Is your org structure top-heavy?

by Rich Jones, Leading 2 Leadership

First, let’s understand the impact of a top-heavy organizational structure on a credit union’s effectiveness, efficiency, and overall performance, which is critical. Here are the risks a top-heavy organization poses:

  1. Slow Decision-Making: A top-heavy structure hampers decision-making, slowing down processes due to the numerous layers of management, approvals, and consensus-building required. This sluggishness hinders the credit union’s ability to respond swiftly to market and economic changes, shifts in member expectations, and even strategic goal achievement. Simply put, there are too many chefs in the kitchen.
  2. Increased Costs: A top-heavy structure often results in higher operational costs, and every CEO and CFO knows that a low expense ratio can be an essential competitive driver. More layers of management mean increased salaries and administrative expenses, reducing the credit union’s overall cost-effectiveness.
  3. Limited Innovation and Agility: Too much hierarchy also stifles innovation and agility. Lower-level employees feel disempowered and less inclined to take the initiative or propose new ideas, hindering the credit union’s ability to adapt to an evolving and disruptive industry.

 

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