Towards a Flatter, More Agile Organisational Structure
Pyramids make up some of the world’s greatest, most awe-inspiring structures. From Burma and Cambodia, all the way to Egypt and Central America, these towering buildings dominate their surroundings. But these pyramids are nevertheless ancient history, and the same will soon be said of their modern analogues: The organisational pyramids whose rigid structure characterised 20th century business success.
Top-down management is simply ill-suited to today’s VUCA business environment, whose political, environmental, and technological changes strongly favour agility over rigidity. Pyramid-shaped hierarchies introduce crippling bottlenecks, while also taking decision-making power away from the very same tech specialists, front-line workers, and engineers whose ideas and innovations hold the key to adaptive success.
As a general rule, when decisions require layers of formal approval, the people making those decisions are far removed from the ground-level consequences. The resulting disconnect creates internal friction, lowers morale, and teaches employees to passively await instructions from above. These are signs of a company in trouble – where talent will be difficult to keep onboard, and innovation is likely to dry up.
Yet companies need not go down this path. When properly implemented, a flat organisational structure can turn these same weaknesses into strengths. By replacing hierarchies with semi-independent teams or ‘cells’, employees can be trained to take real initiatives within the confines of the goals and values of the business. Although such outcomes depend also on strong internal communication and cultural development, our audit firm in Thailand has seen countless success stories among companies that transformed into flat entities.
Long-term benefits can also accrue from decentralised operations. Freed from the responsibility of micro-managing each department, executives and other corporate leaders can take more of their time to examine big-picture issues, and develop strategies that go beyond the immediate needs of the company.
Of course, flat structures come with their own sets of challenges. Without a clear chain of command, disagreements can potentially flare up into internal power struggles. Scalability also becomes more difficult, and the work-life balance of employees will need extra attention after they begin to take ownership of company performance beyond their narrowly assigned roles. Moreover, employee evaluations are trickier when team objectives become more fluid – particularly if some personnel choose to work remotely.
Yet each of these challenges can be addressed by taking proper proactive measures. When implemented skilfully, flat corporate structures are best suited for success in a world marked by the current pandemic, the rise of automation, the push toward remote work, and the ageing society.
The great pyramids of the ancient world are still standing, but the day is not far off when pyramid-shaped companies will disappear forever. Flat organisations, by empowering specialist teams to innovate toward shared goals without bureaucratic friction, can adapt far more quickly to changing technologies and business environments – and that is why they will thrive for generations to come.
Implementing these principles correctly requires intelligent recruiting and cultural training, along with institutional knowhow and experience. To facilitate your shift to a flatter organisation, contact our audit firm in Thailand today.