Death of the boss pronounced? Check out what the future has for you

Lakshmi Menon works as an "executive’’ in the marketing and communications department of her IT-service company. To reach her chief marketing officer (CMO), she has to follow a procedure which entails first seeking solutions from her immediate boss, whose designation reads "senior executive’’ and then the next boss, namely assistant-manager, followed by the manager, "group head’’, "vice president (VP) and then finally the CMO. 

For 25-year-old Menon, this hierarchical ladder is reflective of a complex structure that ultimately works to prevent an "executive-CMO’’ interface. She says such rigid structures demerit any talk of employee engagement or open-door collaboration, especially in her MarCom team that is only 12 members strong.

Menon’s grievances open out a key question of the millennial generation – should companies adopt a flatter, non-hierarchical structures to engage better with employees?

"Flatter systems have certain merits,” says P PremKumar, SVP and head –HR, Lakshmi Vilas Bank.
Experts say flatter systems carry a number of advantages, especially in today’s era of remote workplaces and flexi-working.

Firstly, non-hierarchical structures help to avoid supervisory role, resulting in huge cost savings for the company, says Kumar. "It improves employee engagement, effective communication, quick decision-making, transparency and instils a higher degree of responsibility in the employee,’’ says PremKumar.

Furthermore, employees in flat structures gain in greater visibility, with their work gaining better recognition, says Shreyans Solanki, group head – HR, CASHe. “Such systems also carry a better response time which is integral to an organisation’s ability to win customers, both external and internal.”

Globally, Google, software developer Valve, and Tata Motors back home are amongst the many companies that have "flattened out’’.

But experts feel non-hierarchical structures are more workable in start-ups and organisations with limited headcounts.

Sriram Vaidyanathan, chief human resource officer, BankBazaar.com, says flatter systems are the hallmark of start-ups, which have little room for formalities and hierarchy. “The number of challenges and the frequency with which they surface are much higher in a start-up as compared to established companies. This provides employees with many more opportunities to contribute, make their mark and grow. So having a flat organisation makes sense.”

But as organisations grow, rigorous hierarchies invariably come into play. “Large organisations have taller structures for administrative purposes as one individual cannot monitor thousands or lakhs of employees. However, even such organisations tend to follow flat structures when it comes to employee communication,’’ says PremKumar. 

But experts say in bigger organisations, a pyramid or matrix structure of reporting is essential as, without hierarchy, any boss could get overwhelmed. Companies like web-hosting service GitHub and online shoe retailer Zappos were one of the earliest to adopt and later abandon the 'flat structures' as it impeded their growth. In fact, post a flat structure, 14% employees of Zappos left the company. 

International best practices in HR mandate having no more than 10 direct reportees per boss. Having more than two handfuls of individuals reporting to a manager can cause chaos on deliverables, accountability and delay decision-making, say experts. A Deloitte study on Global Human Capital Trends found that only 14 percent of executives believe their organisations were ready to redesign in an effective manner.

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A flat structure in a large organisation could also be disadvantageous to employees, as the employee could be at the mercy of a single manager and will also ‘’fail to get a more rounded feedback, guidance and mentoring; all of which is essential,” says Solanki, adding that however today, ‘’most organisations ensure an individual does not have more than two supervisors to retain focus, accountability and simplicity.’’

MATRIXED TO FLAT
Non-hierarchical structures help to avoid supervisory role, resulting in huge cost savings for the company

Flat structure may turn disadvantageous, as the employee could be at the mercy of a single manager

Source: DNA Money