Management Planning: Top Down vs. Bottom Up

In corporate and large organizational settings decisions are made either at the top of the pyramid, or from the bottom.

The top-down approach is where top level management makes the overall decisions and strategy for the organization and manages the entities. The top-down approach means that top management is making sales forecasts and dictates to each department their expected sales, objectives and limitations. The benefits of the top-down approach is improved coordination, communication and collaboration across departments with a higher (and sometimes better) perspective of internal and external factors in strategy decisions. 

The bottom-up approach allows for each department to set their sales goals, objectives and align themselves with the overall strategy of the organization. This method allows employees to feel empowered, a higher sense of ownership and autonomy. Departments are able to act with their own interests in mind, and have the opportunity to innovate and offer programming/products/services that meet their objectives. The challenge with the bottom-up approach is that there is a lack of coordination across departments, and department rivalry can occur (i.e. sales targets, budgets, staffing, resources, etc...).

The reality is both strategies should be used. An organization should have those discussions at the top, receive feedback and input from each department and then make a specific plan and forecasts. It is working across teams, hierarchy and with various skills that allows for innovation and high performance. Limiting discussions to be in silos will not give any business or organization the competitive advantage needed to make the most impact, socially or financially. 

Here is a link to an Economist article on top-down vs. bottom-up management.