Keep it slim

Re­searchers Raaj Sah and Joseph Stieglitz ar­gue that hi­er­ar­chic style or­ga­ni­za­tions pro­duce prob­lems like the re­jec­tion of good projects with­out rea­son. The greater the num­ber of or­ga­ni­za­tional de­ci­sion-mak­ing lay­ers, the greater the prob­a­bil­ity that a go

The Smart Manager - - Contents - AR­CHANA JERATH IS BUSI­NESS LEADER – OP­ER­A­TIONS AT SHRM IN­DIA.

Ar­chana Jerath, SHRM In­dia, talks about the pit­falls and chal­lenges of a flat or­ga­ni­za­tion.

In re­cent years, many com­pa­nies have moved to­wards de-lay­er­ing or re­mov­ing man­age­rial tiers to cre­ate a flat­ter or­ga­ni­za­tion for var­i­ous rea­sons. While for some it has been a mat­ter of cut­ting costs through re­duced head­count, for oth­ers it has been [trig­gered by] the need for agility and quick de­ci­sion­mak­ing in a fast-chang­ing busi­ness en­vi­ron­ment.

It is not just small or­ga­ni­za­tions or new-age economies such as IT, ITES, and ecom­merce where flat struc­tures ex­ist. Let us take the ex­am­ple of auto man­u­fac­turer Tata Mo­tors. The com­pany has a rev­enue of $ 42 bil­lion and is present in 175 coun­tries, with an em­ployee strength of al­most 80,000. Tata Mo­tors re­cently an­nounced that they have taken up the task of mov­ing to a flat­ter struc­ture.

They plan to shrink their present white col­lar work­force from four­teen lay­ers to five lay­ers by April 2018. Cut­ting down the time taken to re­spond to mar­ket dy­nam­ics is one of the key driv­ers of this move.

2

Or­ga­ni­za­tions like Ci­pla, Vedanta, and Dr Reddy’s have also moved to flat­ter struc­tures in re­cent times. More fa­mous ex­am­ples in­clude those of Google, Flip­kart, Zap­pos, and Gen­eral Elec­tric.

ben­e­fits of a flat or­ga­ni­za­tion struc­ture

Build­ing a flat or­ga­ni­za­tion struc­ture al­lows a com­pany to be ag­ile, and foster an open cul­ture with room for in­no­va­tion and a high level of ac­count­abil­ity. Tak­ing away the mul­ti­ple lay­ers means there is no pass­ing the buck. There are fewer hand-offs and a higher level of own­er­ship at all lev­els, which lead to faster de­ci­sion-mak­ing and re­sponse to ex­ter­nal fac­tors such as mar­ket needs and eco­nomic slow­downs.

ac­count­abil­ity and own­er­ship

In a flat or­ga­ni­za­tion, the chain of com­mand is short and typ­i­cally the span of the man­agers (the num­ber of peo­ple re­port­ing to one man­ager) is larger. This means that in­for­ma­tion flows much more quickly across the var­i­ous lev­els. With larger spans, man­agers need to but em­power em­ploy­ees to take de­ci­sions and take own­er­ship of their ar­eas of work. This leads to a sense of ac­count­abil­ity and own­er­ship among em­ploy­ees

de­vel­op­ing lead­er­ship skills

With a lot of the own­er­ship and de­ci­sion-mak­ing rest­ing with the em­ploy­ees, em­ploy­ees even at the low­est rung tend to de­velop lead­er­ship skills. They are able to re­late what they do to the ul­ti­mate suc­cess of the or­ga­ni­za­tion. With this sense of own­er­ship and au­ton­omy, em­ploy­ees are more likely to take change, solve prob­lems, and share new ideas.

faster com­mu­ni­ca­tion

With fewer lay­ers, com­mu­ni­ca­tion among em­ploy­ees is faster and more ac­cu­rate. Since flat or­ga­ni­za­tions are

Build­ing a flat or­ga­ni­za­tion struc­ture al­lows a com­pany to be ag­ile, and foster an open cul­ture with room for in­no­va­tion and a high level of ac­count­abil­ity.

also leaner, com­mu­ni­ca­tion flows more quickly in­stead of trick­ling down the var­i­ous lay­ers as in a hi­er­ar­chi­cal struc­ture; also, it is more ac­cu­rate and re­li­able. Fewer lay­ers also mean fewer ap­provals. To­day’s busi­ness en­vi­ron­ment re­quires or­ga­ni­za­tions to have mo­bil­ity and agility; in a flat struc­ture, the abil­ity to change course and adapt quickly be­comes eas­ier and gives com­pa­nies a com­pet­i­tive edge.

fos­ter­ing in­no­va­tion

Hav­ing a say or know­ing how they con­trib­ute to the suc­cess of the or­ga­ni­za­tion make em­ploy­ees feel more em­pow­ered and open to shar­ing new ideas. Since com­mu­ni­ca­tion is faster and there are fewer lay­ers to move be­tween, in­no­va­tion is also en­cour­aged and new ideas are em­braced more quickly and openly.

a di­rect ben­e­fit of cost-ef­fec­tive­ness

As there are fewer lay­ers in a flat or­ga­ni­za­tion, there is a need for fewer man­agers or su­per­vi­sors. This means lower salaries and ben­e­fits al­low­ing for cost re­duc­tion and bet­ter pay across lev­els.

chal­lenges and pit­falls

With a large span of con­trol, man­agers may lose track of their em­ploy­ees with­out the right sys­tems in place. Man­agers must also make time to pay at­ten­tion to all their team mem­bers, han­dle griev­ances in a timely man­ner, and hold reg­u­lar feed­back ses­sions to en­sure healthy and per­son­al­ized in­ter­ac­tions.

A flat struc­ture also cre­ates am­bi­gu­ity and con­fu­sion— in­di­vid­u­als may not be clear about their own as well as other em­ploy­ees’ roles. Power cen­ters may emerge based on in­di­vid­ual per­son­al­i­ties or cliques within teams. These can go un­de­tected and cause harm to the or­ga­ni­za­tion.

Man­ag­ing the as­pi­ra­tions of em­ploy­ees can be an­other big chal­lenge. With fewer ti­tles, there are fewer op­por­tu­ni­ties to pro­mote em­ploy­ees. Apart from salary hikes, good em­ploy­ees would also have ca­reer as­pi­ra­tions and may look out­side for their next role if they be­lieve their ef­forts should be re­warded with a move up the lad­der. Hence to re­tain top ta­lent, it is im­por­tant that a flat or­ga­ni­za­tion is able to of­fer value to em­ploy­ees by giv­ing them greater re­spon­si­bil­i­ties and big­ger roles.

There are many mer­its and de-mer­its in a flat struc­ture. It is im­por­tant for lead­ers to take the de­ci­sion on how they would struc­ture their or­ga­ni­za­tion based on their busi­ness ob­jec­tives, mar­ket dy­nam­ics, and in­her­ent strengths.

Hav­ing a say or know­ing how they con­trib­ute to the suc­cess of the or­ga­ni­za­tion make em­ploy­ees feel more em­pow­ered and open to shar­ing new ideas.

ex­hibit 01

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.