For years, companies have followed a linear top-down management model, but that approach is quickly becoming outdated. Business leaders today favor a more flexible structure, and have seen that workers are more productive and innovative in an autonomous work environment.
The traditional, linear organization chart has its roots in the birth of the Industrial era in the U.S. in the mid-1800s. At the time, large companies, like railroad and oil conglomerates, needed a way to create order and delegate responsibilities with limited technology and communication.
Leaders at the top delegated to and managed a layer of middle managers, with frontline workers rounding out the bottom. This pyramid structure attracted criticism for creating layers of bureaucracy that stifle efficiency, productivity, and speed.
That approach is becoming obsolete as technology revolutionizes how people work. Today’s workforce has more flexibility in how, when, and where they do their jobs, and companies are engaging more freelancers who can add value while working remotely.
Tech Companies Lead The Way
The booming technology industry is leading the change in how companies manage their talent.
Flat organizations are becoming more common as companies recognize that removing a rigid chain of command and empowering workers to make their own decisions increases productivity. Employees and freelancers are encouraged to voice their ideas.
Companies like Google Inc. and Valve Corp. have moved toward a flatter org structure, allowing workers to make decisions and have direct access to top-level executives. A 2015 study by economics professors at England’s University of Warwick showed that happy workers are about 12% more productive.
Valve Corp., a Bellevue, Washington-based video game developer, was founded in 1996 with a management-free culture. “Welcome to Flatland,” reads Valve’s new employee handbook.
“We do have a founder/president, but even he isn’t your manager,” the handbook explains. “This company is yours to steer—toward opportunities and away from risks. You have the power to green-light projects.”
Independence Leads To Better Performance
Online shoe retailer Zappos in 2013 moved to a self-management system called a “Holacracy,” replacing managers with self-directed “circles” or teams and traditional job descriptions with a fluid approach of people filling several roles.
“When companies get bigger, innovation or productivity per employee generally goes down,” said Tony Hsieh, CEO of Zappos in a blog post. Holacracy “enables employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do.”
A study by Texas A&M University and the University of Iowa found that factory workers in self-managed teams performed better than those in traditional roles.
Still, a flexible organization chart doesn’t have to be flat. The goal is to create a dynamic and adaptable work environment.
When creating an organization structure, every business should consider:
- Are you empowering every employee and contingent worker to contribute and voice their ideas?
- Who makes decisions? Is the company more like a democracy or dictatorship?
- Do layers of management hamper communication and quick decision making?
- Do workers feel invested in the company’s success?
When companies adopt a fluid structure, workers move with ease among different roles and responsibilities. These companies set themselves up for success in utilizing freelancers to provide niche expertise and help the companies scale up and down as needed.