The Shape of Power: Organizational Structure and Authority
Today’s organizations routinely operate in uncertain and ambiguous environments that require rapid adaptability and collaborative decision making. Many leaders assume that the best way to address uncertainly is to institute clear lines of authority, communication, and oversight with the vast majority selecting or creating the classical pyramid-shaped hierarchy in which power and authority is increasingly concentrated in fewer and fewer individuals as you progress up the pyramid. While pyramid organizations are far and away the most common structure adopted by organizations today, it does not have to be. Studies have shown that such hierarchies may actually reduce adaptability and innovation within teams (Wellman et al., 2020).
Traditional hierarchies introduce organizational power dynamics and functional communications silos that often prevent the organization from incorporating key insights from lower-level members by decision-makers. In addition, competition to “climb the ladder” often results in unnecessary conflict and employee dissent. Scholars and the popular business press typically characterize organizational structure by the number of organizational levels or “steps” in its pyramid. High structure organizations have steep pyramids with many layers of steps, while autonomous teams and “leaderless” organizations occupy the other extreme. While a useful dichotomy, this all or nothing conceptualization fails to capture or reflect alternative organizational structures currently in use that may be viable.
Let’s take a look at the most common organizational structure and then explore five fundamentally different organizational structures to see how they may be able to inform leaders as they shape the distribution of authority in their organization.
The Classic Pyramid: It is natural that the most extensively adopted organizational structure is also the most widely studied. Pyramid organizations emerge when the majority of team members have relatively low or moderate levels of formal authority, defined as formal control and access to resources or rewards related to team performance. At each level there are fewer and fewer people with increasingly higher levels of authority over those in the level below. Key pyramid indicator: as formal authority increases, the number of people who wield it relative to the total number of team members decreases.
The Inverse Pyramid: While harder to find in practice, examples of reverse pyramids are often used by advisory groups, expert panels, or domain-specific support teams such as human resources, accounting, or public relations teams. Inverse pyramids are organizations in which most members have high or moderate formal authority, and there are few members with low levels of authority relative to the total number of team members. Key reverse pyramid indicator: as formal authority increases, the number of people who wield it relative to the total number of team members increases.
The Leaderless Team: Self-managed teams have received significant attention in recent years. Often used by development teams, R&D practitioners, open-source creators, and industry collaborators, the self-managed team operates with every member having the same level of formal authority within the group. Such groups depend to a large extent on high levels of member-autonomy and require significant involvement by all members in the decision-making processes of the group. Often, these groups utilize technology or other automated solutions to organize, track, and structure their work in ways that eliminate the perceived need for traditional managers to determine priorities, set goals, and hold team members accountable. Key self-managed team indicator: all team members possess equivalent levels of formal authority within the organization and are actively involved in the self-governance and accountability process.
The Hourglass: Organizations in which formal hierarchies are evenly divided between members with high levels of formal authority and those with little to no authority resemble an hourglass. They represent a paring of extremes in which an equal number of high and low authority members exist, and the majority of team falls into one of those groups. In other words, there are relatively few group members with a medium level of authority. Surgical teams are perhaps the most common hourglass example in which high-authority senior operating staff and surgeons are shadowed by a similar number of junior staff and surgeons. These high/low authority dyads are accompanied by a relatively small number of individuals in complementary support positions with formal authority situated between that of the senior and junior members of the team. Organizations that rely heavily on the master/apprentice model to transmit knowledge and develop talent will often create hourglass structures. Key hourglass indicator: Very few people with an average degree of formal authority. Instead, there are a relatively equal number of people who wield high and low levels of formal authority and both camps increase at relatively constant rates as the total number of team members grow.
The Rectangle: When significant differences in formal authority exists at different levels of the organization, but each level of the organization is roughly the same size as the next, this is referred to as a rectangular structure. Typically, such organizations are relatively small and focus on specialized tasks. An academic research team composed of an equal number of senior faculty members, junior faculty members, and doctoral candidates is an example of a rectangular structure. Other examples include advisory groups in which an equal number of people are selected to represent different industries, levels of experience, or perspectives that are afforded greater or lesser levels of formal control over the function of the team. Key rectangle indicator: an equal number of team members at each level of recognized authority within the group.
The Diamond: If you can picture an organization in which the number of “middle managers’ is relatively equal to the number of senior leaders and entry level employees, then you understand the concept of the diamond organizational structure. In a diamond-shaped hierarchy, the majority of the team has a moderate level of authority. This structure emerges when retention is high, resulting in relatively low need for entry level employees and task complexity is high, requiring high levels of expertise, autonomy, and cooperation by most team members. Clinical nursing organizations reflect this shape when one or two managers oversee a large number of fully qualified nurses and relatively small group of nurse-trainees or administrative support staff. Key diamond indicator: the largest category of group members have a moderate amount of formal authority with few senior leaders and low-ranking members of the team.
Which structure is right for you? Does one of these speak to the nature of your firm or do you see a different shape altogether? What are the implications for your business? That depends. Your leadership style and preferences will inform the choice but so will the firm’s market, mission, vision, and values. Your talent pool, and job design strategy, as well as the level of creativity, trust, and emotional intelligence (EQ) within your organization will determine what works best for your people. Digging into the particulars of your leadership team, business context, and mapping them onto the organizational model to grow your business is not easy, but it is critical. Moving beyond the pyramid may just be the key to helping you make headlines, instead of becoming history.
Let’s get to work!
