Why a Flat Organisational Structure Fails as You Grow (and what to do instead)
1. You can’t manage everyone yourself.
While some companies are very intentional in bringing in a flat organisational structure, all too often, companies just fall into it.
One day, you look around and you have 15-20 employees that all report to you.
Many of your earliest staff in particular love the freedom and autonomy you’ve had since you started, and so you’re afraid to add structure that may upset them.
However, without structure and managers, it is much harder to get things done, and make sure the right person has all the information they need.
When you have over 100 employees, no one knows everything going on at a level to make effective, detailed decisions.
As your company grows, delegating authority is essential. Being deliberate in who you choose to lead various teams is more likely to succeed than hoping it organically happens.
In theory, a flat organisational structure is great; the best person for a given problem steps up and addresses it and everyone supports them. It allows more people to take on leadership roles, and always ensures you have the best person for a given problem.
Unfortunately, that’s not how it works in practice.
This is a common set of problems flat orgs face as they scale, regardless of their industry or mission. When you don’t have a set structure, one naturally emerges. Unfortunately, this organic structure lacks the authority and accountability of officially designated leaders. Navigating the day to day tasks without a hierarchy creates conflict and confusion, slowing your company down.
3. You’ll become overwhelmed by problems.
Without hierarchy, eventually, any leader will be overwhelmed. With no structure, the quantity of problems becomes a major issue. How do you address all the problems that come up when there are too many people coming to you? They either get ignored, or you never get enough of the right things done. You can only focus on so many things at once. With a flat organisation, there are many things that will be missed that a good manager would focus on.
This attention of a good manager is often even welcomed by employees. Individuals hate being micromanaged on the one side, but they love being closely managed on their career side.
4. Discipline, firing, and promotions. Hierarchy makes tough decision making easier.
Starting a business is hard. Scaling and growing a business is really hard.
No matter what kind of business you have, there are a never-ending flurry of challenges to tackle. Why add an entire second set of challenges to the ones you already have by letting important HR decisions drag on and become a mess.
When work and decisions are self-organised, many unintended consequences can strike. One of the hardest is accountability for tough decisions that must be made like discipline, firing, and promotions.
Should everyone have an opinion on everything? Can they really?
Do you want to have to form a committee for every decision that needs made?
A flat organisational structure sounds so romantic, until it’s in use and your company is growing.
Start with a change in culture.
Build and reward your leaders . The best way to avoid the pitfalls and ensure all your employees are respected, is to focus on your leaders. When you’re designing and growing your company, be very intentional about which leaders you choose or recruit.
Begin with A,B,C
A) Get buy in from your skeptics
Your early employees are clearly very valuable to your company. They have experience from the beginning of the company, helped define the culture, and often receive a great deal of respect from others in your company.
Unfortunately, they’re often the ones who are also most skeptical of restructuring. They may groan, roll their eyes, and resist setting up any form of hierarchy.
This is why you need to put in effort to get their buy in to these changes as you grow.
Rather than making major changes on your own, consider involving key influencers and skeptics in your company to ensure broad support.
B) Start developing leaders
Great teams are made up of great individuals. If you want great leaders in your company you have to set a standard that you expect your managers to reach, and one of the biggest mistakes leaders make is assuming that because someone is good at their current job, that they’ll be good at a completely new job.
When evaluating for management roles consider the following, are they consistent and accountable, are they ambitious and keen to learn, but importantly do they have good empathy.
C) Carrot or Stick
If you do not measure and reward your leaders for doing the right things (like growing their people, coaching and giving feedback, having 1 on 1s, and focusing on the right things), do not expect to them to be great managers.
What you measure, recognise, and reward, signals to your team what’s important. If you reward and promote good leaders, you’ll see more of them. However, if you are a poor leader that doesn’t invest in developing leaders, it’s likely your leaders will be poor as well.
Scaling any business is hard no matter how you do it. Adding the uncertainty and hidden complexity of a flat organisational structure only makes it harder.