During the last few months, several clients have asked us to help optimize their organizational leadership structure, and we’ve facilitated some meaty discussions about the merits of dispersed versus hierarchical leadership structures. We have developed four questions that can help businesses and nonprofits find the structure most suited to their specific situation.
Do we have all the fundamentals in place?
All organizations benefit from the basic building blocks of skilled leadership, role clarity, high trust, and long-term retention. However, organizations with dispersed structures tend to fail unless all these foundational pieces are in place, while hierarchical structures tend to be more resilient under less-than-ideal conditions. Organizations that are considering transitioning to a dispersed model should first take a hard look in the mirror.
Does the promise justify the pain?
Dispersed structures have the potential to lead to higher performance than hierarchical structures because more experts and specialists can advise decision making. However, dispersed structures are considerably more difficult to operationalize effectively, partly because of the number of leaders involved (and inevitable differences in style, approach, priorities, etc.), overlapping authority of decision makers, and difficulty in maintaining clear accountability. For example, bonuses are easy to calculate in hierarchical teams where the contribution of each member is separately defined, leading to clear and separate results. Bonus calculations are often far more complicated for dispersed teams.
What structure fits our context?
Hierarchical organizations can make fast decisions and course corrections, partly because relatively few individuals are involved in decision making. By contrast, organizations with dispersed leadership often take longer to make decisions and changes, partly because more people need to weigh-in, buy-in, and sign-off at each step. Some sectors’ industries move and change faster than others, and it is important to structure the leadership team to fit the context.
How do we find the right balance?
As a practical matter, few organizations are purely dispersed or hierarchical. In most cases, leadership structures should be hierarchical in areas that need to be standardized across an organization, and dispersed in areas that should be localized. Different tasks and work streams require different approaches. For example, executive communication and project management tend to function best with hierarchical approaches. Innovation and problem-solving work best with dispersed approaches.
Achieving the right balance and finding a leadership structure that fits can be a real challenge. Starboard Leadership Consulting is here to help, and we are always happy to provide a free initial consultation.
