Don't Follow the Flat Organization Trend - Try Hybrid Instead

2024.03.11 11:57 AM By Joshua Taddeo, Principal Consultant
What Occurs in a Hypothetical Org Structure

The recent Harvard Business Review article "The Challenges of Becoming a Less Hierarchical Company" highlights some stumbling blocks companies may face when attempting to flatten their organizational structure. While the article makes valid points about the difficulties of this transition, it's important to consider the value hierarchy can provide in the proper context and when implemented thoughtfully. 

Ultimately, the choice to flatten an organization or maintain elements of hierarchy depends on the company's current conditions, goals, and strategic priorities. What works for a small startup may not be optimal for a large, established enterprise. The key is finding the right balance and hybrid approach that leverages the strengths of both flat and hierarchical structures to enable the organization's success. For many, this may mean selectively applying hierarchy and decentralization in different areas of the business as appropriate.

By considering factors such as the company's size, industry, culture, and objectives, leaders can make an informed decision about the extent and type of hierarchy that will best support the organization's performance. A nuanced, tailored approach allows companies to reap the benefits of both models while mitigating the challenges. The optimal structure empowers employees and drives innovation while providing the necessary coordination and accountability to execute effectively.

The Enduring Benefits of Hierarchy

Hierarchy has been the dominant organizational model for centuries, and its prevalence is not accidental. As businesses grow and scale over time, hierarchical structures often emerge naturally to manage complexity and maintain control. Research has shown that a manager's ideal number of direct reports is around 7, with a range of 5-9 being optimal. As a company adds employees, it becomes increasingly difficult for a single leader to effectively manage and coordinate the work of a large, flat team. 

In fact, Havard Business Review's articles highlight the need for structure beyond a certain amount of direct reports, especially at higher levels of the organization. For almost 100 years, that span of control range generally has not changed and has been brought up in multiple management studies over that time. 

V.A. Graicunas' theory on span of control (1937): Graicunas suggested that the optimal number of subordinates for a manager to oversee is around 6, based on the number of potential relationships the manager would need to manage. While this is an older study, it laid the groundwork for future research on span of control as it includes detailed calculations used to understand the complexity of relationships as the number of direct reports grows.

Bittner, E. (1965). The concept of organization. Social Research, 239-255: This study also suggested that the optimal span of control is around 6 subordinates per manager. 

Cathcart, D., Jeska, S., Karnas, J., Miller, S.E., Pechacek, J. and Rheault, L. (2004), "Span of control matters", Journal of Nursing Administration, Vol. 34 No. 9, pp. 395-399: This study found that the optimal span of control for nurse managers was between 5 to 9 direct reports, with performance and satisfaction declining above or below this range. 

Davison, B. (2003). Management span of control: how wide is too wide?. Journal of Business Strategy, 24(4), 22-29: Davison suggests that while the optimal span of control varies by industry and role, the range of 5-9 direct reports is generally considered ideal for most managers.

While technology has undoubtedly improved productivity over the last 100 years, companies find that their teams can't be effective without good leadership and that leadership only has a span of control of so many direct reports. The reality is that humans only have a specific capacity for nuance across relationships, and each relationship needs a certain amount of dedicated time to flourish and positively impact the team. For every new individual you add to a team with a single manager, you're creating a multitude of additional connections and relationships to manage across the team members.

So why are so many businesses flattening their organization? We believe it's trending as a cost-cutting measure to eliminate expensive middle management, but it won't end well for most organizations, as outlined in "5 Reasons Why A Flat Organizational Structure Fails & What You Can Do About It". While much of our analysis suggests that bad management may be worse than little or no management, hierarchy is still crucial for teams to allow for a more scalable structure. This hierarchical approach provides several key benefits:

Heiarchy Helps Teams Know Which Pathway to Take Through Defined Decision Makers

1. Clear lines of authority and accountability: Hierarchy establishes a chain of command that clarifies decision-making rights and responsibilities at each level. Employees understand who they report to and who has the authority to make decisions.

2. Efficient decision-making, especially in a crisis: With a clear hierarchy, decisions can be made quickly by the appropriate level of management without getting bogged down in consensus-seeking or confusion over who has the final say. This clarity is particularly valuable in high-stakes or time-sensitive situations.

3. Obvious career paths and promotion prospects for employees: A hierarchical structure creates a clear ladder for employees to climb, with each rung representing a new level of responsibility and authority. This visible path for advancement can be a strong motivator and retention tool.

4. Ability to develop deep functional expertise in departments: Hierarchical organizations often group employees by function or skill set, allowing for the development of specialized knowledge and expertise within each area. This departmental structure enables employees to hone their craft and become subject matter experts.

As organizations scale, some degree of hierarchy is often necessary to maintain efficiency and control. The key is to strike the right balance, leveraging the benefits of hierarchy while avoiding the pitfalls of excessive bureaucracy and rigidity. By designing a hierarchical structure that is fit for purpose and adaptable to the organization's needs, companies can harness the enduring advantages of this time-tested model while still enabling agility and innovation.

The Case for a Hybrid Approach

While flatter structures offer several advantages, such as faster communication, increased autonomy, and greater agility, completely eliminating hierarchy can be challenging, especially as organizations grow. The ideal solution for many companies may be a hybrid approach combining elements of hierarchical and flat models, leveraging each company's strengths while mitigating its weaknesses.

A well-designed hybrid structure allows organizations to maintain the efficiency and clarity of hierarchy where needed while fostering the flexibility and innovation of flatter teams. By strategically deploying different structural elements based on the needs of each part of the business, companies can create a more adaptable and resilient organization.

Examples of Some Common Hybrid Approaches

1. Functional hierarchy with cross-functional teams: In this model, the organization maintains a traditional hierarchical structure within each functional department, such as marketing, finance, or operations. However, the company creates cross-functional teams with a flatter structure and more autonomy for critical initiatives or projects requiring collaboration across functions.

2. Hierarchical departments with flat project teams: Similar to the previous approach, this hybrid model maintains hierarchy within departments for ongoing operations and management. However, when the organization undertakes specific projects, it assembles flat, self-managing teams that bring together members from different departments to work collaboratively.

3. Centralized hierarchy for critical decisions with team autonomy on daily operations: In this approach, the organization maintains a hierarchical structure for high-level strategy and critical decisions that require executive oversight. However, it grants significant autonomy to teams at lower levels to make decisions and manage daily operations in a flatter, more agile manner.              

The proper hybrid structure depends on a company's unique context, including its strategy, size, industry, and culture. A small, fast-growing startup may benefit from a mostly flat structure with a few vital hierarchical elements, while a large, complex enterprise may need a more robust hierarchy with targeted areas of flexibility.

Regardless of the specific approach, the goal of a hybrid model is to balance the stability and efficiency of hierarchy with the dynamism and innovation of flat structures. By combining the best of both systems, organizations can create a more responsive and resilient structure that enables them to adapt to changing market conditions and drive long-term success.

Implementing a Hybrid Approach

Transitioning to a hybrid structure requires careful planning and change management to ensure a smooth and successful implementation. Leaders must intentionally design a model that aligns with the organization's strategic objectives and culture while considering employees' needs and preferences.

Hybrid Approach Helps Teams Set Goals and Crush Them
Some key steps in implementing a hybrid approach include:

1. Clearly define the purpose and goals of the new structure and communicate these to all stakeholders.

2. Identify which areas of the business will maintain hierarchy and which will adopt flatter elements based on the needs of each function or project.

3. Develop new roles, responsibilities, and decision-making processes that support the hybrid model and provide training to help employees adapt.

4. Foster a culture of collaboration, trust, and accountability that enables teams to work effectively across hierarchical and flat structures.

5. Continuously monitor and adjust the hybrid structure based on feedback and performance, ensuring it remains aligned with the organization's evolving needs.

By taking a thoughtful and iterative approach to implementing a hybrid model, organizations can successfully combine the benefits of hierarchy and flat structures to create a more agile, innovative, and resilient organization. The key is finding the right balance and customization for the company's unique context and goals.

The Future is Fluid

Don't just follow the trends because a couple of writers have been paid to produce content about the benefits of a flat organization. Most companies touting their progress with a flat organization have yet to play the scenario all the way through. Many of those organizations will likely return to hierarchical structures at some point in the future as they burn through managers or find their results are lacking because their teams lack a cohesive direction without dedicated leadership. 

Ultimately, the traditional hierarchy versus flat debate presents a false dichotomy. The workplace of the future will likely be increasingly fluid, with hierarchical and flat structures dynamically deployed as needed. These dynamics and needs will shift as your business grows, so make sure you're assessing the business needs against the realities of today, not in comparison to a company you heard make a change in structure. 

The most successful organizations will be adept at configuring the right structure for the right purpose and adapting as circumstances change. Hierarchy remains a useful organizational tool but should be applied flexibly and in targeted ways as part of a more hybrid, nuanced approach. The key is designing an intentional structure that enables a company's strategy while empowering teams to be agile and innovative. Those who strike this balance will be well-positioned to thrive as their organization grows and changes.