Flat structures have received increasing attention and interest over the past years as startups have spoken about the benefits of such a structure.
First, let’s look at the two main types of organisational structures in more detail.
Hierarchical or tall structures are often used by large organisations. Like a pyramid, the CEO is right at the top. Below is senior management, followed by levels of middle management with the bottom tier of the pyramid comprising the remaining employees. Everyone reports into a higher tier, with the exception of the CEO with a top-down approach to communication. One challenge with this approach is that is can demotivate employees lower in the pyramid structure as they have less opportunity to drive change. Furthermore, it can restrict creativity and flexibility. New innovations and ideas have to go through many layers of bureaucracy before even being considered[1].
The cost of multiple layers of management together with inaction that can come from a hierarchical structure has resulted in many start-ups and forward-thinking companies to adopt a flat structure.
Flat organisations have little to no middle management. There are very few levels between employees and top management. Many smaller businesses with fewer employees adopt this structure. The flat structure enables free communication between all employees and makes senior management more accessible. Decisions can be made quickly, and everyone can see their contribution to the growth of the company. A study of over 300 executives from across the globe demonstrated that the greater the number of organisational layers, the slower the organisation reached customers with new products and services[2].
But for a flat structure to be successful, it requires a certain type of leader. There are some well-known examples of companies that implemented a flat structure only to find that as they grew, it was no longer tangible including Zappos, Medium and Buffer. The result? The flat structure ended up hindering their growth and causing confusion and added complexity in decision making.
So is a flat structure only for small companies?
Flat structures have certainly been shown to be successful for smaller businesses but there are some examples of larger companies retaining – or moving to – a flat structure. These include Google, Netflix, Spotify and Patagonia. What has made these companies successful is a clear organisational culture coupled with a transparent flat structure.
Here we list the top three leadership skills that have helped to make these flat structures thrive[3].
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Trust: Let your employees do what they do best
A flat structure provides far more independence and autonomy for employees to just get the work done. They have more freedom in how they deliver a project with less direct supervision.
Patagonia is renowned as a market leader and has excellent employee retention. They adopt a relatively flat structure with limited managers that are seen more as mentors rather than supervisors. Dean Carter, Vice President of Human Resources and Shared Services at Patagonia explains:
“The leader picks the right manager and team, and sets the right vision. They pick the mountain, involving a healthy debate with the crowd about it. If that’s done right, your biggest job as a leader is to get out of the way. The manager addresses how we’re climbing the mountain, keeping everyone directed at the goal, and then giving people autonomy to do their work”[4].
For this approach to be successful, leadership has to actively encourage, and be comfortable with, this increased level of trust in the employees to get the job done. A leader can go directly to whichever employee is best placed to complete a task, discuss the brief and then leave that employee to deliver.
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Transparency: Be accessible and open
Leaders need to be comfortable with a transparent mentality where all employees can access all content. Meetings are held openly and all employees are aware of what others are working on – able to contribute where they can. This needs to be lived by leaders, talking openly with all employees, enabling documents to be accessible and a collective will to work together.
A flat structure doesn’t mean no structure. Employees still need to understand how the flat structure operates and is the job of the leader to be upfront about this. Chris Savage, CEO of Wistia, spoke of why their flat structure did not flourish as they grew:
“Every company has a structure. If you don’t explicitly define your structure, then you are left with an implicit one, and that can stifle productivity. We had hoped that being flat would let us move faster and be more creative, but as we grew, we ended up with an unspoken hierarchy that actually slowed down our ability to execute”[5].
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Communication: Open lines of communication at all levels
Communication is paramount to the success of a flat structure and goes hand in hand with transparency. One of the greatest challenges with open lines of communication and fewer reporting lines is the potential for decision making to become complicated and ineffective. A leader needs to clearly communicate the vision of the company and overall mission and ensure that employees understand how things get done. Communicating the latest projects and thoughts as early in the process as possible engages employees and allows for input at the beginning.
How can you assess those leadership skills?
Recruiting for a leader that is attracted to, and will excel in, a flat structure is no easy feat. Psychometric testing can be a good way to help assess that they have the right cultural fit and skills needed. These assessments can be broader than personality questionnaires. They can explore a person’s behaviours, what they value and their response under stress. They have been shown to provide a good indicator of performance and the cultural fit within the organisation. There is not a right or wrong answer, but different ‘profiles’ can be better suited to different roles and organisational structures.
At Talent Gateway, we use Hogan assessments as a powerful way of providing a non-biased assessment of a candidate’s soft skills. Hogan’s widely respected suite of assessment tools are designed to assess a candidate’s values and motivations, main personality characteristics, and potential ‘derailers’ – characteristics which emerge only under stress and which are unlikely to be exhibited through interview discussions. Unlike simple skills tests, the assessment can provide actionable insight into the candidate’s likely behaviour in a specific work environment. This is essential if you share our view that the ‘fit’ between the candidate’s motivations and values, and your organisation, has a huge impact both on their success and their performance in the role.
Finally, it should be worth adding that flat structures don’t work for everyone and every organisation but they are not reserved for startups and market disrupters. With the right leadership skills, a flat structure can be implemented and maintained as the business grows to continue to support innovation.
[1] The difference between flat vs. hierarchical organisational structure, Hierarchy Structure, https://www.hierarchystructure.com/flat-vs-hierarchical-organizational-structure/
[2] The nature of leadership in a flat organisation, Forbes, https://www.forbes.com/sites/williamcraig/2018/10/23/the-nature-of-leadership-in-a-flat-organization/#4d4992a75fe1
[3] Leadership attitudes from flat organisations, Forbes, https://www.forbes.com/sites/rawnshah/2015/11/05/5-leadership-attitudes-from-flat-organizations/#25d1819b4fa6
[4] How Patagonia’s unique leadership structure enabled them to thrive, Katya Margolin, Virgin, 25th April 2017 https://www.virgin.com/entrepreneur/how-patagonias-unique-leadership-structure-enabled-them-thrive
[5] Nails in the Coffin: Why a Flat Organisational Structure Fails, Lighthouse, https://getlighthouse.com/blog/flat-organizational-structure-fails/