Traditional organisational structures of businesses, for decades, have been primarily hierarchical: layers of close-watching management and seniority determined by company tenure.
When it comes to building modern organisations, especially when integrating or driven by remote employees, there is a better way to future proof your organisation.
The traditional top-down team hierarchy
The attributes of a traditional, hierarchical organisations are:
- Generally, work in departments or teams with fixed scope and responsibilities. (siloes)
- Have a direct line manager and set tasks to complete. (task/project based)
- Have clear job titles and predetermined wages for that title. (top down incentives)
- Are paid enough to buy products and participate meaningfully in the economy. (low end of band salaries/benefits)
- Are subject to a bureaucratic management hierarchy which is responsible for decisions. (heavy governance)
- Work in an office with their colleagues. (floors of people, by department)
This setup is quite familiar to all of us. Yet for companies looking to scale up, optimise resources, and drive innovation, most of these practices have been (or need to be) thrown out the window.
So what’s wrong with the traditional top-down structure?
The main issues with the traditional hierarchy are stagnation and lack of employee engagement. Layers of bureaucracy and constant oversight (with many “managers” promoted directly from purely technical roles) force any changes to progress at a slow pace.
At the same time, employees’ tasks are scheduled days or weeks in advance; every billable minute accounted for, every objective listed. Task focus vs outcome focused.
This shape was designed to keep things moving along a constant, predictable track. And this is what they do, day after day, year after yeart. But future-ready companies are about iteration, experimentation, continuous improvement and customer-centricity — and these cannot be fostered using an outdated management structure or organisation shape.
Central to modern organisations is one key principle: your employees don’t need to work for you. Globalisation and remote working means there are far more opportunities than ever before. This is seemingly reduced in a post-COVID world, but the key is making sure that they want to work for you, and leaders need to remember that the switching cost is reduced and based on your peoples’ alignment to your purpose, values and operating principles.
To achieve this ‘loyalty’ requires collaboration, transparency, two-way communication, and a focus on employee experience. That means you need to move your future shape to “the flatter organisation”.
What is a flatter organisational structure?
As Jacob Morgan puts it in his Forbes series, a “flatter” structure seeks to open up the lines of communication and collaboration while removing layers within the organization. It empowers everyone in the company with authority and information and the ability to deliver work however they see fit.
See the graphic below for a visual example of how flatter structures challenge the traditional approach.
While still retaining a core structure (i.e. reporting to managers for people management) flatter organisations grant employees more space to collaborate and work laterally. The people are swarming around the work, less so around the tasks from their manager.
This approach requires a steep shift in perspective for managers and leaders.
Two accepted rules of a flat organisation:
1) managers are there to support employees (not the other way round) and;
2) leaders pass authority down to employees — again, not how things are traditionally done.
Why implement this new organisational structure?
One of the main benefits of this structure is that it makes room for decision-making to happen without ideas getting ‘caught in the system’ — i.e. more bureaucratic — . Just look at how Nike manages its global workforce with a flat structure.
Instead of strict chains of command, teams are given broad deliverables (outcomes) and left to approach them using their best judgement (true empowerment). It’s a form of self-management mixed with accountability; the results are still inspected (continuous testing,/improvement, measurement and lean governance), but the approach isn’t overly scrutinised or ‘mandated’, the focus is on the why and the what, less the how.
Everyone is now a remote team
Flatter structures also allows businesses to lift the geographical boundaries they have placed on themselves. Today there are fully “virtual” organisations which rely almost entirely on the internet and phone to manage businesses. Remote working is a natural evolution of flatter organisations.
Flat and holacratic organisational structures — a step too far?
A totally flat organisation is boss-less. Everyone is a peer: no job titles, no seniority, no managers, no executives. They’re also known as “self-managed” organisations and are considered the next evolution past the “flatter” system.
At Valve, a popular gaming company, nobody tells employees what to work on. Instead, all the employees at Valve can see what projects are being worked on and can join whichever project they want.
Jacob Morgan suggests that certainly for most medium to large companies, this method of decentralised management might be too difficult to implement for established companies, especially large ones.
Flatter organisational structure might be the most scalable and practical route. It combines employee experience, lateral responsibility, and fosters independence without an atomic shift in business operations.
How this relates to future-proofing your business
The transparent and collaborative approach of flatter organisational structures is well-suited to rapid innovation. It’s ideal for conceiving, building, and refining products, plus also swarming your people (your most expensive and innovative asset) around customer outcomes.
Most large, legacy companies are still using approaches from the industrial age, and it’s starting to show.
Companies employing these traditional methods are already struggling to compete with the dynamism and innovation of typically-younger companies. Worse, their employees get significantly lower job satisfaction than those in employee-centric, flatter structures.
As the world moves on and your people work more remotely, the decision to redesign companies to be more dynamic and flexible is no longer optional — it’s an obligation.
Source of graphics: https://thescalers.com/