When I was a kid, I had this little tool set. It had a real hammer, a real chisel, and a real saw. They were functional tools but child-sized. This was fine when I was making balsa wood birdhouses but as I grew up, and my projects got bigger, that tiny saw just wouldn’t cut it anymore. Like my little tool set, a flat organizational structure is functional and can work on a small scale. It just might not be the right tool for the job anymore.
The flat structure is an admirable idea on a theoretical level. You started the company and you want to continue to stay in touch will all aspects of the organization—everyone reports to you. Honestly, there is nothing inherently wrong with that just like there was nothing inherently wrong with my tool set. Both have their purposes, they just aren’t efficient in every situation. You don’t need to go full hierarchy but adding a level of middle management will acknowledge the dynamics that are already present and make your organization more efficient. You can hold onto your principles and organizational culture while still providing a framework that adequately specifies delegated decision making throughout the organization.
Acknowledging the present dynamic
Flat organizational structures are inevitably flat in name only. Human nature and group dynamics will eventually take over and unofficial managers will emerge (Finley, 2). They probably already have. The best case scenario is these unofficial managers are natural leaders who can’t help but fill in a leadership gap when they see one. While there is something to be said for the benefits of their emergence, the fact that they are not officially recognized as such will cause problems. These leaders feel pressure to make decisions that others are unwilling or unable to make. Eventually, the pressure and lack of acknowledgement may become too much and these leaders will burn out which is a loss for everyone.
That was the best case scenario. In the worst case scenario, an invisible and unaccountable power structure emerges which leads to “dysfunction and abuse.” This claim has been validated by stories from former flat firm employees who describe the environment as “a lot like high school.” (Finley, 3) Following a scandal involving a former employee, even the long time poster child for the flat organization, GitHub, has added hierarchy to their HR policy (Rusli, 2).
Long story short, you have a choice to make. Either you can choose the leaders in your organization or allow unofficial, invisible, and unaccountable group dynamics choose your leaders for you. It’s as simple as that.
There really are other things you should be doing.
Even if your organization manages to avoid the inevitable group dynamics which lead to unofficial managers, there really are other things to you should be doing. In competitive industries it is imperative that the CEO have a heads up, outward facing orientation with a focus “on strategy and the future to ensure that they do not miss changes in the industry and technology.” (Bennett and Miles, 8) Studies have shown that in flattened firms CEOs spend more time on “internal interactions” (Wulf, 2) thereby deprioritizing or outright neglecting their strategy responsibilities.
You may think you will be letting your people down by adding layers between you and them. However, the truth is you are letting them down by not doing what is best for the company. You are responsible for their livelihood and, while being everyone’s BFF is admirable, it isn’t what pays their checks. You need to let some of the day to day execution details go and focus on the future and the strength of the firm. A flat organization is simply not an efficient management structure.
I still own the tiny hammer, chisel, and saw. They have come in handy for some small projects over the years and provide a piece of nostalgia that reminds me from where I came. With that being said, when I need to rip a 2 x 4, I bring out the circular saw. If your firm has outgrown the flat organization structure, do what is best for your company and your people. Put the tiny saw back in in the drawer and upgrade to a set of tools that is appropriate for the job at hand.
Your company has matured. Has your org chart?
Bennett, Nathan; Miles, Stephen A. (2006-06-13). Riding Shotgun: The Role of the COO (p. 8). Stanford University Press. Kindle Edition.
Finley, Klint. “Why Workers Can Suffer in Bossless Companies Like GitHub.” WIRED. 20 March 2014. Web. 01 January 2015. http://www.wired.com/2014/03/tyranny-flatness/
Rusli, Evelyn. "Torment Claims Make GitHub Grow Up." WSJ. Wall Street Journal, 17 July 2014. Web. 16 Jan. 2015.
Wulf, Julie. "The Flattened Firm: Not as Advertised." California Management Review 55.1 (2012): 5-23. Harvard Business School. Harvard Business School, 2012. Web. 16 Jan. 2015.