A lot has been written about flat organizations. Almost every week it seems some new case study comes out proclaiming the virtues of the latest flattened organizational structure. After all, who needs managers when they just slow things down and increase costs? This kind of misguided thinking is what makes flat organizations number six on our list of “The Top 12 Fallacies That Get in the Way of Organizational Performance.”
When it comes to flat organizations, there are three things every manager should know.
1) Right-Sizing is Necessary
If you consider legacy organizations that have established themselves over many decades, or rapidly expanding organizations that grow to be very large over a short period of time, the commonality between them is that they have grown organically. The fact is most organizations don’t use scientific principles to determine how many layers they should have. When a company grows organically, it usually leads to piecemeal layers of management being added randomly over time to compensate for the increasing workload. This results in redundant layers of management. Many organizations have excess layers that should be removed. Confusion occurs when the label “flattening” is misapplied to these situations. Removing redundant or unnecessary layers isn’t flattening; it’s right-sizing, and right-sizing is essential to the effectiveness of any organization.
2) Managerial Layers Can’t Be Replaced with Self-Managed Teams
If you look closely at any organization where managerial layers have been replaced with self-managed teams, you will see that there are still decision makers. Someone still hires team members, sets accountabilities, and assumes responsibility for the bottom line. Somewhere, somehow, someone is still managing.
To give an extreme example for illustrative purposes, let’s say that there are eight teams of twenty-five employees, each managed by a frontline manager, who in turn are managed by one director. Now let’s say that you eliminate all those frontline managers, leaving just the one director in charge of all eight teams. In reality, there is no way one person can effectively manage two hundred people.
Over time, individuals on those teams will start assuming managerial duties. You may not be compensating those individuals, or appropriately setting context or direction for them, but one way or another those managerial duties will be carried out, simply because they have to be carried out for work to take place. Firing those eight frontline managers may save money in the short-term, but in the long-term, organizational performance will suffer.
3) One Size Doesn’t Fit All
In any company, there are likely to be too many layers in some areas, too few layers in others, and the right amount elsewhere. Across the board flattening simply doesn’t make sense. Likewise, when it comes to right-sizing an organization, it’s never one size fits all. Removing or adding layers across an entire organization won’t work. For example, it’s not effective to remove all of the director positions or VP positions. It’s best to decide how many layers there should be on a case-by-case basis, and then make changes using the scientific principles of organization design.
Flat organizations may seem attractive in theory, but they rarely work in practice. Not only are self-managed teams ineffective; in reality, someone will always assume managerial duties because they have to be in order for anything to get done. It’s true that organizations often have the wrong amount of layers, but the most effective solution to this problem is right-sizing.
