Hierarchical Corporate Structures and the Alternatives II: Network Structures

Distributed network structure without middle management
Distributed network structure without middle management

Companies need structure. In most cases, these are hierarchical structures characterized by the super- and subordination of employees. Everyone knows who has the authority to make decisions. However, this aspiration for clarity is increasingly proving illusory in practice. Striving for clarity in a complex environment is like trying to get rid of fog in order to be able to drive more safely. It is more important in such a situation to adapt one's own actions and the available management tools to the general conditions. The Dutch company Buurtzorg has undertaken this attempt and adopted a network structure - and has thus become more successful than any other company in its sector.

In the Dutch health organisation Buurtzorg, employees work in teams of a maximum of twelve people who make all the necessary decisions for their work as a team.

The teams have neither a direct manager nor are there superiors who manage the work of several teams. The only formal exception is the managing director, who, as the founder of the organization, initiated the model of self-regulation. To this end, he defined the first basic principles, but other than that does not intervene in the work of the teams. Since it was founded on a small scale in 2006, Buurtzorg has grown to become the largest health care organisation in the Netherlands with 10,000 employees and still operates according to the same model today.

The teams each have their own clearly defined area of responsibility but are networked together in order to be able to advise and support each other on complex issues. In addition, about 40 regional consultants and a small headquarters of no more than 30 people are available for the organisation, all of whom work only on specific requests for support from a team.

This structure was in place at Buurtzorg from its beginnings. Disappointed by the way his then employers treated patients and employees, its founder, Jos de Blok, wanted to do things differently.

The fact that Buurtzorg was a start-up made it a little easier in terms of corporate culture. Unlike in an existing company, no executive had to lose their position and the influence that comes with it. It also attracted and still attracts employees for whom self-responsibility is important. Working in the health care sector also means that the employees have relatively similar work processes. Unlike other organisations with a similarly large number of employees, such as hospitals or banks, little coordination between the teams is necessary, which certainly makes it easier to organize a company in this way.

Process-oriented organizational structure
Process-oriented organizational structure

Process-oriented corporate structure


For Christoph Haase, the starting point when he took over his family's company was a completely different one. As the son of the company founder, Haase took over a technology company with many employees. The company's production facility is located in Vienna - and this in view of numerous competitors from low-income countries.

Haase didn’t really know what was in store for him when he took over the company. He was overwhelmed by the amount of decisions that he was asked to make. His experts expected him to make decisions simply because he was the boss. Haase realized that being the boss alone was not a good basis for making decisions on issues on which even the experts disagreed – and began to transform his company.

He decided to completely change the structure of decision-making power and dispense with the hierarchy pyramid. The innovative concept that applied to Tele Haase products was also to be reflected in the internal organizational design. The company was reorganized in a strictly process-oriented manner and decision-making powers were structured according to the process map.

Since then, every employee has a basic role in the company that is assigned to a process. Those employees involved in a process are also responsible for this process. They either make decisions on their own or are part of decision-making executive committees. In addition, they can apply for further responsibilities, including the role of a person responsible for another (sub)process. Decisions are taken either by the operational staff themselves or democratically in executive committees. Those responsible for the processes are elected, as are the members of the committees. Meetings are open to all, minutes and documents - with only few exceptions - can be viewed by everyone.

What works well now, however, was not always plain sailing. The first year in particular was incredibly turbulent. Many managers and employees did not want to go down this path, saw no future in such a model and left the company. Today, these difficulties seem to have been overcome. When I visited the company some time ago, I was impressed by how enthusiastic the employees were about this model. The success of the transformation has now also become evident in economic terms. The example shows that the structural transformation of an organisation towards more employee responsibility certainly poses great challenges and risks. Increasingly often, however, such radically innovative approaches to organisational design appear to be the appropriate response to a challenging environment.