Is Your Org Structure Top-Heavy?

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.
  4. Lack of Employee Engagement: Excessive hierarchy reduces employee engagement and morale. A top-heavy organization results in top-down decision-making, and lower-level employees often feel disconnected from the organization’s goals and mission and are less motivated to contribute.
  5. Difficulty in Implementing Change: Implementing organizational changes or strategic initiatives is challenging in a top-heavy structure. Resistance from middle management or delays in cascading directives down the hierarchy will impede change efforts. The “why” is often reinterpreted as handed down from layer to layer, ultimately lost.
  6. Risk of Inefficiency and Redundancy: A top-heavy structure results in inefficiencies and redundancies. Too many layers of management lead to overlapping responsibilities or duplicated efforts. These redundancies waste resources, increase process inefficiencies, and impede operational effectiveness.
  7. Loss of Member Focus: This is the most significant risk of a top-heavy organization. Bill Sterner, deceased CEO of Elevations Financial Credit Union, often said, “The higher up you get in the credit union, the less you know what is happening on the front line and with the member.” When decision-making is concentrated among senior leaders, the credit union often loses sight of its members’ needs and front-line and operational challenges. This loss of connection will impact member satisfaction and retention, ultimately affecting the credit union’s competitiveness.

Addressing a top-heavy organizational structure can be a significant challenge for a new CEO. Still, there are several practical steps to streamlining the organization and creating a more balanced and efficient structure:

  1. Conduct a Comprehensive Organizational Review: Thoroughly assess the current organizational structure. At a credit union, an organizational review includes evaluating the number of layers of management, identifying areas of duplication or inefficiency, and understanding how decisions flow through the organization. To determine the issues, conduct a bottom-to-top discovery to identify the duplications and inefficiencies and to identify the misalignment of the layers and silos.
  2. Define Clear Objectives and Strategy: Clearly define the organization’s strategic objectives and priorities. Most credit unions are silo structured by operational alignments, not strategic alignments. As a result of this legacy org structure, two or more silos may be working on the same strategic objective but with different priorities, timelines, and solutions. This duplicity creates a significant expense impact. This step will provide a framework for restructuring efforts and help determine which functions and roles are essential to achieving these goals.
  3. Redesign the Organizational Structure: Based on the assessment and strategic objectives, redesign the organizational structure to flatten the hierarchy and reduce unnecessary layers of management. An organization redesign will likely involve consolidating functions, eliminating redundant roles, restructuring reporting to align with strategic objectives instead of operational areas, and redefining reporting relationships.
  4. Empower Middle Management: Strengthening the role of middle management by empowering them with decision-making authority and responsibilities is a vital ingredient in flattening a credit union. Middle management empowerment will help distribute leadership across the organization and improve responsiveness.
  5. Implement Agile or Lean Principles: Adopt agile or lean principles to enhance flexibility and responsiveness. Since every strategic initiative requires cross-functional team collaborations, aligning the organizational structure with the strategic objectives will enable this collaboration. Additionally, the results will streamline processes, improve workflows, and promote a culture of continuous improvement.
  6. Communicate and Engage Employees: Transparently communicate the reasons for the restructuring. This communication must identify the benefits to the credit union, the members, and the staff. This hones communication will help to engage employees throughout the process. Listening and feedback loops are essential, and a process to actively and transparently address concerns will ensure everyone understands their role in the new structure and, ultimately, how everyone will benefit.
  7. Align Performance Metrics: Performance metrics and incentives must align with the new organizational structure, the empowerment of middle management, and the improvements in decision-making. Aligning performance to the managerial and strategic objectives ensures employees are motivated to work towards common goals and supports the desired cultural shift.
  8. Invest in Leadership Development: Invest in leadership development programs to prepare managers and supervisors for their expanded roles in the new structure and equip them with the skills and tools needed to lead effectively in a flatter organization. This leadership development will also help to make the leadership language, styles, and models more consistent, a critical element of cross-functional teamwork and collaboration. 
  9. Focus on Culture and Change Management: Foster a culture that supports the new structure and values collaboration, innovation, and efficiency. Implement change management strategies to ensure a smooth transition and minimize resistance to the latest working method. Make cultural fit and be willing to embrace change criteria in the hiring and promoting staff.

By taking these steps, a credit union can transform a top-heavy organizational structure into a more agile, efficient, and adaptive organization better positioned to achieve its strategic objectives.


Rich Jones is the Founder/Principal of Leading2Leadership LLC. Before starting his strategic planning agency, he spent over 20 years in leadership roles in the financial services sector. Before becoming an executive in the financial services sector, Rich was an entrepreneur, building and selling two businesses and working for early-stage start-up companies in executive roles in marketing, business development, and seeking investment partners. With more than three decades of experience, he brings innovative thought to companies and executives. Rich published “Leading2Leadership, a Situational Primer to Leadership Excellence.” The book is available on and was designed to be used as a book study for leadership development programs; it breaks leadership skills into manageable situations for discussion and reflection. Rich works with credit unions, CUSOs, and vendors, designing digital, data, culture, marketing, and branding transformation strategies. In 2014, Chosen as a Credit Union Rock Star by CU Magazine, and in 2018, Rich received the Lifetime Achievement Award from CUNA Marketing and Business Development Council. A Marine and graduate of Colorado State University, Jones shares his expertise at

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