Differences of top-down vs bottom-up planning

This article will take a close look at top-down vs bottom-up planning. Comparing both approaches, how they work and when they should be applied.

For top-down planning, management lays down a detailed roadmap and then ensures that everybody follows it. On the other hand, in the bottom-up method everybody has a say regarding goals and how they should be met.

Older organizations traditionally use the top-down approach, while the new trend is to establish a hybrid system. Choosing the right approach for your business is the key to successfully planning and executing.

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What is Top-Down Planning?

Top-down planning is an approach where all planning is done by upper management and then trickles down. It is the most common approach for old industries where procedures are strict and not prone to change.

For example this is used in car-manufacturing. In this industry, higher ups decide what goals should be met over a period of time. They might negotiate with middle management over objectives and the budget needed to meet them. But in this process, lower level employees will probably not get a say.

There are also times when top-down management should be applied even in companies that don’t normally use it. This is true in case of an emergency, where having less people making decisions will speed up the solution. This strategy brings swift decision making and lets everybody focus on the task at hand.

top-down vs bottom-up

What is Bottom-Up Planning?

Bottom-up planning is a method where everyone gets involved in the decision-making process. It usually begins with goals established by management, after which every team gets together to plan the best course of action.

This method is quite common in new industries, like software development, where innovation is important. This approach gives way to new ideas as it draws from everybody’s input and has room for negotiation.

A very popular way to adopt bottom-up planning is by implementing the framework known as objectives and key results (OKRs for short). In this system, each objective has several key results that show progress.

If you are looking for a structured way to bring bottom-up planning to your organization, check out our OKRs template.

Top-down management, pros and cons

This management style has its ups and downs. Having a small group of people make decisions can be beneficial, but it can also be biased. Especially when those people will not be carrying out the plan they are devising.

Pros Cons 
Clear strategic direction. Potential disengagement among lower-tier employees.
Efficiency in resource allocation. Risk of overlooking practical challenges on the ground.
Company wide cohesion. Less room for creativity.

Bottom-up planning, pros and cons

Taking everybody’s opinion into account is great, but it can be a cumbersome process. If not channeled correctly, opposing views can slow down the process and even grind it to a halt. What’s more, this way of planning takes up a lot more resources in terms of worker-hours.

 

Pros

Cons

Enhanced employee motivation and ownership.

Slower decision-making due to the need for consensus.

Improved innovation by incorporating diverse insights.

Challenges in aligning diverse perspectives with overarching strategic goals.

Great for environments where frontline input is crucial.

Risk of losing focus.

Clear ownership of goals

Combining Both Approaches

As with everything in life, balance is of the utmost importance when choosing a management style. 

For a company where top-down planning is the norm, getting everybody involved when the situation allows it can boost morale. Also, it does wonders for company loyalty as it gives employees a sense of belonging.

In an organization with a bottom up culture, it is ideal to define areas and scenarios where management has the final say. This sets up clear playing rules, and mitigates conflicts that may arise if team-members expect to be consulted but aren’t.

No team implements completely pure versions of either of these approaches, instead they usually use both to varying degrees. It is important to be conscious and strategic about when to get everyone involved and when to turn to the small table.

Going up or down?

Now you know the difference between the top down and bottom up approach to planning. We also covered some of their pros and cons, going over some of the industries where each method is common.

If you learn new ways to manage an organization, read about the Difference between OKRs and KPIs.

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