Mitra Ferdows, business management graduate from the United States Loyola Marymount University and consultant in start-ups, has given speech on the best organizational structures ensuring sustainable development. Mitra Ferdows elaborated that many startups seem to be on the right track in the early stages of their birth; however, the achievement does mean different for different organizations as the startups are not all identical and follow the same road map. One of the most critical aspects persuading a organization's achievement is how it is managed and how its position is sustained. A business organizational structure not only affects the future success of the organization it also affects the way customers take the business and the overall culture a business possesses. This means the organizational structure needs to be cleverly chosen keeping many factors in mind. Mitra Ferdows added that studies illustrate that most corporations first use the horizontal organizational structure and with passage of time and growth of the business, they desire using hierarchical structures. Organizational structure defines how information is flown in an organization as well as helping in overall organization of the company along with the nature of leadership. Be it mechanistic or organic, horizontal or hierarchical, organizational structures need to be considered highly decisive for a business’s future victory.
Mitra Ferdows pointed out that organic organizational structure is beneficial to the mechanistic organizational structure because due to high levels of rivalry in an unstable market environment in the recent years, most startups need more inventive and creative members to ensure their future success. Mitra stated that in a top-down mechanistic organizational structure where creativity is stifled, a startup’s chief goal which is to sustain success will not be achieved. In general, in the early years of a startup a flat organizational structure is adopted which turns out to be worthwhile. With complex layers of management, they develop three to four times faster than their competitors. The issue becomes of more concern when the company grows to be a matured organization while the organizational chart remains untouched. Mitra Ferdows contributed that company owners do not intend to change the chart and assume the management system to be the inhibitor of creativity and flexibility. What happens is that this wrong decision will finally pull the quick growth to halt and ultimately disrupts the organization. The best sustainable successful organizational structured are defined based on the stages the company stays in.
Mitra Ferdows restated that there are a number of factors influencing organizational structures namely, hierarchy, communication establishment, employee development, practical tools, shared company vision, strong values, and transparency.
Mitra Ferdows continued that hierarchy is the most noteworthy factor shaping up an organizational structure in terms of teams building up according to the roles such as marketing, product development, etc. For a startup business, leaders can profit more from a rather flat, organic organizational structure instead of a top-down structure to leave more room for more creativity. The next vital factor is how you establish communication to make the information flow and put everyone on the same page. Next factor to be measured is how you help employees grow by developing a clear understanding of the goals of the employees in coherence with the company and granting them a purpose. Next factor indirectly impacting an organizational structure is a company's shared vision, it has always been a good idea to share your vision of the company with your employees, state your values and centralize your team and be transparent in terms of short-term and long-term goals of the organization.
Mitra Ferdows explained that a horizontal or flat organizational structure is defined as the one with no or fewer management levels where the top-level managers can directly give orders to the lower levels. A hierarchical organization, on the other hand, is rather different and contains many management levels. In this structure the message is not directly conveyed from the top-level managers to the lower level employees but it is passed through many levels to reach the lower level. In fact, both flat and hierarchical structures are different, they also have their advantages as well as negative points.
Mitra Ferdows stressed that a horizontal organizational structure is regarded as quick decisions are made promptly as there are no or fewer levels of management and any unnecessary levels are removed at the same time it helps in inspiring the level of responsibility of an employee. Mitra Ferdows continued that apart from the rapid process of decision making, organizational structure also helps in budget reductions as it employs fewer people thus less salary.
Mitra Ferdows further pointed out that the bright side of a hierarchical organization is when employees are given equal opportunities to get promoted and advance beyond in their career. Developing a tendency to narrow down their field to become an expert, many employees will become experts or specialists in this type of structure. In addition, people who work in hierarchical organizational structured corporations are more loyal to their departments compared to those who work in a horizontal organizational structure.
Mitra Ferdows elaborated that with both the organizational structures having their advantages and faults, the decision of choosing one specific organizational structure over the other depends on the corporate's future goals, plan and milestones. For instance, if a company intends to develop its market in the future, it is well recommended to select a hierarchical structure whereas if its priority is to reduce its budget, it is best to choose a horizontal organizational structure. As one of the main reasons startups fail is the problem with investment, the horizontal structure is given more preference to spend the budget on more significant segments and save budget for upcoming growth. To put it more precisely, among many structures organizations adopt, matrix and hybrid structures are used by many successful startups nowadays. In a matrix structure, the team members are given more autonomy and expected to take on more accountability for their work. This enhances the productivity of the team, fosters greater innovation and creativity, and allows managers to cooperatively solve decision-making problems. Furthermore, a matrix organizational structure has a hierarchy divided according to product or project teams. This more flexible conductive approach paves the way for better communication which is different from a top-down functional structure of a flat structure with few levels of hierarchy. Mitra Ferdows concluded that each organizational structure has pros and cons and one should take into account what outcome the startup is expecting for and base their businesses on the proper foundations.
