Flatter hierarchies are all the rage, but they do come with some downsides. Karlie Cremin outlines what it takes for leaders to succeed in a flatter corporate world
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I can actually remember the first time I heard the idea of a holacratic organisation discussed. It was at a conference in the US focusing on HR. A gentleman was giving a talk about this new structure, where there are open job specifications, sometimes no job titles and perfectly dispersed power within a highly productive workforce. The entire room did three things in unison.
I was visiting an organisation recently to scope out a change management project. I was struck by how much each team member I met knew about the operations of the business, and was willing to talk to me about the organisation generally. The team seemed to communicate well and had a fairly easy flow between themselves. I started to think maybe they didn’t actually need to change that much at all.
Then I asked, “So, if that forecast doesn’t work out, whose job is on the line?” The room immediately fell silent and no one would make eye contact. I felt compelled to follow up with “So who is driving here? Who is deciding and communicating the strategy? Mitigating the risk?”
It became apparent that no one was. And therein lies one of the main dangers of a flat hierarchy. Without a title and power, most people feel no obligation to lead when things get tough. And subsequently businesses can start to list, while often giving the impression of moving forward.
The challenges of a flat hierarchy
There are of course many challenges to this model; however, I will discuss what I see as the five key ones here.
1. Communication channels
Without clear structure around roles and reporting lines, communication can become confused. If there is not a chain of command as such, how do you make sure that everyone has access to the information they need when they need it? How do you prevent poor decisions being made because available information was not distributed?
It can also be a challenge to identify who should be told what. Organisations often either freeze and communicate nothing or communicate everything and lose the meaning in the volume. Clearly, leaders must take charge of the communication and prioritisation of information within these organisations.
2. Matching a skill set to a task
In traditional hierarchies allocating tasks is relatively easy – a person’s job title will generally give you a pretty good idea of their degree of control and skill. In flatter hierarchies there tends to be much greater variation in proficiency between individuals who appear similar. This can be very dangerous in task allocation. Leaders in this environment must have a clear skills inventory of the organisation and resources within it, and be able to dynamically identify the best mix of resources to deliver a task to the highest quality with the lowest input.
3. The legal context
The legislative environment has not kept pace with the changes that have occurred in this domain. Legally, the law holds certain individuals within an organisation as more responsible than others for the conduct of the organisation, whether they directly participate or not. A flat hierarchy does not excuse a director, for example, from their obligations. Organisations, and leaders within them, need to fully understand this context and ensure that they are taking ownership of what they are legally responsible for.
4. Roles vs responsibilities
Even where an organisation has an extremely flat hierarchy, there is still a need for individuals and teams to be held responsible and accountable for outcomes. Leaders in these organisations need to hold people to account for performance, to delegate responsibility fairly and equitably, and to set the tone for the behaviour that is acceptable within the organisation.
5. Distribution of power
The goal of many of these structures appears to be to establish a democratic culture where the team works together towards a shared vision in harmony. The reality is that this is not always how teams work. We often see teams where situational leaders have emerged as a result of a flatter hierarchy – and we frequently see extremely negative behaviour in teams as a result. This is not necessarily because the situational leader is trying to lead them astray – it’s simply that the power has been dispersed to a party that is not responsible for the outcome. Power ultimately should rest with the individual or team that is responsible. And this dispersion must be explicit – if not by an organisation chart then by other means.
With this view, flat hierarchies require leaders to focus on developing new and different areas of skill. Leaders need to:
WHY GO FLAT?
There are many reasons a company might opt for a flatter hierarchy. These include:
Karlie Cremin is a principal and founder of DLPA. DLPA customises programs for organisations to strategically develop their workforces to help the organisation thrive into the future. Contact them today on (03) 8678 0389, or [email protected].
- Confirmed what holacratic means
- Gasped
- Laughed with abandon
I was visiting an organisation recently to scope out a change management project. I was struck by how much each team member I met knew about the operations of the business, and was willing to talk to me about the organisation generally. The team seemed to communicate well and had a fairly easy flow between themselves. I started to think maybe they didn’t actually need to change that much at all.
Then I asked, “So, if that forecast doesn’t work out, whose job is on the line?” The room immediately fell silent and no one would make eye contact. I felt compelled to follow up with “So who is driving here? Who is deciding and communicating the strategy? Mitigating the risk?”
It became apparent that no one was. And therein lies one of the main dangers of a flat hierarchy. Without a title and power, most people feel no obligation to lead when things get tough. And subsequently businesses can start to list, while often giving the impression of moving forward.
The challenges of a flat hierarchy
There are of course many challenges to this model; however, I will discuss what I see as the five key ones here.
1. Communication channels
Without clear structure around roles and reporting lines, communication can become confused. If there is not a chain of command as such, how do you make sure that everyone has access to the information they need when they need it? How do you prevent poor decisions being made because available information was not distributed?
It can also be a challenge to identify who should be told what. Organisations often either freeze and communicate nothing or communicate everything and lose the meaning in the volume. Clearly, leaders must take charge of the communication and prioritisation of information within these organisations.
2. Matching a skill set to a task
In traditional hierarchies allocating tasks is relatively easy – a person’s job title will generally give you a pretty good idea of their degree of control and skill. In flatter hierarchies there tends to be much greater variation in proficiency between individuals who appear similar. This can be very dangerous in task allocation. Leaders in this environment must have a clear skills inventory of the organisation and resources within it, and be able to dynamically identify the best mix of resources to deliver a task to the highest quality with the lowest input.
3. The legal context
The legislative environment has not kept pace with the changes that have occurred in this domain. Legally, the law holds certain individuals within an organisation as more responsible than others for the conduct of the organisation, whether they directly participate or not. A flat hierarchy does not excuse a director, for example, from their obligations. Organisations, and leaders within them, need to fully understand this context and ensure that they are taking ownership of what they are legally responsible for.
4. Roles vs responsibilities
Even where an organisation has an extremely flat hierarchy, there is still a need for individuals and teams to be held responsible and accountable for outcomes. Leaders in these organisations need to hold people to account for performance, to delegate responsibility fairly and equitably, and to set the tone for the behaviour that is acceptable within the organisation.
5. Distribution of power
The goal of many of these structures appears to be to establish a democratic culture where the team works together towards a shared vision in harmony. The reality is that this is not always how teams work. We often see teams where situational leaders have emerged as a result of a flatter hierarchy – and we frequently see extremely negative behaviour in teams as a result. This is not necessarily because the situational leader is trying to lead them astray – it’s simply that the power has been dispersed to a party that is not responsible for the outcome. Power ultimately should rest with the individual or team that is responsible. And this dispersion must be explicit – if not by an organisation chart then by other means.
With this view, flat hierarchies require leaders to focus on developing new and different areas of skill. Leaders need to:
- be skilled communicators, and adept at prioritising and disseminating information
- fully understand their team and interact with them as peers, while still maintaining power
- be dynamic and able to make decisions quickly, based on consistent logic
- be knowledgeable about the legal context of their actions – they need to know what they are responsible for, and the consequences for getting it wrong
- lead with purpose and charisma – there’s a lot more choice in who we follow now, and leaders need to quite simply be worth following
WHY GO FLAT?
There are many reasons a company might opt for a flatter hierarchy. These include:
- The business is more agile – Without the burden of traditional bureaucracy organisations are free to make decisions swiftly.
- Employees are empowered – Employees are able to make a meaningful contribution to the business every day, and are empowered to make decisions. This should result in a more engaged workforce.
- Lower cost – This model significantly reduces overheads, with less money being dedicated to management staff.
Karlie Cremin is a principal and founder of DLPA. DLPA customises programs for organisations to strategically develop their workforces to help the organisation thrive into the future. Contact them today on (03) 8678 0389, or [email protected].