How Do Organic Organizational Structures Affect External Hierarchical Organizational Structures?
External environments do a great deal of work in affirming the design of an organization. Importantly, the design and function of other organizations make up a large part of the external environment. In many ways, organic, or decentralized forms of organization can respond quicker than more formal, hierarchical structures. On the other hand, hierarchy represents stability and solidity in a volatile market. These kinds of interactions affect each other and help improve the design of each.
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Organic vs. Hierarchic
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Within the large literature on organizational theory, these two organizational types are presented as opposites. An organic, sometimes called "modern," "decentralized" or "horizontal," organization is one of great fluidity and independence of its component parts. On the other hand, a hierarchic organization is a bureaucratic, top-down command structure. Put differently, the former dispenses with most formal chains of command the standardized procedures, while the latter is centered around these things.
Competition
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Centralized, hierarchic firms are normally stable, large and complex organizations. Start-up firms, or those that must adapt quickly in a volatile market, normally take a version of the organic approach. In such industries as manufacturing, the hierarchic system outperforms the organic systems because the standardization of routines, tasks and offices controls costs to a great extent. On the other hand, employee satisfaction is often higher in the organic firms, which may mean, over time, these firms will have a competitive advantage in attracting the best in the field. In other words, the organic structure can affect the hierarchic one by forcing the latter to reconsider its employee relations.
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Technology
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In volatile fields like computer software, the organic model can outperform the standard one. This is because when a field is volatile, the organic model does well. The organically organized firm is flexible, since there are no standardized routines, and offices and functions are themselves fluid. Specialization in terms of task and function matter less in an organic environment. It is easy to conclude that the more volatile the market, the more the organic organization will negatively affect the hierarchic structure.
Crisis
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One of the most important advantages the organic organization has over its rivals is its ability to respond rapidly and creatively to crises and other radical changes. If these two types of firms are competing against each other, a crisis such fuel price shocks, inflation, depression, interest rate increases or some other mark of instability will lead the hierarchic organization to seek to imitate the organic in its response. Since the hierarchical organization responds to minor changes in routine only, drastic changes will force a more organic approach from the hierarchic firms. These firms will have to develop more rapid-response team organizations, which might entail a more "horizontal structure."
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