Companies in business must choose whether to focus on a top-down approach or a bottom-up approach to their business decisions. Let's look at both of these in terms of their characteristics, benefits, and liabilities.
In the top-down approach, decisions are made by upper management and passed down to employees, who receive their tasks from their bosses and are expected to perform them. This business style is beneficial in that it provides good organization. Tasks are determined and delegated along orderly channels, and everyone in the system knows exactly what is expected. Further, a company's management is strong and authoritative when it uses the top-down approach. This approach also involves less risk because fewer people are involved in the decision-making process. On the other hand, the top-down approach can easily become dictatorial and even oppressive for employees who are expected to obey and perform and not question. Also, since it limits input, it can decrease creativity and job satisfaction and prevent the inclusion of new and helpful ideas from non-management sources.
The bottom-up approach incorporates input from employees on all levels into the company's decision-making process. Employees are encouraged to contribute their ideas and to take ownership of their jobs. Businesses using this approach develop a series of goals that include the entire company, and tasks are often generated by employees who are directly involved in particular areas of operation. The benefits of this business style include better communication among all members of the company; higher morale and job satisfaction (as employees are encouraged to take ownership of their jobs and an active role in determining how to best accomplish them); greater creativity and wider ideas about solutions; and better cooperation and relations among company levels. The bottom-up approach can, however, bog down as more people need to be consulted and contribute to decisions, and this can lead to an increase in the time necessary to set goals and perform tasks. Overall, a company might experience a decrease in efficiency with this style, at least at first.