Today’s post is written by Workforce Institute board member Natalie Bickford. Here she explains the merits of flatter organizational structures for leaders in search of productivity gains.
There is hardly an organization in the world that isn’t searching for additional productivity gains. With minimum wage rises pushing employment costs up, business running costs on the increase, and consumers watching their spending, we all need to focus on reducing costs and delivering more for less.
One area to take a good look at for these savings is in our organizational structures. Over time, and rarely by design, our organization hierarchies have grown taller and thinner.
We want to recognize a highly-valued employee, so we create a “senior” role and put them in charge of a few of their colleagues. Or we find that we are lacking capability in a certain layer of the business, so instead of dealing with the capability gap, we create a new supervisory layer to compensate for the weakness.
We play this game over a number of years, and voila, we eventually step back and find that we have created an over-layered, dysfunctional organization with more cost and less accountability for every layer of management. This can also cause confusion for our employees, who are not entirely sure what they are responsible for or who gets to make what decisions.
To be fully engaged at work, employees need to have space to perform, i.e. discreet decision making authority. Having somebody whose only role is to supervise what you are doing, is dis-empowering. Likewise, sitting alongside colleagues who feel that they share the same responsibilities with you is confusing.
So, how to assess whether our organizations are healthy?
The first thing to review is how many layers of management sit in-between the CEO and the very frontline roles of the business. There is hardly a business in the world that would require more than seven layers of management (however big and global it may be), and for the significant majority it should probably be less than five. Every layer of management that you add takes the c-suite further away from their customers. Every layer of management creates work, process and policy, in a bid to “add value”. So the more layers you strip away, the quicker the decision making will be, the clearer the consumer feedback will be heard, and the more the corporate bureaucracy will be reduced.
When looking at the layers of management, you should be asking yourself where the overlaps are with the level above and the level below. When you find overlaps, remove them, taking the opportunity at the same time to broaden out the spans of control for the remaining leaders. One-on-one, or one-on-two reporting lines should always be a target area for review.
I would also recommend starting this review with the frontline roles and working backwards, continually considering what genuine and discreet value each subsequent layer is adding to the layer below, to the consumer, and to the delivery of the business strategy.
It sounds simple, but it is very hard for us to step back from the organizational structures that we have lovingly watered and grown over the years. But, as with the garden, every now and again, you need to give everything a significant cut back. It might feel brutal in the moment, but the plant almost always grows back stronger and more robust the following Spring!