To flatten or not to flatten?

09/01/2018

 

 

Are flat hierarchies the secret recipe for efficient work? Is the traditional hierarchy really overrated?

 

 

 

Higher, faster, further

 

In the last 45 years, a new type of organizational structure has been established by a number of companies regarding new challenges at workplaces. Since the change from the age of industrialization to the modern knowledge society, the traditional top-down organizational structure has diminished in significance. Digitalization has made disrupted leadership possible. Accelerated task structure and the speed of new ideas changed, if not revolutionized, the traditional work environment.

 

 

 

The debate

 

Since generation X moved to Y, people and their understanding of leadership are becoming increasingly individualized. As a result, traditional leadership is in decline.

Traditional hierarchies have explicit role allocations and responsibilities.

 Information exchange is marked by one-way communication from top to bottom. 

Responsibility is restricted. Thus, traditional structures often accel in performing tasks faster than flatter ones. Generally speaking, it is often wise to turn back 

to traditional structures in cases of emergency or when prompt decisions need to be made, for example in medical operations.The most often criticized point of traditional hierarchies is the limited communication, which can only happen into, but less frequently, between different layers.  

That is also why today, the model of flat hierarchies is used by many companies. Especially startups employ this type of open-minded management culture. They focus on transparency in order to empower their team and facilitate communication and boost productivity. Nevertheless, there is still a widespread discussion about the optimal organization structure. Some see flat hierarchies as a secret weapon for growth and success. Others believe that this model has only a timed effect as it cannot work in the long run, and is not applicable to every business model.

 

 

 

The ingredients of flat hierarchies

 

Establishing a nonhierarchical structure in a company seems to be comfortable. Neither executives nor managers are required, although these traditional positions are used to empower every individual team member. A management tier is implemented to enhance the flexibility and self-responsibility of the team. Flat hierarchies focus primarily on team leadership and application of various tools in order to optimize their work efficiency. Hundreds of startups are established by simply thinking out of the box.

For them, flat hierarchies promise individuality,

flexibility,and, an explosion of creativity.

Also, connective and diversified work characterize

tasks in this kind of organizational structure.

 

 

 

 

How a flat organization can be successful

 

The W.L. Gore & Associates Inc. follows this kind of new organizational structure. The company, whose CEO is democratically elected follows a ‘lattic’ structure. The inventor Bill Gore once “dreamed of an enterprise with a great opportunity for all who would join in it, a virile organization that would foster self-fulfillment and which would multiply the capabilities of the individuals comprising it beyond their mere sum.” Today his company is rated as one of the 100 best companies to work for index, and it reached a revenue of 3.2 billion dollars in 2017. It is the 135th largest American private company according to Forbes. W.L. Gore & Associates is not the only firm which established flat hierarchies in their organization.Furthermore, famous companies such as Google, Valve, or Medium adapted this structure and became successful.

 

 

 

“The Offer” – how a flat organization could  be susceptible to failure

 

Nevertheless,  flat hierarchies are also criticized. Since 2013, the online shoe retailer Zappos established a new flatter management structure, called holocracy. Moreover, they offered their employees to take a $2,000 stipend instead of starting their job to separate the wheat from the chaff. This human resource planning was unconventional, but after two years the rate of employee turnover reached f 30%. The staff experienced working difficulties. Zappos justifies the rise in turnover rate by an increased wish of self-fulfillment of long-term employees.Yet, this example shows that flat hierarchies are not faultless. Critics remark that confusion can rise in the team because employees do not get enough feedback, which is psychologically needed. Flat hierarchies sometimes open a door for expectations of work processes. These expectations cannot always be fulfilled. As a result, workers feel dissatisfied and inhibited.  In the end, companies can lose quantity and quality. Furthermore, this new way of work is not accepted by everyone. There are also people who do not want to act independently and self-responsibly. Still, they have to be directly integrated into the work process.

 

 

 

Patent remedy?!

 

To flatten, or not to flatten, that is the question – and the answer is tricky. The establishment of flat organizational structures can be both, a success and a failure. There is no perfect solution. Establishing a particular type of organizational structure requires a high-performance level. Huge companies are difficult to run using flat hierarchies, but for small ones, this could be the right option. Finally, the most critical point is not to flatten the organization, but to decentralize it, to make it more transparent and federative, which often depends on the current use-case. An organization is a process, not a situation – it is susceptible to changes, and it needs to be continuously adapted according to its current condition.

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