Flatter is not necessarily fitter

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In modern management thinking, “the flatter the organisation the better”. According to this adage, organisations with very few levels of hierarchy and little in the way of middle management have all the virtues.

Compared with older structures, they are supposed to be less bureaucratic and more flexible, less authoritarian and more democratic, more innovative and less bound by rules and traditions, better at internal communication and better at responding to customer needs and allowing employees to work to their potential and achieve job satisfaction.

General Electric, under the leadership of Jack Welch, adopted this approach with some effect, stripping out entire layers of management across the corporation and and in the process turning GE into a much more flexible organisation.Google’s co-founders Larry Page and Sergei Brin have delegated as little control of the search engine as possible to managers, eschewing a hierarchy, while offering all employees unusual benefits – includingsuch as free meals and a free laundry service.

Before testing whether flat worksall this is true,It is worth noting that organisational forms seem to be as fad-prone as any other area of business, if not more so. The past century has seen the organisation variously conceived as that are the multi-divisional organisation, a the pyramid, organisation, the organic, organisation, the a matrix, organisation, the flat, organisation, the a network, organisation and the virtual. organisation.,– and this is without even beginning to count not-Western models like the Chinese family organisation – each of which has been touted as the best way to structure a business.

This parade of fashions means two things: first, management theorists and practitioners are not happy with current forms of organisation and are searching for a better way; and second, they have not found it yet.

The premise of the flat organisation is that companies are too bureaucratic and top-heavy that huge wage costs are being incurred by unproductive layers of management, and corporate bureaucracy is choking these companies to death, stifling individual initiative and creativity. The key to maintaining competitiveness, according to Rosabeth Moss Kanter, professor of management at Harvard Business School, is to learn how to do more with less. In her 1989 book When Giants Learn to Dance, Prof Kanter challenged businesses: “Cut back and grow. Trim down and build. Accomplish more, and do it in new areas, with fewer resources.” The response was the flat organisation, less bureaucratic, more efficient and more flexible.

However, does hierarchy necessarily mean equate with bureaucracy? The answer is no. Japanese businesses have a long track record of competitive success, and yet companies such as Toyota, Honda and Sony are, by western standards, very hierarchical. A typical Japanese corporation will have two to three times as many “middle managers” as an American one. These companies are hierarchical, but not bureaucratic. Internal organisation is flexible and communications are good.

Honda, in particular, is famous for its ability to create cross-functional, self-managed teams that come together for a particular project and disband again, all inside the confines of a large hierarchical organisation. Arguably, it is the strengths of the Japanese business model that have allowed so many companies to survive a decade of domestic recession.

The success of these businesses, and of other companies such as Hong Kong-based Cheung Kong and
the Thai multinational CP Group, which are based on the Chinese family model, should warn us against assuming that any one structure is supreme. In their 1978 book Organisational Strategy, Structure and Process, Raymond Miles and Charles Snow argued that what matters is not the “style” or “type” of organisation, but whether it is fit for purpose. In other words, will this method of organisation enable the company to reach its strategic goals?

Some organisational features are to be avoided, and bureaucracy may well be one of them. But when structuring an organisation, it is probably better to worry less about how “flat” it is, and rather more about aligning structure with strategy.

Instead of opting for whichever organisational model happens to be fashionable, choose the right one to get the job done.

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