Lately, I have seen a calling for organizations to flatten their hierarchies. Some of the reasons to move in this direction include: It makes the organization more agile, it empowers the customer-facing employees, etc. I believe in being agile as well as empowering all levels of employees, but are you willing to bet your organization’s survival on this? In “The Infinite Game,” Simon Sinek talks about how an organization survives through the years because of their ability to plan and operate for the long haul. Here are some concerns and thoughts I have for those people who believe that hierarchies need to be flattened:
A SUCCESSOR WILL NOT BE EFFECTIVELY TRAINED. The average life span of a Chief Executive Officer is about five years. Without a structure to create experience, it will be difficult to find a successor within the organization. Jim Collins states that companies who went from good to great had a leader who grew up within the organization. How will an organization find a talent in a structure that does not provide for the development of the next leader?
THERE IS NO ABILITY TO GROW FUTURE LEADERS. I have this belief: “Invest in your people to not only benefit your organization; but also to benefit in building a better world.” If an employee does not feel like they are growing professionally or personally, he/she will likely leave the organization to find an opportunity that will provide for those needs. I believe growth takes different steps at different levels. Each level presents the necessary challenges to create experience for making the tougher decisions.
TRAINING EMPLOYEES AND MANAGERS IS A PROCESS. I have found training quality decision makers is a stair-stepped process. The instructor guides the student and then lets the student work with the newly acquired knowledge on their own. The instructor returns to build a deeper understanding of the knowledge and experience with the student to grow the skill from “acquired” to “mastered.” Can you expect any one employee will be able to grasp the impact of their decision making with an initial training seminar and a book of policies? It takes coaching followed by “on-their-own” experience. Just like in flight training, a pilot does not truly learn about flying until they do their first solo flight. Training your decision makers should be considered with the same determination.
YOUR VISION FOR THE ORGANIZATION GETS STYMIED BY DAY-TO-DAY DECISION MAKING. With a flattened hierarchy, the top management will find themselves involved in the daily grind. The time that would have been spent for strategic planning and vision implementation is now spent answering questions above the ability of your front line employees. Well-run organizations want to empower their people. Committed employees want to have “buy-in” to feel like they are part of their organization. When I was shorthanded in managers, I found myself involved in the daily grind to the point where I could not work on my implementation of the vision until I was lying in bed at night. I do not think your customer facing workers are going to be armed immediately to make the tough decisions that have lasting effects on the organization. Tough decisions are successfully made by those with the experience of growing through the ranks. Think of the levels as a process in risk mitigation; each level, the risk tolerance is assessed by the owners of what they are willing accept.
INVESTORS LOOK AT MANAGEMENT. Investors look beyond the analytics and focus on the management. Without a hierarchy, there is no management team to be evaluated by the investors for future opportunities. Warren Buffet looks at the ability of the management team to determine if he is going to invest his money in their company. Many successful investors are moving in that direction. The numerical results are not enough; you must also evaluate the performance and professionalism of a management team.
NO INCENTIVES WILL ATTRACT QUALITY TALENT. As mentioned in an earlier paragraph, without a road map for growth, what quality talent would want to apply for your position? As applicants are becoming savvier about their personal trajectory, they monitor the opportunities available in an organization to develop their skills.
EXCEPTIONS. It is known that Elon Musk utilizes a flat hierarchy in his organizations. Talking with people who understand how Elon Musk is operating his establishments, applicants are aware they are coming to the organization for a short-term position in which they will burn out through their time there. In return for that experience, the applicant will have made themselves more attractive to other companies that want those particular talents and experiences.
Let us not be so quick to take away a system which has provided many things in professional development. I have seen a small restaurant effectively use a hierarchy scheme to make the organization more responsive to customers while providing support between the dining area and kitchen. Be careful in revolutionizing the system, there are second and third order of effects that can be identified. Through identification, solutions can be designed in order to move forward with the reorganization of the management. If you think flattening your hierarchy will make the organization more agile, are you willing to have your newly-trained employee making a big money decision? Or do they have to wait for you, the decision maker, to be available? You can empower employees at every level; the ownership needs to decide what level of risk he/she is willing to accept.
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