As the business and employment environments change, many organizations are experimenting with a flat reporting structure for increased responsiveness to competition, as well as to "engage" employees. While the concept is good and valid, there must however still be hierarchy in a flat organization. Allow me to explain why ...
1. Span of control. As an organization grows, more employees are needed to cope with increasing business demands. While the boss may wish to exercise control over everything that is happening, he or she is only human and has only 24 hours a day and a finite attention span. Attempting to do everything not only slows things down (which is counter to the intent of having a flat organization), but also degrades the quality of decision due to the inability to devote full attention to everything that is happening.
2. Responsibility and Authority. Supervisors vested with the responsibility to ensure that their team achieve organizational goals must also be given the authority to manage his or her team via the "power" to reward and/ or punish. In a work environment where employees can freely by-pass the Team Leads and speak directly with the CEO, there is responsibility but no authority. The challenge arises when the employee begins to see the Team Lead as an obstacle and works around the Team Lead. In such a situation, the Team Leads will be ineffective and the organization's performance will suffer as a result of point #1.
In short, CEOs must acknowledge that they are only human and therefore have limitations when it comes to managing a growing organization. While it is addictive to be a popular boss, CEOs must ensure that their Team Leads are given authority matching their responsibility. Anecdotal evidence suggests that CEOs are oblivious to the damage they are causing and the difficulties they are creating when they allow employees to by-pass their Team Leads.
Flat organizations are important in today's economy and the strengths of a nimble and open work environment cannot be ignored. As is often the case, the devils are in the details and there must still be hierarchy in a flat organization.