“Flat” organizations are often well-meaning in theory, and disasters in practice.
They are billed as the counter to the evils of traditional, hierarchical organizational structure with a layer of management – “we don’t believe in hierarchy, everyone is equal!”. In my experience, though, flat orgs end up being a disorganized mess.
Take it from me: I tried flat until it failed, and implementing the most basic traditional management structure literally saved me from folding the company (and was a catalyst to our growth from $1M to $4M).
Or take it from Treehouse, who went flat to much press and premature celebration, only to walk it back when it flopped.
If you need more, check out this study about the myth of flat organizational structures in startups, which echoes my experience and shows that flat orgs can result in “haphazard execution and commercial failure by overwhelming managers with the burden of direction and causing subordinates to drift into power struggles and aimless idea explorations”.
Alongside those examples, some related truths I’ve found about business:
- Employees want structure and support.
- Employees want a team, with peers and mentors.
- Employees want career progression and a view into their potential trajectory.
- Hierarchy isn’t evil. Different roles require different people at different points in their careers; they also provide different value to the company. All of that is okay.
- People and projects are challenging, complex things that require oversight and direction, especially as the organization grows and the projects become more complex and risky.
Traditional organizational and management structures, when designed and executed well, support the above. Flat organizations don’t.
In well-run, traditionally structured organizations:
- Staff have actual managers. Good managers guide staff, help them make decisions, coach them, level them up, and look out for their best interests.
- Managers / directors have a team, accountability, resources, and autonomy to meet their goals. That means a slice of accountability goes to them, and off of the owner’s shoulders – a must for scaling, as well as job satisfaction.
- Staff have upward mobility and opportunities to progress. Without progression opportunities and clear career paths, most motivated and talented individuals will become frustrated and leave.
Flat orgs, on the other hand, often result in the opposite:
- No / poor management practices, which leads to poor communication, black holes, employee underperformance, and surprises (“Jane is quitting, it came out of nowhere!” or “ACME corp might fire us, they’re really unhappy!”)
- Poor mentorship or guidance, which leads to underperformance (in fact, a Harvard Business School study found new hires with mentors outperformed their peers by 18% and stayed with the company longer).
- No true sharing of accountability, which leads to lesser feelings of autonomy, underperformance, and overwhelm of the owner(s).
- Hidden hierarchy, wherein egalitarianism is touted, but the reality is that hierarchy is there – the firm just isn’t up-front or honest about it.
- Unclear and inconsistent decision-making and communication, which leads to underperformance and frustration.
- No progression or clear career paths, found to be critical for employee retention by MIT Sloan. The lack of these paths become a frequent cause of higher turnover.
Don’t reinvent the wheel. Don’t make the mistake of thinking your firm is so special and unique that the tried-and-true structures and processes of functional, successful organizations don’t apply to you. You’re not that unique. Don’t let your fear of the unknown – how to grow, how to install / design a proper structure – lead you to lie to yourself.
Instead, embrace the next phase of your organization. Move away from flat, and learn how to design your business for the best of your employees, clients, and yourself. The benefits – less stress, scalability, more time, better retention, and more – will become immediately clear.