure are Google, Zappos, Altassian, and Netflix.
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