EVERY LARGE the company has a boss and minions, who do most of the work. What comes between the corner office and the workshop is a matter of management preference. The organizational charts of some companies are imposing thousand sheets, with staff crammed into rigid hierarchies crammed with assorted supervisors. More fashionable lately has been the pancake flowchart: fewer layers of workers reporting to a smaller group of chefs. As attractive as such “flat” organizations may seem, thinning out senior positions comes at a high cost.
Enjoy more audio and podcasts on ios Where Android.
Vice-presidents, zone supervisors and other department heads were once the central cogs of the corporate machine. Now these middle managers are being ridiculed like a pound store CEOs, there in large part to organize and attend unnecessary meetings. A few trendy startups present themselves as having no administrative level, letting freelance employees move from task to task as they see fit. Such holacracy, as it’s called, clearly won’t do Unilever or Goldman Sachs. But even big companies now ritualistically boast of “delaying” their ranks.
Flat organizations are meant to reflect the modern workplace. The businesses of past generations were highly hierarchical to emulate the armed forces, which the bosses of yesteryear remembered as a place where missions were accomplished. Starting at the bottom of a pyramid, maybe six or seven rungs below the top ranks, wasn’t so bad if you intended to progress in the same company throughout your career. Millennials and later Gen Z rookies had other ideas. Reporting to an overbearing boss reduced their ability to make an immediate mark.
Several factors have contributed to the “flattening” tendency. Businesses have found that having a lot of mini-barons can lead to mind-numbing silos. New ways of working, starting with modern technology, mean that executives can manage more subordinates, including from a distance. Add enough direct reports to each supervisor and the number of rungs between the CEO and the graduate intern decreases accordingly.
Supporters of flat organizations say they give every employee an extra responsibility: bosses with dozens of minions can hardly be expected to micromanage them. Clean organizational charts make businesses more agile, enable faster decision-making, and reduce start-up costs. Business titans like Elon Musk of Tesla, an auto company, have described delamination as a way to improve communication and get rid of corporate windfall.
It is clear that there are limits to what we can do. Not all Tesla factory workers will ask Mr. Musk for their annual review. In fact, any amount of ploy negates what it means for an employee to be part of a company. The key corollary, if not the enabling factor, of flat organizations is that every employee has fewer bosses. It will seem attractive to some workers.
Such absence of a boss, however, is a false utopia. Companies that have gone the farthest in removing managerial levels have found that getting rid of a formal hierarchical order results in informal hierarchies instead. A leadership vacuum risks being filled by petty tyranny. It’s inevitable when large groups of people spend time together, in the office or elsewhere, that someone finds themselves in charge (and often a lot of people end up in charge of different small tasks). It can be layers of managers set up formally based on their skills and background. Or, if everyone is on a holacratic tie on paper, it might be the one speaking the loudest in meetings.
Fewer levels means fewer people with day-to-day experience recruiting employees. Yet managing others is not an incidental task that companies do to achieve other goals. This is the prerequisite for achieving any of their goals. Sometimes skimping on the degree of supervision of each human resource does not matter. But there inevitably comes a time – for the employee or the company – when it matters a lot. Having many organizational levels means that those responsible for managing large numbers of people have had the experience of managing fewer people before.
The Covid-19 has already changed the professional lives of many people. Gone are the days of sitting in the same office as your coworkers every day. Many will adjust to the new managerial standard for some time to come. Keeping employees informed and engaged is therefore more important than ever. The layers of bumps provide the structure. For all the joy of bringing them down, middle managers are part of the solution.
For a more in-depth analysis of the biggest stories in economics, business and markets, sign up for Money Talks, our weekly newsletter.
This article appeared in the Business section of the print edition under the headline “Better Not to Squash”