The benefits of working in a flatter organisational hierarchy
6 min read | Nick Deligiannis | Article | Leadership Department & Organisation Managing a team
Traditional hierarchies are giving way to more fluid, flatter company structures. Nick Deligiannis explores the benefits and potential pitfalls of this changing work environment.
Flatter organisational hierarchies: Key Insights
- There are five types of company hierarchy, according to Jacob Morgan, author of The Future of Work. These range from traditional hierarchies to entirely layer-free ‘flat’ organisations. Each has its own benefits and weaknesses.
- We are seeing a significant drive away from traditional hierarchies, towards flatter structures – and not just in small start-ups or not for profits. Reports suggest that flattening is also happening in a corporate management structure.
- Flatter organisations have many benefits – including a greater involvement and buy-in from a wider range of people. By bringing employees closer to the heart of decision-making, these structures enhance a sense of ownership and investment.
- The people who gain the best results from a flatter structure tend to be those with strong soft skills, rather than the most in-depth technical expertise. Emotional intelligence, expressiveness, flexibility and comfort with vulnerability are all great traits for a flat organisational environment. David Casali expands upon this.
- A flatter structure can make career pathways more opaque. It is very important to address this at interview and in online company research.
Read on for further detail on the different types of company hierarchy, and judge whether you would suit a flatter organisational structure.
Company hierarchies: Background
Before embarking on the search for a new job, it’s important to consider the type of company you’d like to join, and whether a flat or hierarchical structure might suit you best. But what exactly is the difference between different kinds of workplace structures?
There are five types of hierarchies, as described by Jacob Morgan, author of The Future of Work: Attract New Talent, Build Better Leaders, and Create a Competitive Organization.
1) The traditional hierarchy is the most common way of structuring a company, based on a ‘chain of command’; indeed, it was a model quickly embraced by the military, and most organisations continue to use it. However, this structure has also become increasingly regarded as out of date, due to its high level of bureaucracy and perceived sluggishness.
2) Flatter organisations are based on fewer layers than traditional hierarchical companies, thereby opening up lines of communication and collaboration. Examples of companies that follow this structure include Cisco, Whirlpool and Pandora. This structure represents the most common stage of flat hierarchies.
3) Flat organisations really are flat, usually lacking any job titles, seniority, managers or executives. The video games developer Valve and multinational manufacturing company W.L. Gore & Associates are examples of ‘flat’ companies.
4) Flatarchies sit somewhere between hierarchies and flat organisations, incorporating something of both. Organisations with this structure are highly dynamic in nature and can be thought of as free from any single constant structure at all. Lockheed Martin, Google, 3M, LinkedIn and Adobe are examples.
5) Holacratic organisations have previously been described by the media as “bossless” organisations. The goal of this structure is to enable distributed decision-making while allowing everyone to work on what they do best. Zappos and Medium are among the best-known organisations to have experimented with this model.
We are seeing a movement towards the flattening out of organisations. You might imagine this to be driven solely by start-ups and not-for-profit businesses, but multinational companies employing thousands of people are also going down this route.
A 2019 report – The Flattening of the Firm: Evidence from Panel Data on the Changing Nature of Corporate Hierarchies – has detailed that flattening is also happening at a corporate management level. According to this report, “layers of intervening management are being eliminated”, while the CEO is increasingly “coming into direct contact with more managers in the company.”
The question is, what is driving this movement. What are the benefits (and drawbacks) of working for a flatter-structured company?
Flattening hierarchies makes things more transparent and allows communication to flow seamlessly
At their best, flatter structures remove unnecessary layers. Within such structures, there is less emphasis on command and control, and more attention to providing feedback and collaboration.
Advantages of flatter organisational structures include
- Clearer communication, due to information not having to pass through as many layers before it reaches the ‘frontline’
- Faster decision-making. Authority isn’t centralised. This removes the risk of decisions being stalled by leave, sickness, or key personnel not being available.
- Increased autonomy and empowerment. As there aren’t as many managers for employees to defer to, there is more opportunity for people to take a leading role in company decision-making
- Innovation. A study of more than 300 executives found that the greater the number of layers in an organisation, the slower the speed by which new products and services reached customers.
- Heightened productivity, given that employees are more intimately involved with decisions made by the company
- The organisation has a shared purpose. Thanks to heightened involvement in decision-making, employees feel greater personal ownership of the organisation’s overall success
How can someone thrive in a flatter organisational structure?
The people who gain the best results from a flatter structure tend to be those with strong soft skills, rather than the most in-depth technical expertise. This Forbes article co-written by Davide Casali of Automattic shares five leadership attributes or attitudes that fit with flatter organisations:
1) Act: In a flat structure, you don’t always need to get authorisation from someone else for every aspect of your work.
2) Flow: Projects, proposals and ideas should be seen as malleable, rather than concrete, fixed and inflexible.
3) Open: Transparency allows everyone involved in a project to contribute values, perspectives, and helps improve overall quality.
4) Accept: When everyone feels they have the ‘green light’ to give their input on your project, it can take a lot of confidence to present your ideas in the first place. The capacity to accept criticism or alternate ideas is a must.
5) Share: Being able to foster open conversations, so that blind spots can be avoided, issues caught earlier and the quality of work improved across the board.
Does a flatter organisational structure mean flatter career prospects?
Unfortunately, there can be downsides to a flatter structure. Some professionals feel the lack of supervision, or a specific boss to report to. Accountability, responsibility and potential progression paths are rarely as clear in a flat company. Research from Gallagher shows that career pathways become more opaque when the hierarchical status of job and pay grades are removed. Sadly, this lack of clarity can lead to employees leaving a company in order to feel they are advancing their careers.
Career progression is becoming an increasingly crucial issue for many workers. Gallagher’s Organisational Wellbeing & Talent Insights Report cited research that found 91% of Millennials regarded the potential for career progression as a top priority when seeking a new job. Furthermore, 60% expressed a wish for formal feedback on their development every one to three months. Yet nearly 38% only received it once per year.
If you are interviewing for a role within a flatter structure, you may wish to ask questions about career progression paths. Use the time in the interview to try to assess how committed your potential boss is to learning. You can also conduct research online to determine how committed the business is to the development of its people.
Choosing an organisational structure: Next steps
An organisation with fewer layers certainly has its benefits, as we’ve outlined. But be aware that this structure might not suit everyone. Before you start your search for a new job, think carefully about what hierarchical structure might suit you best based on your skills and philosophy of work.
About this author
Nick Deligiannis started at Hays in 1993. He has held a variety of consulting and management roles across the business, including the role of Director responsible for the operation of Hays in Victoria, South Australia, Tasmania and the Northern Territory. In 2004 Nick was appointed to the Hays Board of Directors, and was made Managing Director for Australia and New Zealand in 2012.
Prior to joining Hays, he had a background in human resource management and marketing, and has formal qualifications in psychology.