By Mireia Las Heras and José Pérez del Valle (IESE Business School)
The traditional corporate hierarchy is facing a reckoning. This year, so many organizations got rid of their middle managers that the term The Great Unbossing was coined. Pharmaceutical giant Bayer is one of the latest to slash these roles and let 100,000 workers manage themselves, following in the steps of other big companies like Amazon and eBay.
It’s important to recognize that self-managed companies (often referred to as “flat” because of their lack of hierarchy) aren’t new. But they have been gaining more traction lately. In part, it’s due to economic difficulties – doing away with middle managers is a way to cut costs, since those positions are higher paid than those in the lower ranks. Others, however, become flat (or flatter) for more mission-driven reasons: creating a more egalitarian, flexible and fair work environment where employees gain autonomy and a greater sense of belonging.
But implementing a flat model isn’t a one-size-fits-all approach: The specifics of how that structure is set up will depend on the company’s individual needs. And it doesn’t always entail going full flat either. Companies can be anywhere on the spectrum between traditional hierarchy and no hierarchy at all – it doesn’t have to be either-or. In other words, you don’t need to be a flat company to have flat characteristics.
After months of researching self-managed organizations, we’ve come up with a short list of tips to make your company flatter – or less hierarchical – without having to make the full transition.
1. Foster transparency
Transparency is crucial for a flat organization to work efficiently. It’s essential in making sure employees make well-informed decisions, something they’ll have to do more often because of their participation in decision-making calls. This includes hiring new employees, evaluating co-workers, negotiating their salaries and integrating new hires into the company.
In this context, transparency means that information must be disseminated in a timely and efficient manner across the whole company, instead of staying exclusively in the hands of senior leaders, as is traditionally done. Any relevant data has to be available to all employees, since they need it to make important decisions.
One example is how the owner of Voxel, a self-managed tech company based in Barcelona, dealt with the process of selling to the multinational corporation Amadeus. In a traditional hierarchical model, the company’s owner would likely not have informed employees about their desire to sell until the deal was done – nor would they have shared the terms of the negotiations or even kept them updated on its progress. However, for Voxel this would have gone against their culture of transparency and trust. In their case, the owner and CEO asked employees for their help in considering important criteria to make the final decision of who to sell the company to, and under what terms. Once the negotiations started with Amadeus, he was open about how they were evolving and worked with employees to make any final decisions about the deal. As a result, Voxel managed to remain a flat organization and keep its company values even after being acquired by a big corporation.
2. Cultivate healthy communication
Having a flat organization requires, and at the same time fosters, open communication. Since employees aren’t limited by hierarchical barriers, they are more likely to share ideas, collaborate across teams and provide feedback to their peers. At the same time, they seek information more eagerly and more often, since it’s crucial to making important decisions. This reflects the “flat” aspect of these work models – the equal standing that employees share.
At tech company Basetis – which transitioned to a non-hierarchical model in 2017 – employees are required to ask for advice when trying to solve a highly complex problem. They are encouraged to seek out those co-workers who know best the issue at hand. The idea is to foment a constant back and forth of ideas, as well as create an environment where people feel comfortable recognizing and learning from their mistakes. The final decision, however, is always made by the employee closest to the problem or task.
While a culture of open communication can lead to more challenges – people feel comfortable sharing their ideas even if they don’t align with their co-workers – there are ways to mitigate this discord. Flat organizations generally seek to promote non-violent communication methods or hire consultants to help with conflict resolution training. This may take more time and energy, but in the end, it can be worth the effort.
3. Delegate decision-making to teams
In flat organizations, responsibility is shifted away from senior leaders and delegated to individual teams of employees closest to the task. The idea is that every role in the company is important: Each team works with autonomy but coordinates with each other to ensure their projects are aligned. This gives workers more agency over their work and makes them fully responsible for their goals.
And it’s not just tech companies that adopt flat structures. At Eboca, a self-managed organization that provides vending machines and coffee stations, employees are divided into “circles” of teams that are in charge of shaping the rules and guidelines of their respective areas. Workers manage their own schedules and important operational decisions.
By delegating authority to teams, companies reduce bottlenecks in decision-making and increase efficiency and commitment. This does away with the old-fashioned idea that senior leaders are the most experienced and wisest members of the company and highlights the nuance of workplace dynamics. In addition, this approach can help workers feel more connected to the outcomes of their tasks, which in turn boosts morale and engagement.
4. Rethink the hiring process
Hiring people who fit a company’s culture is always a priority, but it’s even more crucial for flat organizations that have such distinct work structures. With fewer layers of management, each hire has a more direct impact on the workplace and workflow.
Tech company Voxel admits their process is more time-consuming and costly than traditional firms, but they believe that, in the end, the effort is worth it. They go through lengthy rounds of interviews and several tests in order to deem an applicant trustworthy enough to join the team. At Basetis, they don’t even bother with the hiring process – only applications through employee referrals are accepted. In both cases, the goal is to protect the company and its workers from hires that aren’t a good fit. This, in turn, leads to lower employee turnover and fosters more organic and stable growth for the organization.
5. Create a culture of purpose
For some companies, adopting a flat structure is about more than just efficiency. Conscious capitalism refers to the idea that firms should transcend mere profit-making and actively consider the well-being of stakeholders, employees and society at large. Defining a purpose beyond the company’s economic benefits is a crucial step.
What’s more, employees are often more engaged in their work and motivated around the company’s goals if they feel that what they do has a greater impact. Creating a sense of purpose, in turn, can increase productivity: it allows employees to align their personal aspirations with the company’s objectives. In flat structures, every employee’s contribution matters, and the company’s purpose becomes a driving force behind skill enhancement and conscious growth.
Mireia Las Heras is a Professor in the Managing People in Organizations Department of IESE Business School.
José Pérez del Valle is a Research Assistant at the International Center for Work and Family at IESE Business School.