About Flat Organization Structure

shapecharge/E+/GettyImages

If you've had to deal with a bad manager, you can see the appeal of a flat organizational structure. In a flat organizational structure, there is no middle management, just the boss and the employees. Some companies find this liberating, but it leaves other organizations floundering.

Flat Organizational Structure

The purpose of the flat management structure is to have as little hierarchy as possible. In a completely flat company, employees make their own decisions. At the game-design company Valve, for instance, employees choose the projects on which they want to work or seek out funding for their own goals.

Other companies may not go that far. They're "flatter" companies rather than completely flat. The flat hierarchy reduces or removes middle management so there are as few bureaucratic layers between the boss and the frontline employees as possible.

Why Go Flat?

When a startup begins, running flat is often the logical approach. If a company has only a dozen employees, the founder may be able to supervise them all personally. Having a formal management structure beyond "I'm in charge" seems unnecessary. Startup staff members who have come from larger corporations may relish going flat as an alternative to bureaucracy.

While larger corporations may convert to a flat hierarchy, it's more likely to happen when a company starts flat and stays that way as it grows. If everyone enjoys the freedom of having no bureaucracy and the ability to take things to the boss, then switching to a more formal, less-flat structure won't make anyone happy.

Flat Hierarchy: The Pros and Cons

The appeal of the flat organizational structure is that it avoids some of the problems that bog conventional management hierarchies.

  • Things move faster because decisions move up and down a smaller chain of command.

  • Proposals and ideas that middle management might shoot down go straight to the boss. The fewer the people who get to veto an idea, the better the chance of good ideas becoming reality.

  • New products and services reach customers faster.

  • Overhead is lower because there are fewer managers drawing a paycheck.

  • Employees enjoy the freedom that comes with choosing their own projects and managing their own work.

  • When there's a problem, the most qualified person can step up and tackle it without worrying about formal authority.

  • With no hierarchy, there's no risk of working under a toxic, bullying boss.

  • If employees don't like their colleagues, they can rearrange their work to deal with people they like better.

Like any management concept, however, flat hierarchy has its downside as well.

  • As the company grows, it becomes harder to stay flat. Employing 15 staffers without supervisors is more practical than 1,500.

  • The executives the company does employ may feel overwhelmed.

  • If the company is introducing a flatter hierarchy, managers may resist out of fear for their jobs and status.

  • It can be much harder to hold employees accountable.

  • The more employees each individual executive oversees, the slower their responses become.

  • Some employees are more comfortable with supervisors giving their job structure and direction.

  • When employees have problems, they have no idea to whom they should take them.

  • Converting an established company with a conventional hierarchy to a flat hierarchy is a massive undertaking.

  • Middle managers perform valuable services, such as communicating strategy, helping employees prioritize and developing employees' careers.

The Invisible Hierarchy

Another argument against the flat management structure is that organizations can't function without a hierarchy. If a company doesn't have a formal hierarchy, it will develop an informal power structure instead. Unofficial leaders develop, and other employees turn to them as if they were managers. Executives may rely on the same informal structure to get things done.

An informal power structure doesn't have to be a bad thing, but it often turns out that way. A formal hierarchy, run properly, has discipline and penalties for managers who abuse their authority. It's harder to hold unofficial leaders accountable.

Several ex-Valve employees have said that in practice, getting support for their projects and careers depended on currying favor with the "barons" who ran the company's invisible hierarchy. Without a baron, your career didn't advance. Employees said that barons who supported them could easily and arbitrarily withdraw support. Employees may form informal teams too. Employees who like working with each other may eventually turn cliquish, offering no support to other employees and their projects.

Making a Flat Hierarchy Work

One way to use the flat organizational structure effectively is to shoot for flatter rather than completely flat. Reducing the layers of management peels away bureaucratic sludge. Hiring enough managers to direct employees keeps things efficient. Opening up lines of communication rather than having employees report only to the person above them improves the employee experience and makes it easier to collaborate.

To make a flat or flatter organization successful, a business needs several things:

  • It has to be willing to let go of the classic big-business hierarchy. If it doesn't want employees exercising more independence, then flat's not the way to go.

  • It allows employees to question hierarchical practices, such as annual employee reviews and rigid schedules.

  • It has good communication technology that lets employees talk to management and collaborate freely with each other.

  • It has an understanding that management is there to help employees rather than employees existing to help management.

  • Decision making has to be transparent. "Because your supervisor says so" doesn't provide the motivation employees need in a flat system.

  • Employees down in the trenches need to think like entrepreneurs. It's one thing for an employee to have a good idea, but it's another to figure out how to market and make money off the idea.

  • Leaders have to be able to take it when employees challenge their ideas.

  • Employees must be able to access the resources they need.

Staying Flat

A company that starts small and flat doesn't have to adopt a classic over-managed hierarchy as it grows. It takes a conscious effort to keep things as flat as possible, however. One way is to scale up gradually, adding managers and levels of management when it becomes necessary.

The business world has many rules of thumb for figuring out when to scale up. One best practice, for example, is to have no more than 10 people reporting directly to one individual. The further over that limit things go, the harder it is for managers to manage effectively.

Advancement in Flat Organizations

Career advancement is often associated with climbing up the corporate hierarchy until – if you're both good and lucky – you crack the C suite. Employees who want to advance may find a flat management structure baffling. How do you climb when there's no hierarchy to ascend?

  • Be very clear about what you want from your career. In a flat organization, you have the freedom to move from project to project. That's liberating, but it may not take you any further than you are now. Knowing where you want to be can help you decide which projects will get you there.

  • Realize you can develop and grow at the company without ascending to a new job title.

  • Put your best effort forth at work. When you don't have job titles or rank to impress anyone, it's even more important that your work speaks for you.

  • Look for opportunities. If you don't have someone over you who is willing to mentor you or help your career development, then it's up to you to do it yourself.

  • Look for challenges you can take on.

  • Ask yourself what skills you have that you're not using on the job yet. Consider what skills you need and where you can learn them.

  • Figure out the growth areas in the company. If you work on them, that could put you on a winning team.

  • Build networks of supporters and allies who can help you get where you want to be.

References

Resources

About the Author

Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com