Flat structured organisations aid quick decision-making

Working on leadership development for the past few years, I have observed many organisations trying to move towards a flat organisation structure. Flat organisation structures, also called horizontal or de-layered structures, have fewer number of managers between the employees and senior executives. This format usually tends to have a shorter chain of command, fewer layers of reporting and diminished close supervision by layers of management.

Clearly the kind of structure an organisation decides to follow is the method they choose to determine and control lines of communication, authority, information flow, policies and responsibilities. It determines the nature of distribution of leadership through the organisation.

Big or small? Until recently, flat structures made sense for smaller organizations.  However, now, bigger organisations are trying to imbibe flatter structures at least within departments and sites, if not companywide. They realise that innovation is key for companies to survive in today’s environment. A big enabler of innovation is empowered employees. Another way to do it may be to have some functions flatter than the others depending on the expectations from that function. For example, if technology is a support function and has decided to follow agile methodology, it may feel the need for self managing teams.

Benefits of flat organisational structure
Such a construction is gaining popularity because it allows companies to build adaptive, innovation friendly organisations. Instead of shifting the entire responsibility to the top, it builds leadership skills at the lower rungs, empowers employees by helping them take charge, make decisions and feel responsible for the success of the organisation. Another side effect of this is encouraging ownership. Since employees are more involved in the decision-making process, their needs of autonomy and self fulfilment are more nearly met. This culture attempts for employees to have fewer behind-the-scenes power struggles and disagreements. Google is one such company. Google is philosophically flat, not organisationally flat; it is just not possible now with tens of thousands of employees.

Flat structures encourage higher levels of communication between the management and employees. They do end up being more democratic. Such leaner and fitter structures are more flexible, which allow decisions to be made quicker and on a need basis. The number of approvals needed by the upper management which needs trickling down is usually lesser in number. Communication within the organisation is usually faster, more reliable and becomes more effective, leading to quicker turnaround times. It also allows for greater mobility and agility. Greater transparency is required in the decision-making process.

Challenges in flat organisational structure
Some of the challenges that companies face as they become more horizontal are the emergence of new power dynamics that may undermine the equality that is afforded by such a format. When value is no longer placed on an employee’s position; new hierarchies based on personality type, skills, pedigree or communication style could emerge. If these hierarchies do not get acknowledged, it becomes more difficult to address the emergence of a new hierarchy because they remain implicit or undetected.

This structure can pose a problem when the ratio of employees to managers becomes too out of proportion. The management can easily lose control when there are less people to put a brake to non-productive practices and less individuals to support them in their decisions.

Sometimes when you have less hierarchy, decisions don't get made or are not made effectively by employees that may lack experience, accountability, or motivation in place of the missing managers. Issues with failing to catch bad decisions early on due to a lack of internal controls that a more traditional management model has in place due to its lack of managers may happen.

Companies may suffer from problems related to the inappropriate handling of grievances, the formation of informal clout or the influence of popular employees. An effective HR department could resolve these issues within a flat organisation.

It is also far more difficult to adopt or develop such a culture in primarily hierarchical societies like in India, where hierarchy is ingrained in the fabric of the DNA of the people due to its history and cultural baggage.

What can leaders do?
One of the key responsibilities of the executive team becomes having a well-thought-through structure in place which allows room for employees to innovate and be empowered while also having in place a sense of control and order brought about by strong leadership at the top. This makes the importance of presence of processes and protocols even more important. It also helps minimise chaos and confusion.

The leaders need to teach their people to work better with ambiguity. Practices like consensus decision-making, rotating responsibilities and open allocation need to take precedence.

The leaders need to create an organisation in which people make moral quick decisions on their own and adopt a growth mindset instead of a fixed one when there's no one technically watching over them. The employees need to be clear on the mutual understanding of growth.

Finally, it is not possible to ignore the rise of flat organisational structures in current times. It has its share of advantages and disadvantages. It will serve the leaders well to get a deeper understanding of what works and what doesn’t in the context of their environment and the future that they envision for their company.

The thoughts and opinions shared here are of the author.