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“Corporations and other businesses should try to eliminate the many ranks and salary grades that classify employees according to their experience and expertise. A ‘flat’ organizational structure is more likely to encourage collegiality and cooperation among employees.”
Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.
Some people may believe that corporations and other businesses should try to eliminate the many ranks and salary grades that classify employees according to their experience and expertise. A ‘flat’ organizational structure is more likely to encourage collegiality and cooperation among employees, as the businesses are crossing borders and new projects are coming up in different countries, these businesses are facing new challenges. These challenges require business to divide themselves into teams at different levels planning and execution. To handle these challenges experienced and domain specific skilled manpower is required. This manpower cannot be compensated and designated at the same level of an employee with general experience or with an employee who has just started his career. There are several other reasons to favor a hierarchical structure in organization.
First, execution easy most of the organization in the whole world maintain hierarchical ranks in order to delegate the authority to take appropriate action when the situation demands. Higher the level in the hierarchy higher is the authority. Also, most of the organization maintains such structure so that in case of non availability of subordinates work is not affected. Let’s take an example of huge conglomerate GE, it has a number of subsidiary companies like GE finance, GE medical Equipments, and GE power and each of them need manpower with different kind of experience. The activities of all the employee of these companies have to be controlled at different levels. Therefore, these companies have employees working at different levels. Those at higher ones look after strategies and those at middle coordinate with both higher and lower rank employees.
Second, removing the salary grades among employees will remove the incentive of working hard all together. In most of the organization employee work at different levels and People at managerial level generally have higher responsibilities and more experience than their subordinates. Therefore the employees have to be compensated accordingly. For example a senior manager- operation has responsibilities like arranging the manpower, raw materials, scheduling the operations, and transportation of the ready product, but a production supervisor has responsibilities like Manpower management, meeting the time deadline for production targets. We see that responsibilities of senior manager are more and needs more effort and dedication and hence the salary of senior manager should be higher than that of the supervisor.
Third and most important reason to maintain a hierarchy in organization is that there is certain information about the organization that if shared with everybody may cause troubles for the organization, such information can be shard among the employees that are much more accountable and have considerable experience and expertise.
Some may argue that a flat organizational structure with no salary grades may improve communication and makes the organization agile and help in adapting to ever changing business scenarios, but at the same time it such structure may face difficulties in successful implementation of policies and may lack a direction in contingencies in the absence of leadership.
Hence the organizations today, keeping the above stated facts in mind should maintain a hierarchical structure in organization and the employees should be paid according to these hierarchical structures.