Tall vs Flat Organisational Structures: What Are The Pros and Cons?
Did you know that the word ‘organisation’ comes from the Greek word 'oragon', which means 'tool'?
The idea behind it is that an organisation needs to have a structure to function correctly, and all the people inside that structure are the tools that make the organisation work.
That’s ironic when you consider that, in modern-day slang, calling people “tools” is guaranteed not to make you friends, but, according to the ancient Greeks, ‘tools’ are what we all are.
Organisation = Structure
An organisation needs a structure to effectively manage and control its resources, keep the business on track and productive, and anticipate and adapt to change. An integral part of ‘organisational structure’ is ‘management structure’. You can’t have one without the other.
Once upon a time, most workers didn’t mind being sucked up in the big homogenous whole. It was the way society was. But times are different now. Nobody wants to be a tool, a cog in an engine. And when the management structure treats people like tools, it's the outstanding ones who often get lost because their managers don't know what to do with them. This is one of the reasons why there are so many insufficient managers around. When a high-performer deserves more money but reaches the top of their band, their boss doesn't have any other choice except to make that person a manager, whether they're suited for it or not.
Consider this example
Let’s say you’re a techie and you’re superb at your job, and you earn £35k a year, and you deserve to earn more, but you’ve climbed as far as you can in your current position. If your company is locked into an old-fashioned management structure, the only way to pay you a bigger salary will be by promoting you into a management role. It doesn't matter if you're going to be the worst manager in the world; if you want more money and the company wants to hold onto you, the old-fashioned management structure traditionally dictates that’s the only place left for you to go. As a result, a formerly superb techie is now a third-rate manager, and, even though you’re getting higher pay, your career, reputation, and morale are slowly going to go to Hell in a handbasket.
That is just one all-too-common example of why old-fashioned management structures need to be questioned and, sometimes, pulled apart.
What should the solution be?
In my opinion, if you’ve got a superb worker on your team who’s reached the top of their band and you don’t want to lose them, you should talk to them, assess their capabilities, and, if promotion to management isn’t the best way forward, create another band for them and pay them what they’re worth. Let's face it, if they're great at what they do and giving you that much more value than the other people in their pay grade, doesn’t that make more sense than taking them away from what they’re good at and killing what makes them exceptional?
‘Tall’ vs ‘Flat’ organisational and management structures
Organisational structures come in all shapes and sizes: tall/flat, centralised/decentralised, formal/informal, circular, matrix; some organisations even make up their own. I wouldn't be surprised if Ben & Jerry's ice cream company has a raspberry ripple one.
The old-fashioned organisational structure tends to be ‘tall’, which means it consists of many different management levels, and the chain of command is long. Employees are only related to their team manager and department manager, who, in turn, are supervised by senior managers, all the way up to the Chief Executive Officer. The result is that the top-level managers hold the most power, the employees underneath them feel remote and controlled, communication between the levels can be clunky, and decisions take a long time to be made.
The pros of a tall organisational/management structure
In a tall structure, roles are transparent, objectives are clearer, and costs are easier to control.
The management structure has a very distinct status quo. The managers at every level oversee a small number of employees, and their employees' duties are clearly defined.
Also, each level’s managers have their own clear and separate responsibilities.
Because each manager manages a small number of employees, the employees are more closely supervised.
When a team member deserves to earn more money, they get elevated into the next band. When they run out of bands, the only way to pay them what they’re worth is to promote them to management.
The cons of a tall organisational/management structure
Employees have less freedom and fewer responsibilities and must rely on their direct manager to know what’s going on.
The decision-making process is slow because sign-off is usually required from different management levels.
Communication must occur through different management levels. If communication between management levels is fractured, department managers and team leaders may not be privy to upper-level decisions, and the staff who rely upon them feel isolated and unsupported.
The company isn’t as flexible and responsive to change as it should be. When there’s a problem, solutions can take a long time to find.
No matter how deserving of a pay increase they are, some people aren't management material. Nor might they want to be.
These are just some of the reasons why more and more businesses are jettisoning the ‘tall’ organisational/management structure and adopting the more agile, autonomous, ‘flat’ organisational/management structure instead. As that name suggests, in a flat structure, the hierarchy is more compressed, and management and supervisory lines are either blurred or entirely removed to take advantage of new technology, the modern economy, and/or the tremendous forward momentum that is taking place in workplace culture.
The pros of a flat organisational/management structure
A flat structure encourages employees to be more flexible and cooperative, work across boundaries (i.e. between different teams and departments) and empowers them to solve their own problems.
It’s more cost-effective. Fewer management levels mean fewer people to pay to get the same amount of work done.
Employees are more motivated to give their best and be more focused and productive.
Because there are fewer management levels, the communication chain is shorter, so communication between managers and employees is improved, and all employees have greater clarity of what’s going on. There is less opportunity for confusion and Chinese whispers.
Employees have a much better sight of all levels of management (and vice versa) and, as a result, are more likely to share their ideas and opinions.
Because the individual teams are self-governing, they can take responsibility for most, if not all, of their own HR: if there's a problem, it doesn't always have to be escalated; it can be dealt with within the team, leading to faster resolution.
Employees can be developed more quickly and moved more agilely around the organisational structure, often improving their skillsets through actively doing the work instead of via costly formal training.
Client-facing employees can give feedback to the whole management team more quickly, and the company can respond more rapidly to changes in customer demands. From the customer's point of view, the service they receive is more efficient and better able to meet their needs.
The cons of a flat organisational/management structure
People who are not self-starters may find the lack of leadership demotivating.
Because it's a more collaborative approach, more significant decisions might be decided by a vote or a consensus, taking longer to make.
Because teams are self-governing, individual roles and responsibilities could become confused, especially if team members work across multiple projects. Also, some team members might find themselves shouldering a bigger workload than others.
Because each team is allowed to determine its own best practices, there could be a lack of consistency in their different working methods. Also, transiting between teams and frequently learning new ways of doing things may be difficult for some employees.
Communication can be harder to spread between smaller, more autonomous teams. Plus, if the teams are entirely focused on their own activities and don't work across boundaries with other teams, there's a danger that the 'teams' will turn into 'tribes'.
A flat organisational structure is generally more suited to smaller operations.
All organisations need to have a structure. However, if a company wants its employees to be better aligned, engaged, and have more options to progress than being shoehorned into a traditional management role when they’ve reached the top of their pay grade, the modern flat structure is undoubtedly the way to do it.
Don't forget that all businesses have their own unique life cycle.
Every successful business evolves through different stages of development. It is possible for a company with a flat organisational/management structure to take on a tall organisational/management structure as it gets bigger or even combine the two structures together. For example, Starbucks have a flat organisational structure within its customer-facing franchisee-owned stores and a tall organisational structure in its corporate head office, where the global decisions are made.
I’m not suggesting that companies with old-fashioned organisational and management structures are doing it wrong. If it’s not broken, don't fix it.
The problem is when the organisation and the people working inside it are evolving, but the structure holding the organisation together remains rigid, institutionalised, and outdated. That’s when the cracks start to show. In the example I described earlier, the superb techie who was promoted to manager because it was the only way to pay them more money will probably leave anyway because they'll look for a better paying job somewhere else that lets them continue doing what they're good at. Or they'll take the pay increase, be a crap manager, and, before you or they know it, it will all go wrong.
As a leader, it’s your job to stand back, question how your organisation is structured, and not be afraid to make changes if changes are necessary. Always be aware of the stage your business is at, and be prepared to dismantle your organisational structure if it’s not working. That could mean creating new bands or promoting people sideways instead of upwards. It might even mean taking some of your existing low-performing managers out of their current positions and letting them return to what they excel at, except with more authority and the better pay they deserve.
All this will be a test of your leadership skills but testing yourself and challenging the status quo is the only way to become a more successful leader.
Ask yourself this question.
Is it time you dismantled the old-fashioned management and organisational structures that could be holding your company back?
Maybe, maybe not, but I’d encourage you to think about it.
