Hierarchical Organizational Structures - Literature review Example

Institution : xxxxxxxxxxx Title : xxxxxxxxxxx Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2014 INTRODUCTION The relationship existing between an organization’s structure and its capacity to accomplish its goals in the competitive business climate has in the 21st century come under spotlight across major organizations globally. The increasingly changing business context and the competitive business environment have Infact raised questioned as to whether hierarchical organizational structures are still relevant in managing organizations faced with stiff competition. With scholar and researcher debating over this issue, searching for alternatives, and weighing these alternatives, a heterarchical organizational structure turned out to be a lucrative choice for some. However, this has only served to intensifying arguments surrounding the two organizational structures with regards to their strengths and limitations. In this particular paper, I cross-examine various literatures pertaining to hierarchical and heterarchical organizational structures. While reviewing the extant literatures, I question some arguments and counterarguments regarding the two organizational structures and develop a concrete personal view as applicable to the arguments. In selecting a firm’s organizational structure, the management is often in search of an organizational structure that has the potential of not only bringing out a properly coordinated and efficient unit, but also an effective one. The choice is often quite important as a proper grouping of employees and work ultimately facilitate the business activities while also enabling employees to realize the firm’s vision and mission. However, among other organizational structures, increased considerations and emphasis have often been placed on hierarchical organizational structures and, of recent, heterarchical organizational structures. A hierarchical organization structure is an organizational structure that uses a top-down approach in organizational decision making. In such an organization, the employees are often ranked in different levels, with each level being over the other. Hierarchical organizational structures are frequently tall but with narrow control spans that become wider towards the bottom of the structure. In addition to having the pyramid-shaped command chain (organized authority), every particular stage of the chain has an individual with some employees working directly under him or her and within the individual’s control. While a taller hierarchical organization has the characteristic of many levels, a flat hierarchy has relatively few levels. As such, in my analysis, hierarchical organizations are centralized, have clear role definition for individual employees, and define the kind and nature of relationship among employees. On the other hand, heterarchy is an organizational structure and system where the organization’s elements are non-hierarchical/unranked or have the potential of being ranked in numerous ways. These elements share the actual horizontal power and authority position with each other, where each element has a theoretically equivalent role to the others. According to Stephenson (2009), it is basically a mega-state of various connected hierarchies and networks, since this organizational structure can be subsumed to, parallel to, or contain hierarchies. Kleiner (2009) argues that it is a relatively recent and new way of conceptualizing the largeness, systematization, and goal-orientation of networks within the modern age. Even as Stephenson (2009) & Stephenson (2007) argue that hierarchy’s focus is on the vested interests, network focus on the personal interests, and heterarchy on collective good, I believe that the two organizational structures are actually not entirely mutually exclusive. As such, in my view, every level within the hierarchical system can be argued as consisting of potentially heterarchical groups constituting the constituent elements of the organizational structure. Despite this, there have been simmering debates regarding the practicality, benefits, limitations and relevance of the two types of organizational structures in the 21st century organizational management. With the issues increasingly becoming more contentious under the very watchful eyes of the world, this debate has not escaped the attention of many researchers, scholars and management gurus. Actually, with the ever-increasing fierce competitions being experienced within the current business climate, the relevance and dominance of hierarchical organizational structure has been largely questioned. In actual fact, while arguing against normative hierarchical structure, Stephenson (2009) considers the significance of hierarchical organizational structures as dwindling while also providing a suitable alternative. Stephenson (2009) argues that heterarchical structures are increasingly trumping hierarchical structures as the complexity and changes in various organizations increasingly persist and as people become increasingly connected. According to Stephenson (2009) , the people endowed with power have the responsibility of building meaningful and collaborative structures as well as effective performance metrics that ensure sustainability. Apart from highlighting how hierarchies are flexible to changes, Stephenson (2009) argues that people need to create a structure embracing ancestral tendencies of networking with the modern market and the current hierarchical structure-and that is heterarchy. In Stephenson’s view therefore, a heterarchical organizational structure exemplifies the best and finest points. Frew (2009), while responding to Stephenson, also supports that heterarchical structures have the potential of creating meaningful and long-lasting change. While this argument seems more provocative in my view, Stephenson (2009) is absolutely correct in emphasizing the rapid rise in the interconnections currently being experienced by people and organizations as well as emphasizing the interdependence stemming from that. Few have actually grasped the fact that the level of interdependence being generated in the globally connected economy considerably changes the actual drivers of both individual as well as collective success, and that central to the drivers are organizational structures coalescing value from the desperate participants. However, as for Stephenson’s argument that heterarchy trumps hierarchy, my immediate struggle would be to make some practical business sense from it. While heterarchies could be existing within the social settings, I am just not that sure whether I have seen any being practiced in business. The problem seems to be in the theoretically equal/equivalent role of players and entities within heterarchy. As such, in practice, I do not know whether this exists. Having seen various instances of structurally and politically equivalent entities within network structures, there has always existed influence and informal power element inherent within informal networks, which in actual fact prevent the theoretically same roles. As contentious as this may seem, I argue that whether heterarchy trumps hierarchy or vice versa relies much on the prevailing circumstances. For instance, one can imagine the responsibility or duty of spreading any communication from a particular individual to several other people. In this kind of situation, a very strong hierarchical system would be quite efficient in comparison to a completely heterarchical system, since the communication paths in the hierarchical system are considerably lower as compared to those in the heterarchy system. According to McGuire (2006), heterarchy is basically a good and attractive idea. However, implementing this idea is quite difficult as compared to the familiar hierarchy forms. McGuire (2006) argues that heterarchy needs a properly-designed and well-coordinated network that ensures alignment as well as common connections mainly through the performance measures. As highlighted, heterarchies have the capability of turning into contagion seedbeds resulting in ineptness and fraud, as has already been seen in the much unintended repercussions of ENRON and in fact the diffusion of mistrust experienced during the global financial crisis/meltdown in 2008. The directive to link smaller departments to the giant Environment, Transport and Regions (DETR) department similarly failed due to the fact that putting individuals in a particular building and in same hierarchy is just but an initial step within the hierarchical process hence does not immediately and automatically result in or guarantee an integrated working within a heterarchy. Similarly, in the previous decade (the year 2003), Bush administration formed the Department of Homeland Security (DHS) through merging of separate government functions. The said government functions included emergency and disaster response, intelligence and policing. Developed from more than 60 pre-existing departments, the Department of Homeland Security (DHS) consolidated all the departments as well as agencies in order to engage them in a more meaningful collaboration. However, since shared processes never existed, this move served to intensify competition among constituencies. This implies that in any bureaucratic brawl, a team competes for a position with the other, a directorate attacks the other in order to defend its budget, and the overall departments fight each other. By contrast, my argument here is that McGuire’s argument, while valid, lacks details on the method of creating effective hierarchies. Indeed I agree with McGuire (2006) that implementing the idea (heterarchy) is quite difficult as compared to the familiar hierarchy forms. Actually, Stephenson (2009) and Dawson (2009) also reiterates the same with Stephenson (2009) terming it as a good idea that needs more input. Dawson (2009) also states that there is much to do while working with heterarchy in order to realize complete and successful transition. However, some other arguments tend to be more questionable. Actually, while there is increasing interconnection and consolidation, this does not make people any wiser and closer to others. Instead, such may come only by trust across the various agencies and hierarchies. Apart from being a social imperative, it is actually self evident that people within the departments have to connect, and connect in a manner that is both meaningful as well as sustainable; hence the reason for understanding, measuring, implementing and reviewing heterarchical connections is paramount. This is indeed a challenge for the 21st century leadership, and especially in heterarchies. To Environment, Transport and Regions (DETR) department, Department of Homeland Security (DHS), European Union and even United Nations, whatever connections, consolidations and collaborations that lack trust is just but mere traffic. Trust among members, whether individuals or agencies, remains a major determinant as to whether corporation and collaboration can be achievable. Such different entities may agree to share information, coordinate activities and even collaborate, however, the biggest question remains as to whether they can develop the trust level that is necessary in exchanging valid information. Actually, Hagel et al (2008) also raises the same questions by asking about what actually sustains a heterarchical structure and how the trust is created therein. I thus argue that building trust is in itself very important but quite a complicated communication process whereby individuals in any agencies or organizations gradually test the extent at which the other party is actually willing to understand and accept them without taking advantage of them for individual gains. Therefore, the motive to collaborate needs to be there in order for such a process to function effectively. From such a viewpoint, collaboration can be considered as basically a mutual assistance process. For heterarchy members to effectively function, there has to be motivation that will drive mutual assistance among the different parties, and this is exactly what I have discovered as missing in various organizational situations. This is in part due to the capitalist reference frame that upholds competition as a basic motivator. I hence believe that the networking that translates to the functioning hierarchies remains inevitable in the current era, but the ability of organizations, institutions or entities to effectively coordinate it and collaborate within it remains a total mystery given the various barriers hindering effective communication. Therefore, for heterarchy to effectively function, there has to be that common language and understanding by the various parties. Much to the ardent heterarchy supporters’ dismay, including those proposing some sophisticated ideas around it, Considine & Lewis (2007) argue that certainly understanding that a hierarchical organizational structure is much better than the current alternatives is a fundamental step. According to Considine & Lewis (2007), hierarchical structures establish a clear authority suitable for work as well as departments. As Considine & Lewis (2007) further indicate, managers are presented with authority depending on their management levels hence have the authority and power to distribute or allocate resources, punish or reward behaviours, and order subordinates. Similarly, there is no confusion among employees regarding the boundaries that exist between the departments and various jobs while everyone also clearly understands the command chain. To Considine & Lewis (2007), this is a very instrumental aspect and a useful characteristic in times of crisis, when the decision-by-committee or even subordinate delay could become disastrous. This implies that since the boss gives an order, he or she expects compliance. On the other hand, Fairtlough (2005) is quick to contradict this and by pointing out that hierarchy and its strategies (be it functional, corporate or business) are no longer acceptable. Fairtlough (2005) argues that people should be able to think in terms of heterarchical structures and the associated strategies, since in hierarchy each strategic decision-making node has connections to a parent node. In heterarchy, however, all nodes may have connections to the surrounding ones without necessarily going through or even getting permission from the others However, despite all these arguments, did Considine & Lewis (2007) take into consideration the question regarding what is actually the general outcome and consequence of this kind of management approach? especially when there are no crises? In my view, I don’t think so since the approach is good at getting things done, however, it is most likely to be –and indeed there is some evidence that-in the long-run, it often yields an exact opposite of what is needed. Considine & Lewis’ idea of compliance to orders sounds more traditional, and does not actually promote the collection of ideas and opinions from junior subordinates. Autocratic leadership have of recent come under criticisms for being ineffective in the modern management practices in delivering organizational overall goals, and have thus come to be replaced by other forms of leadership including democratic and charismatic leadership styles. Actually, Kettl (2006) argues that hierarchy highly depends on the aspect of authority and leading down; where roles and command chains are clearly defined hence it is highly prone to the bureaucratic inertia. Ghoshal (2005) also argues that the net ramification of adopting Considine & Lewis ’ idea is what he describes as the supervisor’s dilemma. According to Ghoshal (2005), it is the condition whereby using authority, surveillance and monitoring ultimately leads to the distrust of employees by the management hence perceived need to do more surveillance as well as control. As Ghoshal (2005) further states, since all the behaviours are considered by the managers as primarily motivated by the actual controls put in place, the managers develop a sceptical and pessimistic view of the employees. For the employees however, Ghoshal (2005) argues that hierarchical controls often signal to employees that there is no trust for them and that they are not trustworthy to have the appropriate behaviour in the absence of such controls. In my view, Ghoshal (2005) presents a good case. In fact, any surveillance regarded as controlling often yields threats to the personal autonomy of individual employees thereby decreasing the intrinsic motivation of such employees. Actually, it severely damages the self-perception of such employees. Among the potential consequences of interfering with the employee attitudes is the shift from skilful and voluntary cooperation and collaboration to the perfunctory compliance. In such a scenario, a pathologically spiralling relationship turns out to be the net result of the negative feelings among the managers and the employees. Despite this however, Sullivan & Baruch (2009) contend that hierarchical structures still offer the employees the opportunity to advance their careers. According Sullivan & Baruch (2009), hierarchical structures often provide a clear and easy path towards career advancement. Advancement in this case implies the replacement of a departing superior by a subordinate. Alternatively, this can mean that a subordinate may move from a company to another in order to fill a good or better position in a hierarchically -structured organization. Fairtlough (2005) discusses systematic advantages of a hierarchical structure. One of this is the fact that leaders are very accountable and that it is very rare for tyranny to occur. Fairtlough (2005) actually notes that hierarchy is very important in any non-profit community. As highlighted by Fairtlough (2005), heterarchies rely on high level of personal responsibility. This limits chances of tyranny, promotes collaboration, fosters teamwork, and builds the required commitment to the organizational common goals. In my view, Fairtlough (2005) is absolutely right and sounds convincing, especially by highlighting that personal responsibility builds organizational commitment. Kleiner (2009) however sees this in a different light. According to Kleiner’s review of heterarchy consequences, individuals may adapt to heterarchy issues but at a certain point operating under such a system may become only a second nature in light of hierarchy’s hegemony. I however find Kleiner’s argument here as unsubstantiated by proof. Frew (2009) argues that heterarchical structures have the potential of creating meaningful and long-lasting change. Frew (2009) , while highlighting how the heterarchy concept is quite essential in the understanding of bureaucracies so that such bureaucracies are aligned and completely fit for the purpose, cites how private and public organizations may be more fit by adopting a suitable structure. According to Burton (2004) and Burton et al (2002), such can be made through the use of knowledge from contingency theory and the associated organizational research. The Misfit effects associated with underfit or overfit are well documented in empirical literature concerned with research on organizational designs. According to Burton et al (2004) and Burton et al (2002), an organization’s failure to achieve fitness and being underfit or even overfit will automatically result in a poor performance equivalent to the misfit. Tregaskis (2003) argues that the beauty of heterarchy is highlighted by the manner in which heterarchy enables multiple skills to be legitimately valuated. Tregaskis (2003) thus argues that heterarchy portends a 21st-century governance that is premier. In my view, the argument by Frew (2009), Burton (2004), and Burton et al (2002) seems valid considering that many organizations experience stiff competition not only for the necessary resources or clients, but also for social and economic fitness. Actually, competitive advantage results from fitness of the various discrete activities a firm engaged in during the designing, production, marketing and deliverance with the business strategy. Besides, organizational theories have similarly highlighted the relationship existing between fitness and organizational performance, with the structural contingency model/theory positing that underfit and overfit have equal chances of reducing performance while asymmetric theory persists that they reduce performance with a differing magnitude. According to Levchuk et al. (2005) and Marschan et al (1996), structuring an organization in a hierarchical manner is very useful partly due to the fact that it considerably reduces communication overhead as it limits information flow. They highlight that people operating within hierarchical structures mainly hold communications with the immediate subordinates and superiors. However, in my view, they neglect the fact that this could also be a limitation. I see this as both an advantage and a limitation, where the limitation arises from the fact that while it decreases communication overhead, there may be ineffective communication and sometimes slow decision making as only the immediate people seem to communicate directly and effectively. On the other hand, Chakravarthy & Henderson (2007) provide a really compelling counterargument against hierarchical organizational structures. While questioning the continued use of hierarchy, Chakravarthy & Henderson (2007) review extant literatures inquest for a better approach to managing organizations. In their findings, they highlight that hierarchy was very useful when it was initially proposed, since then however, the changing business context has rendered hierarchy obsolete. In their findings, they suggest that what is actually needed is the heterarchy. They further argue that the main locus of most decision making has become no longer hierarchical or corporate. They hence emphasize that functional as well as business strategies are much more interlinked and quite interdependent currently than it has been before. This particular work by Chakravarthy & Henderson (2007) actually has significant implications as it offers a suitable framework for continued organizational renewal to any manager, whether from functions, business division or corporate. In my view, this work seems to advocate for heterarchy as a better alternative. However, does this research balance on attention given to both sides of the organizational structures? I do not think so. This particular work seems to have invested heavily on the research regarding hierarchy, while mostly ignoring heterarchy. This is its limitation and perhaps future work should be able to focus on heterarchy. Besides, Considine & Lewis (2007) and Mahler & Hogan (2009) argue otherwise. According to Considine & Lewis (2007), aspects of the managerial governance are actually still hierarchical today, including the formal decision-making process and the authorizing process. Mahler (2009) similarly argues that for uncomplicated problems as well as operations, a hierarchical organization and its perpetuation of labour specialization and labour division has been working and can continue working reasonably well. Conclusion Debates surrounding the relevance and significance of Heterarchical organizational structures and hierarchical organizational structures are without a doubt quite compelling. According to the analysis, it is clearly evident that literatures pertaining to the two organizational structures have provided compelling arguments, highlighting strengths and limitations of both organizations. There is, however, an indication that neither of these organizational structures is capable of providing total satisfaction. Based on the critical analysis, my position is that arguments for heterarchy are much more compelling and widely supported by extant literatures such as Stephenson (2009) and Fairtlough (2005). Findings by Chakravarthy & Henderson (2007) similarly highlight the same. REFERENCES Burton, R. et al., 2004, “The impact of organizational climate and strategic fit on firm Performance”, Human Resource Management 43 (1): 67–82. Burton, R. et al., 2002, “Return on assets loss from situational and contingency”, Management science 48 (11): 1461–1485. Chakravarthy, B. & Henderson, J., 2007, "From a hierarchy to a heterarchy of strategies: adapting to a changing context", Management Decision, Vol. 45 Iss: 3, pp.642 -652 Considine, M. & Lewis, J., 2007, “Innovation and Innovators Inside Government: From Institutions to Networks” Governance, 20: 581–607 Dawson, R., 2009, “Heterarchy: Technology, trust and culture”, People and Strategy, 32(1), 13. 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