Case Study 6.1 Will Flat Management Fall Flat?

Bill Hunt initially thought flat management sounded like a pretty good deal. No bosses. The ability to set his own work priorities. What was not to like?

He found out soon enough. At one organization, Hunt, a Washington-based software engineer, was forced to stay up late drafting human resources plans and codes of conduct about which he knew nothing. At another, he wondered why the people who got stuck with the administrative work formerly done by managers were always women or minorities. In lieu of a formal hierarchy, cliques formed, making it tough for workers who were on the outside and creating what he viewed as a toxic culture.

I have yet to work in [a flat organization] that was effective, he wrote in June in an article for Medium. Although tech culture fetishizes rule breaking, disdain for authority and meritocracy we could all do with a few more rulesand a few more managers.

Hunt is not alone in his skepticism. For a number of years, the key elements of flat managementtrimming managerial layers and giving employees more control over decision-makinghave become a go-to solution for lagging performance. In an era when the fastest-growing companies pride themselves on being lean, innovative, and poised to respond to an increasingly unpredictable global economy, this approach was supposed to make organizations more efficient. It is also millennial-friendly in its rejection of hierarchy and its goal of having all employees contribute to an overarching mission.

But as many companies struggle to make flat work, critics are pushing back over what some of them dismiss as just another management fad. Even executives who embrace the concept in the abstract often tell researchers they doubt its practicality, at least at their company.

Weve gone pretty far to the hype side, says Ethan Bernstein, a management professor at Harvard Business School. It turned out that a flat structure opened up a whole new set of challenges. Some companies have the appetite to address these. Others dont.

Bernstein is referring to Holacracy, a self-management system used by Zappos, among other companies. The online shoe retailers struggles to replace hierarchy with collaboration have been widely chronicled. Despite challenges, which included work time spent debating whether an employee should be allowed to bring her mini-pig to the office, Zappos has stayed with the program, but many companies are rethinking the no-bosses rule. Others are scaling back; limiting self-management to a single department, for example, or reintroducing some hierarchy as a way to regain control. Moving to flatter management, it turns out, is much harder than many bosses imagined it would be.

A pair of recent Stanford University studies found that many people actually like hierarchy and the incentive it provides for advancement. Despite todays cheaper communication technologies, social networking and crowd sourcing, Jeff Pfeffer, a professor of organizational behavior at Stanford, dismisses the idea that corporations are becoming more egalitarian as partly wishful thinking. Other business scholars worry that this view is shortsighted and that companies resistant to change are giving up too soon. This is a trend that is not going away, says Joe Carella, assistant dean of executive education at the University of Arizona. The world is changing at a pace it hasnt before, and were moving at exponential speed. We need to redesign how management works.

Is the answer a flatter management structure? In a recent executive survey, Carella says he found that while 70 % of respondents admired flat management principles, half of them did not think they could make it happen at their company, primarily because of the capital outlay involved in shifting to a new system.

What Is a Flat Organization?

A flat organization is one with fewer layers of management. Variants include:

Lattice. Used by W.L. Gore & Associates, makers of Gore-Tex fabric, this structure is set up so that everyone in a company is connected to everyone else and can go directly to those they need to in order to get their jobs done.

Holacracy. Power is distributed across the organization in a series of teams or circles.

Network centric. Employees network inside the company with colleagues and outside the company with manufacturers.

Flat management is often used interchangeably with self-management, the term consultants and academics generally prefer. Just because you have no bureaucracy doesnt necessarily mean flat, says Harvards Bernstein. If you put a bunch of people in a room, they will find a way to order.

Bernstein pinpoints the advent of self-managed teams as occurring in British coal mines about 65 years ago. Until then, coal had been mined like an assembly line, with each team performing a single task and having to finish its shift before another team could begin. That is, until miners in South Yorkshire decided to organize their work differently. With minimal supervision, groups of workers interchanged roles and performed multiple tasks, which allowed the mine to function 24 hours a day without miners waiting for a previous shift to finish. Once self-managed teams proved successful, it was only a matter of time, Bernstein said, before people started thinking about self-managed organizations.

Discussion Questions:

1. Discuss the advantages and disadvantages of flat management. Do you feel the advantages outweigh the risks?
2. List three things that you think are necessary for flat management to work. In other words, what are the characteristics of the employees, the work, and the organization that would support flat management?
3. Would you prefer to work in an organization that has flat management or a traditional organizational structure? Explain your answer.