Traditional organizations emphasize a strict division of labor, top-down decision-making and extensive rules and procedures. As global economies emerge, businesses that implement more decentralized organizational structures are faster responders to market changes.
The traditional organization is a pyramid with a president at the top, a few vice presidents, layers of management and the majority of employees at the bottom. Jobs are specialized, and information and authority flow from higher to lower levels.
Slow to React to Change
A strict hierarchical organization hinders response to rapidly changing environments. It is slower to react to changes in market conditions and less efficient in taking advantage of knowledge introduced from a variety of sources on the ground.
The contemporary design flattens the traditional pyramid structure, facilitates the flow of information to all parts of the organization and reduces response time to external and internal demands.
The matrix structure, the boundary-free organization and the learning organization decentralize decision-making power and allow information and innovation to flow horizontally through a more interdependent organization.
In less hierarchical organizations, conflicts may break out related to uncertainty about roles, role conflict between managers and turf wars. Organizations resolve these problems with training programs run by skilled organizational management trainers.