In any agency, it’s helpful for workers at all levels to understand their roles as part of the collective. A clear agency hierarchy provides structure and order, letting everyone know where they sit within the chain of command. However, there isn’t only one type of agency hierarchy. In fact, there are several varieties in use today, some of which are much more flexible than others.
This guide will take a look at some of the most common varieties of agency hierarchy, exploring their benefits and best use cases.
Let’s begin by clearly defining the term “agency hierarchy.” Similar to a corporate hierarchy, an agency hierarchy is a system employed by an agency to organize workers into groups and positions. Typically, it separates workers into different departments – like “Marketing“ or “Sales” – based on their roles and skills, as well as setting out the chain of command for each department.
While it may be possible to run an agency without a clear, well-defined hierarchy, it’s not recommended. Many experts agree that having a hierarchy is critical for success. They provide structure and organization across the workforce, which can help with efficiency, productivity, morale, and more.
Here are just some of the main benefits associated with agency hierarchies.
Naturally, the No. 1 benefit of any agency hierarchy is organization. The very purpose of having a hierarchy is to organize workers into different groups, teams, or departments. This lets everyone know their place, as well as setting out how the business is run, who runs each department, and how the chain of command works.
The importance of organization can’t be understated. As mentioned above, it can directly influence an agency’s productivity levels and general efficiency. With an organized structure, workflows tend to move much faster, as everyone knows their responsibilities and who they need to report to. This is particularly relevant in today’s ultra-competitive world, where agencies have to maintain high productivity rates to keep up with their rivals.
Another benefit of an organized agency structure is how it facilitates communication and collaboration between workers. For example, with a clearly-defined marketing department, everyone within that department should know who they can talk to and work alongside on marketing-related projects.
Additionally, thanks to the clear chain of command established in most agency hierarchies, workers at varying levels will know who they need to report to. This helps managers and others in positions of authority to stay informed on project progress and other workplace updates. Simultaneously, managers and other figures of authority will find it easier to delegate tasks to those below them.
Having a strong agency structure also aids with workplace loyalty and morale. When workers are divided into clear teams, they tend to have a stronger sense of belonging and companionship alongside their fellow specialists. This helps to develop a sense of team spirit, with everyone working together towards a common goal.
In the long-term, this can also nurture a happier working environment where employees are more likely to become loyal and longstanding members of the team. This helps the agency retain talent and reduce turnover rates. In other words, you’ll waste less time replacing and recruiting team members and have more time and energy to dedicate to your work.
While agency hierarchies clearly serve an important purpose and bring many benefits to the company, they may also present challenges and hurdles to overcome. Here are some examples and tips on how to avoid them.
While a strong agency hierarchy can help communication between workers of the same team or department, it’s not always the same story in terms of communication between different teams. Indeed, some hierarchies can actually restrict collaboration across departments, making it hard for members of the sales team to work with those in marketing, for instance.
In some cases, workers in one team might not even feel that it’s necessary to communicate with anyone beyond their own department. Alternatively, they might want to speak with colleagues in other teams, but don’t know how to do so. This can slow down the progress of certain projects, as well as frustrating workers and causing clashes and delays.
Fortunately, there are easy ways to avoid this, like employing a hierarchy structure that facilitates communication across teams, such as the matrix model (more on that below). Alternatively (or additionally), managers can regularly host meetings that bring together the heads of different departments.
Another potential challenge which may occur due to agency hierarchies is the emergence of rivalries between teams. Employees may begin to feel that they’re in direct competition with other departments, trying to outdo and outperform them, rather than working together towards the same aims.
On the one hand, this could be seen as a benefit. After all, some level of friendly competition can be healthy in the workplace. However, intense cross-department rivalries are often more detrimental than beneficial. They can cause teams to make decisions purely in their own interests or even take steps to interfere with the progress of other teams.
Again, there are measures that can be taken to prevent this from happening. The best method is to focus on togetherness, encouraging teams to feel united in their push towards a common objective. It’s also important to maintain balance across departments, giving each one the resources and support it needs to thrive.
Unfortunately, some agency hierarchy styles can also delay projects, causing agencies to miss deadlines and deal with slower decision-making processes. This is particularly likely in hierarchies that have lots of layers of authority, with multiple managers, sub-managers, supervisors, and so on. With so many figures of authority holding influence over big decisions, it’s easy for delays to occur.
For example, before a certain action can be taken, it might have to be approved by multiple managers across different departments. That doesn’t just harm productivity, it can also affect the agency’s standing. If clients see that progress isn’t being made and deadlines aren’t being met, they may choose to take their business elsewhere.
To fix this, you don’t necessarily need to make any hierarchical changes. Instead, adjust workflows to optimize efficiency. If you see that certain processes aren’t getting done as quickly as they could, or that recurring delays are slowing you down, identify the root causes and introduce policy amendments to resolve them.
There are multiple agency hierarchy structures to choose between. In general, they’re divided into two main categories: mechanistic and organic. Mechanistic hierarchies are what most people are likely to be familiar with, featuring a central figure of authority at the top and clear lines of authority flowing down for each respective team. They’re formal and centralized in their structure.
Organic hierarchies are much more fluid and flexible. They have low levels of formalization, with fluid communication lines and more versatile employee roles. In this kind of system, workers may find their roles harder to define, taking on a range of differing duties according to the agency’s changing needs. In some agencies, this type of hierarchy can be a better fit than a mechanistic model.
However, if we dig deeper into agency hierarchies, we’ll discover a range of subtypes or models that agencies might like to consider, such as the traditional model, the matrix model, and the pod. Here are some overviews of the most common hierarchical structures, complete with pros and cons for each one.
If you picture a hierarchy in your mind, you’ll likely imagine the traditional model. It’s typically represented by the classic pyramid shape, with the boss of the business at the top, then several layers of employees below with decreasing levels of authority, branching out into different groups or departments.
Highly centralized, this is the ultimate incarnation of the mechanistic hierarchy. It breaks the entire workforce down into clear divisions based on their role and status within the agency as a whole. It also sets out the chain of command for each department, with heads or managers at the top and workers below them.
The advantages of this model include clarity and efficiency. It’s a very easy to model to understand, where every worker knows their place and can clearly see their own potential for promotion and career growth as they work up the ranks of command. On the downside, the rigidity of this model can stifle creativity and impede communication across teams and departments.
Overall, the traditional model is arguably best-suited for agencies that are highly specialized, offering specific kinds of services, like consulting, or larger agencies that benefit from an organized structure.
The matrix model has much in common with the traditional model. It has a clear head of the business at the top of the food chain, with subsequent layers of authority branching down. However, it’s a slightly more flexible option, designed to make cross-divisional work and team formation much easier.
In this system, each department or team is clearly defined, but there are more links between them, which is where the “Matrix” name comes from. Every worker reports not only to their own specialized head of department, but also to a separate project manager, who oversees workers from a range of teams, bridging the gaps from one group to the next.
In many ways, the matrix model aims to offer the best of both mechanistic and organic hierarchies. It maintains the clear structure seen in the traditional model, but introduces that much-needed flexibility which can help agencies act more efficiently. On the downside, the unique reporting systems involved with this model can be a little confusing, especially for those who aren’t used to it.
Overall, the matrix hierarchy is best for full-service agencies or those that often take on projects requiring cross-department collaboration, like software development agencies.
The pod model is just what it sounds like – it divides agency workforces into “pods.” Each pod is basically a little team, comprised of individuals who have skills and abilities that make them well-suited to working side-by-side. Pods can then be assigned to various projects or accounts, improving their teamwork and working relationships as they go.
Each pod will typically contain individuals with clearly-defined roles. For a digital marketing agency, for example, a pod might have a graphic designer, a copywriter, and a strategist. The pods also have one or more senior members of the agency to oversee it. So, when a new project comes in, it can be quickly assigned to a pod, and that pod’s members can get to work on meeting the client needs.
Indeed, the client-centric nature of this agency hierarchy is arguably its strongest feature. It’s very much designed around satisfying clients and ensuring that work gets done quickly and efficiently, with minimal risk of delays. Additionally, individual workers within each pod also tend to build strong relationships and work better together over time as familiarity between them grows.
The downside with this system is that if any member of a pod doesn’t pull their weight or simply has to take time off, the pod loses a lot of value and usefulness. Overall, this hierarchy is best for agencies that have clearly-defined roles and a lot of client accounts to manage, like those in advertising or marketing.
Another possibility is the flat or horizontal agency hierarchy. As the name suggests, this kind of hierarchy is almost a non-hierarchy, as it doesn’t have the usual layers or levels of authority and management. Instead, it’s built around concepts of employee autonomy, flexibility, and free-flowing communication.
In this kind of agency, even entry-level workers have more influence over decisions. The lines that typically separate supervisors and managers from other employees become blurred, and the whole organization can feel more inclusive and harmonious. In an ideal case, it allows every employee to feel valued and heard, which can foster loyalty and long-lasting business relationships.
One of the downsides that some agency workers have cited with the flat model is that, in action, there often tends to be a “hidden” chain of command which gets established. So, even in a model that should be equal and balanced, workers still feel like they’re either above or below certain other members of the team.
For this reason, the flat model is often recommended for smaller agencies. As firms get larger and have more projects and employees, they tend to require more rigidity in their hierarchy.
There are also some agencies that don’t actually need a traditional hierarchy, as their workforce is mostly or entirely made up of either freelancers or contractors. In that case, a freelance or collective hierarchy may be used, which is flexible and scalable to suit the changing needs of the agency as it grows or scales down over time.
This kind of agency usually has a small core team or even just one individual who handles client relations. The rest of the workforce is made up of freelancers with appropriate skills to respond to client needs, which could include specialists in marketing, copywriting, design, development, and so on. It all depends on the nature of the services the agency provides.
There are plenty of pros of operating a freelance or collective structure. For starters, it’s highly flexible. You can bring in workers as needed, using the vast pool of freelancing talent to build the best teams. On the downside, quality and consistency levels can vary, depending on the workers you bring in. The central project manager also has a lot of responsibility on their shoulders.
As such, this system is only best for entrepreneurs who are extremely confident in their own abilities to manage projects and hire the right people. It’s also good for those with limited budgets, as you can save a lot of money by hiring freelancers, rather than having full-time contracted employees.
With several different hierarchical structures available, agency owners may be unsure which is the best fit for their firms. Here are a couple of key tips and considerations that can help you make the right choice.
Arguably the most important determining factor to help you decide the right hierarchy type is the size of your agency. In general, bigger agencies tend to require more rigid, organized structures. This is especially true for those with offices or teams spread out in different locations, as it can be hard to maintain free-flowing, fluid systems when you’ve got so many workers and projects to manage.
If you’re just starting off with a small team or startup, feel free to experiment with organic, flexible approaches. However, for bigger firms, especially with high turnover and lots of new workers regularly joining the company, it’s usually better to establish a system that makes roles and responsibilities clear to all.
A lot of entrepreneurs start up their new businesses with one clear hierarchy or structure in mind. But that’s usually because they’re not familiar with all the options out there. They may have only ever worked in places that use the traditional approach, or the matrix model, for example, and don’t know about the possibilities of pods or freelance structures.
When setting up your business or considering ways to improve its productivity, take your time to research alternative methods. Look up case studies. Review real-life examples. Find out how these different hierarchies work in practice and what benefits each one brings to the table. Then, with a thorough understanding of the available options, you can make an informed decision for your firm.
Change can be tumultuous. It can cause disruption, delay, and difficulty. That’s why, in general, it’s best to pick a hierarchical type and stick to it, if you can. However, agency owners shouldn’t feel that they have to stick with a system that isn’t working. Nor should you feel like your hierarchy always has to stay the same, for the entire lifespan of your firm.
Indeed, a switch to something different could be exactly what your agency needs to unlock its full potential. There are lots of examples of agencies trying a different hierarchy and finding that it works much better for them. You might switch from traditional to pod, for example, and see client relations soar. Or you could transition from flat to traditional and skyrocket your productivity rates.
If it feels like your current system isn’t working – or if your business is in a very different place now to where you began – it might be time to change things up. Experiment or trial an alternative hierarchy to see how it works. Additionally, don’t forget to review performance metrics regularly so you can see how your hierarchical adjustments impact your agency’s day-to-day operations.
As you can see, there are lots of ways to structure, organize, and manage an agency. Every method is unique, and it’s impossible to say that one is simply the best. They’re all different, and each one can work well for agencies of differing sizes, values, and ways of working. That’s why it’s recommended for agency owners to review the options and carefully consider differing structures to figure out which works best for them.
But a good hierarchy is only one piece of the puzzle when it comes to setting up a successful agency. You also need the right software and technical tools to assist you. Hello Bonsai’s software for agencies is a great way to start, helping with everything from project management and time tracking to billing and beyond. Contact the Bonsai team today to learn more.
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