Unlocking Financial Success in a Flat Organization

What is a flat organization?

A flat organization is an organization where the number of layers or levels is kept to the absolute minimum. As a result, the physical separation between the executives and their colleagues is small, and direct interaction between the remaining layers is not only inevitable, but also stimulated and appreciated. In these organizations, the span of control, or a measure of how many people directly report to their leader, is large. Given this unique environment, for leaders to drive success in a flat organization they should focus on the following strategic imperatives.

Stay open to innovation

Any company that wants to outcompete its peers needs to be proactive and nimble. Organizations benefit greatly from the joint and individual creativity of their team members. However, this creativity can only be captured and harvested in an environment that embraces openness and open-mindedness. 

Openness is an indicator of employees’ willingness to share ideas openly and freely with the rest of the organization. Open-mindedness is a measure of the willingness of the organization to assess, absorb, and implement the ideas brought forward by colleagues without prejudice and with an open spirit. Openness and open-mindedness are key ingredients to building a meritocratic organization where the best idea wins regardless of who initiated the idea —  the janitor or the CEO. 

A flat organization is the most, if not the only, appropriate organizational structure to stimulate and reap the benefits of innovative thinking in an environment that is devoid of artificial barriers and unnecessary layers.

Focus on flat

Building a flat organization has both structural and cultural components. The structural component is quite intuitive, as it involves reducing the number of layers in an organization and increasing individual’s span of control. Other structural or mechanical elements include aligning job titles, decreasing the number of job titles, and creating a simplified but equitable compensation structure.

There is an equally important cultural dimension that is more difficult to broach, and is largely dependent on elements such as organization size, average tenure of the workforce, age of the organization and, of course, the reigning culture. 

Unfortunately, coworkers are naturally reserved and guarded in their interactions with leaders. Empirical studies have shown that out of caution, or perhaps self-preservation, colleagues are hesitant to speak up to share their ideas with the organization. This inherent hesitation seems equally pervasive when it comes to bringing forward creative ideas for sustainably improving company operations. 

A flat and open organization has a much better chance at removing these barriers than a steep hierarchy. If an organization is bureaucratic, its leadership autocratic, and its people unempowered, this will most certainly stifle the creativity of the workforce. It is upon the leadership of the organization to break down barriers, to engage the coworkers in open dialogue through town halls and listening sessions, to be authentic and approachable, and to make it abundantly clear that the company needs the innovative talent and ideas of all its employees. 

Why would an organization invest a tremendous amount of effort and money in recruiting talented colleagues, only to allow a culture where these talented individuals are discouraged from speaking up? This constitutes an incredible waste of talent and an unforgivable loss to the company. 

Invest in empowerment

A flat organization, where the artificial barriers between the different layers have been removed, where colleagues feel safe speaking up and sharing ideas, is an organization that will benefit from the collective creativity of its workforce. The outdated notion that the CEO or the leadership team has all the answers is nonsensical. The smartest ideas for improving process or product will typically stem from the folks closest to the challenge, not from a far-removed executive. That is why empowerment is such an important cultural attribute of the flat organization. An empowered individual, somebody who understands that he or she has the knowledge and authority to make the decision, without fear or hesitation, will be stimulated to come up with new and fresh ideas. 

In a very competitive and fast moving environment, a flat and empowered organization will outcompete its peers through the collective creativity of its workforce. It will be more innovative, agile and entrepreneurial than its competitors. These attributes will vastly benefit its financial performance, and equally important, the wellbeing of its coworkers. 

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