Flat Organizational Structure – Think about it...

In the article – “The heart of entrepreneurship” by Howard H. Stevenson and David E. Gumpert (1985), the authors discuss about the best organizational structure for a venture and come up with a reasonable answer and explanation. The management structure should be flat, decentralized with multiple informal networks, to enhance communication and decision making process, and mobilize people.

In 12Manage – The Executive Fast Track website, it is stated: “A flat organizational structure is an organizational structure that features relatively few layers of managers between the top of the corporation and the normal employees".

This structure supports innovation at the unit level, provides more effective communication processes and increased flexibility to deal with rapidly changing environment. The decision making process is quicker because of less approval levels. Employees have more responsibility, independence and authority. It is unnecessary for supervisory management to step in unless the plan is off track and an effective corrective action is needed.

My previous company applied the flat organizational structure with few management levels. Due to equally distributed authority, all employees built up a small society of mutual trust and support. We communicated openly, shared thoughts and learned from each other. With support, trust and encouragement from managers, many creative ideas come into world without fear for failure. We once failed to deliver a software product to client. After serious meetings about that failure, the manager realized that the goals should have been discussed, deliberated and adjusted based on communication and feedback among all related employees.

According to Robbie Hardy, president of Chapel Hill-based IntraSoft and North Carolina’s Entrepreneur of the Year 1997 by Business Leader magazine, building and maintaining a flat organization is one way to keep the best employees. “Keeping the team and founders in touch is really important in creating an atmosphere that's healthy where people feel they can do anything”. “You can't expect your people to read your mind,” Hardy said. ”And you can't expect them to create innovative solutions if you're not fostering creativity.” IntraSoft developed a progressive and creative environment in which employees are challenged to use cutting-edge technology to create a unique and innovative product line (Lester, 1998)

Harold Leavitt, professor emeritus of organizational behavior at Stanford University and author of Top Down: Why Hierarchies Are Here to Stay and How to Manage Them More Effectively, highlights one inevitable fact about flat organizations: ”The more you flatten, the less you control” (Henricks, 2005). Besides, Ingvar Kamprad, founder of IKEA, emphasizes that Time is an Entrepreneur’s Best Asset (LaBarre, 1999). Therefore, I think an entrepreneur should be aware of the advantages of ”Flat Organizational Structure” and consider to apply it for the purpose of Empowering people and Making faster decisions.


References:

12Manage – The Executive Fast Track. Flat Organizational Structure. Retrieved August 31, 2008, from http://www.12manage.com/description_flat_organizational_structure.html

Henricks, M. (2005). Falling flat? How flat is too flat when it comes to management? You'd better find out before it's too late. Entrepreneur. Retrieved October 31, 2008, from http://findarticles.com/p/articles/mi_m0DTI/is_/ai_n8688088

LaBarre, P. (1999). Success Here's the Inside Story. Retrieved October 31, 2008, from http://www.fastcompany.com/magazine/29/bookpage.html?page=0%2C1

Lester, M. C. (1998). 1997 Top Gun Enterpreneur of the Year. Business Leader Magazine. Retrieved on October 31, 2008 from http://www.businessleadermagazine.com/Index.aspx?page=ui.article&PID=7707

Stevenson, H.H. & Gumpert, D.E. (1985), "The heart of entrepreneurship", Harvard Business Review, Vol. 85 No.2, pp.85-94.

(Photo from http://www.thesykesgrp.com)