3 Major Myths about Flat Organizational Structures in Business

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If you’ve worked in a company with a hierarchical or ‘tall’ organisational structure, you’ve probably experienced the frustrations that can arise from dealing with long chains of command and potential bureaucracy.

Many modern startups are now championing the idea of flat-level and non-traditional structures to aid talent attraction and recruitment. In this article, Instant Offices take a look at three of the major myths around this kind of working, and why adopting it may actually benefit your company more than you think.

What is a Flat Structure in Business?

Also known as a horizontal organisation, this is an organisational structure within a company that reduces the levels of management between staff and management, thereby creating a shorter chain of command. As a result, people theoretically have more involvement in decision making processes and the ability to work autonomously rather than be closely supervised.

Other Types of Organisational Structures

According to an article in Forbes, there are a few different alternatives to organisational hierarchy.

Hierarchical

The oldest and most common structure in corporate company hierarchy, this downward-flowing chain of command is set up like a pyramid with a CEO at the top, followed by layers of managers and subordinates.

Flatter

An evolved form of the hierarchical structure, flatter organisations remove layers within an organisation and open up communication instead of having it flow one way.

Flatarchies

A combination of hierarchies and flat organisations, this refers to dynamic companies that might have ad hoc hierarchical or flat teams working together depending on the tasks at hand.

Holocratic

A new trend that’s been gaining lots of traction as more companies experiment with a ‘bossless’ environment. At its core, holacracy enables distributed decision making among teams or ‘departments’.

Now, let’s look at the myths of a flat organisational structure.

Myth 1: Every company needs a hierarchy to succeed

The military needs strict and clearly defined levels of hierarchy, sure, but does the same model really benefit modern companies? In an environment where communication typically flows from top to bottom, engagement and collaboration becomes difficult, and employee wellbeing is a vague consideration at best.

Today’s startups need skill and speed in order to function efficiently and for this to happen, CEOs and Directors hope to bypass layers of middle management by running flat-level organisations.

Giving the people on the ground a voice creates an equal workplace, offers individuals a higher level of responsibility and promotes communication companywide. Perhaps one of the most famous examples of this kind of management structure is at Google, where less hierarchy apparently empowers employees and promotes happiness.

A flat hierarchy, with excessive layers of management stripped out, would seem to have some advantages over its highly structured counterparts:

Savings:

Fewer management-layers means flat-level companies spend less on salaries overall. While this means existing staff have more room for growth and expanding their skill sets, it also means more opportunity for raises and promotions based on performance and productivity.

Agility:

A smaller business hierarchy and less bureaucracy gives teams the ability to be more agile and adaptable when making decisions. This empowers people to handle problems, processes and operations within the company, without having to seek approval from a chain of managers, and leads to faster turnaround times and a greater sense of responsibility.

Collaboration:

Flat-level organisations encourage collaboration and open communication. Creating a situation in which employees are equal allows self-motivated individuals to excel, innovate and form teams to progress ideas and inspire one another.

Communication:

When everyone in the company has an equal voice and can feedback on processes, policy, products, services and the business model as a whole, organisations can keep improving and even discover new ideas or ways to differentiate themselves.

Myth 2: Workers are lower in status than those who delegate the work

Traditional corporate management structures tend to conjure up images of stuffy, bland environments in which employees are stifled and micromanaged by whip-cracking suits with their eye on the clock. Aside from being old-fashioned and regressive, issues arising from mismanagement and bureaucracy can often become significant problems in hierarchical companies.

Times have changed though; these days many of the most successful companies in the world take a grassroots approach to business, giving all employees equal chance to be creative, innovate and contribute to the overall success of a business.

Companies like Google and Facebook don’t necessarily attract great talent based on salary alone, but because a more relaxed management culture lends itself to more freedom, professional growth and collaboration. In a flat-level organisation like Google, for example, junior team members have just as much opportunity to speak to executives and CEOs as senior team members do.

Myth 3: Organisations that don’t follow norms are more likely to fail

These days, there is no “normal” in the world of the startup. Differentiation is actively encouraged. Take video game development company Valve, for instance, which says it’s been ‘boss free’ since being founded in 1996. Salaries at Valve are determined by peers, employees dictate their working hours and desks are mounted on wheels so everyone can work where they want. With teams responsible for making all decisions, from hiring to firing and new projects, the company operates on a completely flat-level structure, and is seemingly very successful.

Companies are changing the way they operate now. Even the concept of traditional office space has been challenged by the rise in popularity of shared and flexible office solutions. These days a small company can rent a few desks in a premium location anywhere in the world for far less than it would cost them to set up in an office space, leading to more agile ways of working.

While building hierarchical structures may have been a logical solution in the past, more and more companies are looking at the benefits of flattening their organisations to make way for a more collaborative and engaged future.