If your business is struggling to innovate and your employees are disengaged perhaps it’s time to throw out the old-school hierarchy and embrace a more modern-day alternative.
As business leaders look to the future of work and how to steal a competitive advantage, we’re hearing more talk of alternative concepts like self-management, flexible work arrangements, and task forces instead of teams. The general idea being that if you give your employees more autonomy you’ll unleash their creativity and entrepreneurialism, speed up decision making, and help to propel your business forward.
To this end there are a number of more ‘innovative’ organisational structures that businesses can experiment with. But transitioning to a comparatively casual, people-powered approach is not without its challenges – and is it really worth all the upheaval? Here we consider three alternative models and the advantages and disadvantages of each, so you can see whether either option is a viable one for your business.
What’s wrong with the status quo?
Since the industrial revolution the default setting for running a business, particularly a large one, has been a hierarchical management structure. Employees have set job titles with pre-defined responsibilities and a clear line of reporting.
Everyone knows where he or she stands but this bureaucratic, top-down style of governance can be cumbersome and de-motivating. As a result, more forward-thinking organisations – tech companies in particular – are moving away from the model and exploring alternatives.
1. Flatter… to flat
A ‘flatter’ structure cuts out some of the layers associated with a hierarchy and aims to facilitate the flow of information and ideas. Open communication and collaboration are encouraged and with a shorter chain of command organisations can become more responsive. There’s also greater emphasis on the employee experience, including empowering individuals to work to their potential, which can provide an advantage in the war for talent.
How flat an organisation gets ultimately depends on what it’s comfortable with. Social media management platform Buffer is one company that chose to go fully horizontal, with interesting results.
The company got rid of all job titles and instead of static teams opted for more fluid ‘task forces’. These could be set up by anyone to fulfil a specific purpose, rather than by a designated ‘leader’, and employees could choose which task forces to be a part of, depending on where their motivation lay.
While Buffer is still a relatively flat organisation boasting a fully remote team, this foray into total egalitarianism was fairly short-lived. In practice employees found the lack of structure and guidance overwhelming and ended up feeling lost and inhibited rather than empowered. It’s also been said that in the absence of a set hierarchy informal hierarchies typically form based on seniority, and the company tends to develop cliques, which can end up blocking the collaborative processes you’ve set out to promote.
2. Flatarchy
As the term suggests, a flatarchy is something of a marriage between a hierarchy and a flat management structure. It may be a flat organisation that uses structured teams as and when necessary or, as is more common, more like a traditional hierarchy with looser spin-off teams created to tackle a specific project.
A good example is a company with an internal incubator or innovation program. Employees can pitch their ideas and, if successful, set up more autonomous teams to bring these ideas to fruition. The emphasis here is on innovation and encouraging staff to problem solve in more creative, dynamic ways.
Tech companies such as Google, LinkedIn and Adobe have used this practice to good effect and, as they seek new ways to gain a competitive edge, other large and mid-sized organisations are also experimenting with the model. It does still require a fair amount of disruption however, and the ad hoc nature of teams could make life challenging for smaller companies.
3. Holacracy
Based on distributed decision-making, a holacracy is best visualised as a framework of circles, or small departments. Individuals have roles instead of job titles and self-direct their work, reporting to teams rather than a manager.
Everyone has the power to innovate and make changes and each circle is responsible for its own decision-making. As a result, holacracy is claimed to encourage entrepreneurialism and improve agility and efficiency.
Contrary to popular thought, holacracy is actually governed by a strict, pre-determined set of rules and processes, which cover everything including how meetings should be conducted. The idea is that when people are 100 percent clear on what’s expected of them, the more effective it is to self-manage.
Many businesses would find the amount of prescriptive detail a turn off. That said, online retailer Zappos has operated a holacracy since 2014 and has plenty of good things to say about their experience. Among the key benefits Zappos leaders cite the ability to make faster and more creative decisions that improve customer satisfaction.
Obviously the size and nature of your business will largely determine which organisational structure is the best fit. A good approach is to cherry-pick the elements you feel are most appropriate rather than reinventing the wheel. This can also help to make the transition more manageable.
Whichever way you go, it’s worth pointing out that any move to a more democratic system automatically entails greater transparency and a heavier reliance on new technologies. Particularly with the rise of remote working, it’s critical that employees can access each other and the information they need anywhere, anytime.
This article was first published on the Optus Yes Business hub in Nov, 2018.
