The benefits and challenges of flattening the traditional management hierarchy

September 23, 2021 4:28 pm

During the bleakest days of the Second World War, British wartime Prime Minister Winston Churchill famously coined the phrase “never let a good crisis go to waste”. 

His words carry significance for the business world. In challenging times, enterprises, as with states at war, require rapid solutions to pressing problems where procedure, tradition and convention may no longer provide the answers to the questions of the day.  

The past decade or so has presented many a commercial crisis, challenges you may be familiar with in your own business’s setting.  

In 2012, still in the shadow of the 2008 financial crash, UK bank Barclays initiated a full-blown digital transformation strategy in a bid to futureproof its business and rebuild its reputation as an institution fit for the modern world.  

Rather than bringing in external expertise to drive the digitisation, Strategic Transformation Director Steven Roberts leveraged his own network within the bank. He found longstanding colleagues to create a group of young digital evangelists who could bring new ideas to the table – a group that would become known as Digital Eagles. These people would be found from within, and inside a few months there were more than 3,000, the group representing a new non-hierarchical Barclays community.  

This example is showcased in the Structures chapter of Paul Miller and Shimrit Janes’s Nature of Work framework, which explores how the relationships between people are grouped to form the ecosystem of an organisation. According to the authors, the move by Barclays, which was very much against its conservative roots stretching back to 1896, is particularly enlightening.  

“This is a powerful example of one way of structuring something new in an organization in an organic and living system way. It brings with it challenges but contains a flow, ease and energy that top-down mandates fail to capture.” 

Paul Miller and Shimrit Janes, Nature of Work: The New Story of Work for a Living Age

The COVID-19 pandemic represents another crisis moment, something which we have all had to react and adapt to over the past 18 months.  

As societies and economies shut down, business as usual approaches to work were quickly rendered unviable. Decisions needed to be made quickly, while technology and data had to be used in different ways to improve productivity away from the traditional workplace.  

According to McKinsey, in order to facilitate this, organisational structures had to flatten:  

“Rigid hierarchies must give way to leaner, flatter structures that allow the system to respond quickly to emerging challenges and opportunities. There are fewer middle managers and span-breakers and more doers and deciders. Creating this new organism requires reimagining structure not as a hierarchy of bosses, per the traditional organization chart, but rather as a dynamic network of teams.” 

McKinsey, Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era 

As well as fulfilling what McKinsey calls the need for speed in terms of decision making, flattening organisational structures can carry a range of other benefits.  

Under such structures, employees are naturally given more freedom and responsibility to complete their work without being overseen by a line manager. Progression involves delving deeper into an area of expertise as opposed to climbing a traditional corporate ladder, a feature which can lead to reduced staff turnover and longer average tenures.   

Other companies have found that this sort of structure also prevents the need to hold fewer meetings as each role carries its own clearly defined responsibilities.  

However, there are several potential pitfalls and challenges associated with decentralised business structures that need to be considered. 

Are your company’s personnel suited to a flat structure? In the Nature of Work framework, Miller and Janes refer to how army ants build bridges with their bodies, allowing other ants to cross a gap to expand the range of their foraging activity.  

In a business context, what they are saying is that the structure has the potential to achieve far more than the sum of the individual parts, but only if the individuals in question are ready to cooperate for the greater good of the whole.  

Some companies may also require a more hands-on approach to management and guidance, especially when it comes to transferring technical skills between experienced and newer staff.  

While there is no doubt that flatter structures will suit some firms far better than others, crises such as the financial crash and COVID-19 pandemic have exposed the weaknesses of top-down management. In times such as these, businesses will continue to explore radical alternatives.  

Has your business altered its structure in light of the pandemic, or could your organisation benefit from a decentralised structure in the future? This important talking point will be discussed at Nature of Work Live on November 2-4, 2021.

Further reading: 

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