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Structure is key to creating a successful flat organisation

While advocates of flat organisations emphasise how they encourage innovation and autonomy, their lack of structure can alienate employees.

The flatter an organisation, the fewer bosses it has and the more it expects staff to self-manage. So the appeal of flattening your organisation is giving each employee the power to be more productive and innovative – you make their work less bureaucratic.

It has become a popular approach to organising a business, one that has been adopted by big companies like Google, Nike and Patagonia.

Flat organisations don’t all look the same, some have formal structures or defined boundaries as to what counts as self-management. Some, such as Nike, assign groups to different products. Others allow for employees to completely self-govern and self-assess their roles.

While there are obvious good reasons for more collaborative, innovative and autonomous employees, without any form of structure, elitism can breed within an organisation. A consensus seems to be forming – going flat can be effective, but removing too much structure is dangerous.

Feminist predictions

As noted by Klint Finley in his Wired article, one of the more famous criticisms of ‘structureless organisations’ was articulated by Jo Freeman, a feminist activist, in her essay ‘The Tyranny of Structurelessness’.

Responding to a flat, structureless philosophy of group organisation popular with the women’s liberation movement in the sixties and seventies, Freeman argued there was no such thing as a structureless organisation, as every group of humans will naturally form a hierarchy.

“The structure may be flexible; it may vary over time; it may evenly or unevenly distribute tasks, power and resources over the members of the group. But it will be formed regardless of the abilities, personalities, or intentions of the people involved,” says Freeman.

“We cannot decide whether to have a structured or structureless group, only whether or not to have a formally structured one.”

Freeman says that if you refuse to define power structures, informal ones will emerge. And, while she thinks that an informal structure can work in a few circumstances, she believes that for larger groups and more significant ventures they tend to cause more harm than good.

“Unstructured groups may be very effective in getting women to talk about their lives; they aren’t very good for getting things done. It is when people get tired of ‘just talking’ and want to do something more that the groups flounder, unless they change the nature of their operation.

“As long as the structure of the group is informal, the rules of how decisions are made are known only to a few and awareness of power is limited to those who know the rules.”

Welcome to flatland

Valve, the company behind gaming-platform Steam, has a structureless approach. True to Freeman’s theory, its critics say an informal structure formed in a very hierarchical way.

In its employee handbook, under the subheading ‘Welcome to Flatland’, Valve claims hierarchy is great for predictability and repeatability. It states that without management, ‘nobody reports to anybody else’ and innovation ‘steers’ the company to success. The only management like figure in the company is the founder/president but as the handbook says “even he isn’t your manager”.

An ex-employee spoke to Wired about how Valve’s ‘pseudo-flat structure’ hid a layer of powerful, structured management.

It made Valve feel “a lot like high school,” the ex-employee says.

Considering its flat structure, it’s a little surprising Valve also had a system of ‘stack-ranking’ (see our article for what this is, and why it’s problematic).

The handbook states “stack ranking is done in order to gain insight into who’s providing the most value at the company and to thereby adjust each person’s compensation to be commensurate with his or her actual value.”

Most notably, the ranking is formed by project team members and no employee is allowed to rank themselves. While eliminating self-promoting, it does allow for popularity tests.

Image sourced from Valve’s ‘Handbook For New Employees’

Another ex-employee wrote anonymously on Glassdoor that “to succeed at Valve, you need to belong to the group that has more decisional power, and even when you succeed temporarily, be certain that you have an expiration date. No matter how hard you work, no matter how original and productive you are, if your bosses and the people who count don’t like you, you will be fired soon.”

This ex-employee could have expressed the same sentiment by quoting Freeman when she said that structurelessness can become “a smokescreen for the strong or the lucky to establish unquestioned hegemony over others.”

Flat but structured

Melbourne based company, Inventium adopted the flat organisation style but did so with pretty rigorously defined structures adapted from Brian J. Robertson’s method, ‘Holacracy’.

Holacracy is a way of structuring roles within an organisation wherein power is distributed into teams called ‘circles’. A holacracy gets rid of job descriptions, in an effort to allow for more flexibility in what a person’s responsibilities and tasks look like.

This creates a self-organised hierarchy. Each circle is given clear responsibilities and are trusted to carry out their own work. To create some accountability to the larger organisation, there are two roles within each circle called ‘lead link’ and ‘rep link’. They sit in a circle’s meetings to ensure the teams are working within the organisation’s mission and strategy.

Each circle creates its own governance process that is made up of input from all employees. The idea is to ensure there is agreed upon decision-making for changes in governance and amending or objecting to proposals.

Holacracy gives authority for employees to take any action needed to perform their work, unless it is prohibited by policy.

“One of the criticisms of [holacracy] is that it replaces one bureaucratic, rule-driven system with another,” Inventium founder Amantha Imber says.

“After reviewing it all, we took what we liked, and created some new systems of our own. For example, people constantly work in different team combinations. So rather than having ‘circles’, we hire people who are self-motivated and self-driven and are comfortable working both on their own and with a variety of different team combinations.”

Imber didn’t fire her managers but instead took away their management duties to allow them to “focus their efforts on actually doing the work they were originally hired to do rather than spend countless hours managing people,” she explains on the Inventium website.

Without management, Imber felt there was no fair way to evaluate her team members’ performance, so she decided to implement a questionnaire that would require quarterly self-reflection.

Example questions include:

  • What are the key things you have done this last quarter which have made you proud?
  • What have been your most significant learnings this quarter? How has this led to self-improvement?
  • What are you most looking forward to achieving next quarter?

“I’ve regularly sought the team’s reflections on how the new system has been working and what needs tweaking. This has led us to deviating from the traditional holacracy model,” Imber says.

Imber admits that not everyone has adapted well to this model. “People either love it and thrive, or it makes them feel extremely uncomfortable and they inevitably leave.”

With or without management, having a cohesive team is essential for any organisation. Sign up for this Ignition training course on building effective teams.

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Max Underhill
Max Underhill

A structure defines the “contributing elements” positions. This is based on the stakeholder outcomes (with measures to allow empowerment when the positions are filled). An organisation with less stakeholders and likely less outcomes will be quite different to a more complex say service based organ. In 1994 Kellogg removes 2 layers of factory supervision and they moved to HO to ensure services to manuf. were delivered. Stuctres sort out vertical & horizontal outcome delivery

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