Today’s organizations have no choice. Speed, the flow of information, and a 24/7 global world make it difficult for any team or organization to survive in a traditional, hierarchical, command & control structure. But maybe this is not about survival at all; but instead about organizational advantage!
Look to today’s brands and business success stories like Google or Zappos — what are people talking about? Culture. These firms are successful for many solid business reasons, and especially about the way they design their organizations. Things like org charts, roles, compensation and even leadership philosophies have become more than an afterthought — they can be a company’s true advantage! Each of these structural decisions can make a difference and create better outcomes for the business. Which got me thinking…
What are the advantages to flattening out your company? And will the results be worth it the trouble? Here goes:
Advantages of Flat Organizations:
- Lower Cost: Sometime around the mid-90s, businesses took out middle managers that were simply extra layers that helped organize the business but did not add value. Good luck finding a business that has a lot of middle management bloat today. This cut is basically permanent.
- It’s easier to manage teams: In flat companies, business teams are organized in smaller units that are closer to the customer and where the team community is easier to manage. Strong teams often follow the “two pizza rule.” If it takes more than two pizzas to feed the team, then it might be best to break the group down into smaller units.
- Decision-making is closer to the customer: Military organizations put the decision-making too far away from the customer. A flat company does the opposite, allowing employees who talk to customers every day to make decisions.
- Empowerment of the “front line”: In a flat company, the power shifts in the organizational chart to the front lines, which creates empowerment amongst the ranks. This is a shift in cultural thinking. Give the front lines folks the go ahead to ask and solve customer problems!
- Team-based problem solving: Instead of dumping problems & challenges in the leader’s lap, employees in flat organizations work as a team and garner input and feedback from many perspectives. This power of the team enables buy-in and change to often happen a little bit easier as folks are a part of the change!
So that is the good stuff. What are the downsides?
Disadvantages to Operating a Flat Organization:
- Inability to shift in leadership style: Many leaders are not capable of changing up the way they lead. Even those leaders that want to change may not be able to adjust when the going gets tough. Power, control, titles and access to information are all either tools for all or weapons for a few!
- Change management is difficult: Conversely, even if the leader can shift their leadership style, sometimes folks simply can’t handle the the change.
- Time investment: In a world where we are judged by weekly status reports and quarterly earnings will anyone take the time to make the investment in a new way of operating before someone screams “results now!”
- 9-5 workers aren’t interested in empowerment: Not all employees long to make decisions nor have the skills to be on active work teams. The organization must be prepared to provide the knowledge, training and ongoing framework for this to work.
For leaders every aspect of the business and its design is a decision. Where can you get more productivity; flat or with hierarchy? All that matters in the decision is what works for you and your shareholders. Even if that shareholder is you.