The structure and management of your company becomes the lifeblood of the company culture. Are you flat or tall? Which structure is best?
- Although there are subcategories of how businesses are structured, most follow either a flat or tall organizational model.
- Flat management styles are being newly implemented to allow for more autonomy among staff members.
- Organizations that follow a tall business structure abide by a traditional hierarchy of senior executives at the top.
To create a company that has the potential to upset an existing industry, and create a lasting impact on the world, your corporate culture has to be unique, inspiring and challenging.
Everything from the dress code to the layout of your office will directly impact the way your team operates and the way your company is perceived in the market. Remember, finding people as passionate about a product as its founder is rare.
Offering financial incentives is one way to build excitement and give early members of a team a sense of ownership in the brand they're creating. But, as it turns out, it's also about the structure and management that becomes the lifeblood of the company culture.
Flat structure vs. bureaucracy
Mark Cuban is often cited as one of the biggest proponents of a flat management structure for an early-stage startup.
Having a team of energized, talented people with defined areas of responsibility can minimize the need for layer upon layer of bureaucracy.
Remember, the reason big companies fail is that they focus too much on committees and internal politics while losing sight of the unique value their product offers the consumer.
Bureaucracy makes servicing a customer more difficult
One of the problems with having layer upon layer of leadership is that customer issues become more complex.
Customer-facing members of your team need the authority to act quickly to save a customer. When things go wrong, or a customer perceives an issue, your repeat business from that client is in serious jeopardy.
How your organization reacts will decide how that customer chooses to spend their money in the future.
In a bureaucracy, the decision to fix a customer issue, and the steps involved rapidly multiply. In a flatter organizational chart, employees empower themselves, or immediately gain one-time authority from a superior to take care of the customer.
Flat organizational structures may be too fast to control
Think about the last time you went to a drive-thru and ordered a calorie-laden burger.
If you had a nutritional advisory panel, along with an executive vice president in charge of energy quality sitting in the passenger seat, the decision to eat something that is bad for your health would have likely been blocked by the wisdom and self-control of the organization.
Using the same metaphor, in a flat organizational structure, there is generally less oversight and outside input on decisions made.
It would be far easier to grab the burger without anyone giving the decision a second thought. You'd be able to enjoy a guilt-free burger, at least until you hopped on the scale a few days later.
The challenge of a flat leadership structure lies in balancing the need for oversight with the need for speed and efficiency. Without enough oversight, decisions that may be good for the individual in the short-term, but harm the group in the long-term can slip by.
Bureaucracy gives executives more control over brand and customer experience
The impact of a wise, talented executive team can be more fully felt in a taller organization chart.
The thoughts and decisions of executive management can be easily communicated to midlevel management who can then reach out to supervisors and carefully make sure the vision of management is followed. The added accountability and opportunity for monitoring is a definite strength of a bureaucratic structure.
However, in some situations, a flat structure can be successful in executing as well. For a flat organization to execute the vision of a founder reliably, the organization needs to be relatively small and easy for a founder or leader to oversee the entire operation. Depending on the energy level of the leadership team, it may be easier to run things through bureaucratic channels.
A high-energy team could get the same quality of execution in a flatter structure, but the risk of a failure in proper execution is higher.
Example of a flat organization
A flat organization has very little hands-on management and gives equal power to all members of an organization. Another term for a flat organization is a self-managed business. An example of a flat organization is the game company Valve Corporation. No titles are given to employees and no projects are assigned. Projects are all open and developers choose what to contribute on.
Example of a tall organization
Tall organizations are usually reserved for large corporations with complicated hierarchies. Senior executives are at the top with clearly defined roles assigned at each level. Government agencies are an example of tall organizations.
Is there a perfect organizational structure for every business?
Part of the beauty of building a new organization to accomplish a goal is that you're free to experiment. While the risks bring with them both potential financial loss and reward, trying new things is what has made the entrepreneurial spirit so resilient in even the roughest of economies.
Focus on core competencies; understand employee strengths and empower them to execute on those strengths. You'll be surprised at how powerful a team can be when their unshackled from a restrictive process and chains of command.
There needs to be clear leadership, but if you hire the right people, you'll simply need to point the ship in the right direction and everyone will pull together at the oars to build a killer product or solution.