What are the advantages of flat organizations

Career & Salary

computerwoche.de: Strictly measured breaks, no personal responsibility and tasks imposed from above, that is the prime example of classic hierarchies. What's the problem with that?

Geoffroy de Lestrange: Such a hierarchical order is based on the idea that there must be a distinction between role and task. That is an outdated view. Decision-making power and implementation do not necessarily have to be separated, because tasks are usually worse done if they are controlled by others. Authority and outside regulation rob every company of part of its potential.

computerwoche.de: Isn't it difficult for organizations if no one is assigned a leading role with decision-making power and instead everyone works as they please?

Geoffroy de Lestrange: Traditional hierarchical models with clear decision-making chains seem to have an advantage. Even in such an organization, teams can develop freely to a certain extent. When it comes to difficult decisions, there is always a responsible leader who gives the direction. If decision-making power is not distributed or allocated, organizations of a certain size have difficulties implementing ideas and projects. There must therefore always be a higher-level decision-making body to a certain extent.

In contrast to the conventional, hierarchical command structure, this can vary in flat hierarchies and is not so centralized in the form of specific people. Rather, leadership roles are distributed depending on the topic and project based on the respective skills of the employees. This brings about a change from locally bound departmental responsibility to locally relieved process responsibility. The collection of ideas and new impulses should generally be allowed to be generated separately from decision-making bodies by everyone in the team.

computerwoche.de: The word “flat hierarchy” can be read frequently, whether in job advertisements or on company websites. However, the status of managers is still high. How does that fit together?

Geoffroy de Lestrange: We are currently in a time of upheaval. The flat hierarchy stands as a new ideal on the one hand and the authoritarian organization with classic management staff who distribute tasks on the other. The latter has persisted to date because many managers believe that the transfer of responsibility and freedom to the workforce inevitably leads to anarchy. This view has been handed down in many places through years of habit, as if it were an irrevocable law of nature. But in the age of digitization, companies and their processes are changing so quickly and strongly that agile work has become almost mandatory. This is the only way to keep pace with the pace of technological progress. This is where flat hierarchies come into play. They promote agile work.

Agile leadership is a form of lean management

computerwoche.de: To what extent?

Geoffroy de Lestrange: Flat hierarchies enable shorter decision-making processes and thus a higher reaction speed. In addition, they devour less personnel costs, because middle management can be significantly reduced by redistributing responsibility to the employees. Agile corporate management is therefore also a form of lean management, as it minimizes waste, saves intellectual and material resources and optimizes the use of these. In a nutshell: flat hierarchies promote creativity and flexibility. Traditional decision-making concepts, on the other hand, are the ideal prerequisites for managing crises. Both models can contribute to the efficiency of companies in their own way. The key here is the mix.

computerwoche.de: How should companies approach the dismantling of hierarchical structures?

Geoffroy de Lestrange: Flat hierarchies should ideally only be established from one direction, namely from traditional structures to flat ones. Because it is much easier in a work organization with clear management levels and competencies to gradually grant individual freedom until a degree is reached that contributes to the optimal function of the company. It is important to find the right balance between management responsibility and independent employee development, that is the key to success. Startups, on the other hand, often lure young people with the promise of an open corporate culture. But when such startups grow, they realize that after a certain stage they need a leadership who sets the course. But that is often problematic, because embedding a hierarchical structure in an extremely relaxed and open company atmosphere often meets with incomprehension on the part of the workforce.

computerwoche.de: Why have companies found it so difficult to dismantle traditional hierarchical structures so far?

Geoffroy de Lestrange: Many companies only dare half a step with their open, flat corporate culture and neglect both the technical component and the role of performance management in cultural change. But increasing global networking naturally also increases the pressure to make decisions and the complexity that management has to deal with. All too often, the decision-makers still rely on the wealth of experience from old, analogous times.

Flat hierarchies also require agile corporate management. And this can best be managed through holistic SaaS solutions or cloud-based software for human capital management. Younger employees and sought-after high potentials in particular expect a high-quality feedback culture, for example. The young generation wants to track their personal development individually. Standardized "one-size-fits-all" solutions are not accepted by young people. The subject of performance management is consequently gaining in importance, but very few companies are aware of this to date. Many still carry out a one-dimensional performance analysis, which takes place only once a year, instead of regular 360-degree feedback discussions. However, employers have to come up with a uniform performance management system that no longer just manages the workforce but also takes them on a journey.

computerwoche.de: What do you think is the best way to motivate employees?

Geoffroy de Lestrange: Bonuses and promotions, i.e. financial means to increase the motivation and loyalty of employees, are a very popular means, but unfortunately only have limited effectiveness. Studies show that financial incentives only create satisfaction in the short term. Personal development, i.e. learning experiences and continuous improvement of one's own skills, on the other hand, create long-term motivation and satisfaction and ensure that employees stay in the company longer and are more productive. Companies should therefore concentrate on further training if they want to retain and motivate employees. The recently published study "Future Culture" by IDC in cooperation with Cornerstone OnDemand shows that 76 percent of the German companies surveyed still rely on financial incentives to motivate employees. Knowledge of the connection between motivation and employee development does not seem to be too widespread in the DACH region.

  1. Bonuses and recognition from the boss
    A good working atmosphere is the be-all and end-all for a company's success and employee loyalty. Reason enough, as the boss and HR department, to think about employee motivation. Benefit advisor Markus Sobau names the seven greatest employee wishes.
  2. Flexible working hours
    The desire for flexible working hours is particularly pronounced. Every second employee would like to be able to decide for themselves when and how much they work.
  3. Home office
    A third of employees want to work from home. If the employer pays the costs for the necessary infrastructure for working in the home office, the interest in working from home is even greater.
  4. More gross from net
    Despite all prophecies of doom, a higher salary motivates - preferably if it has a net effect. This can be done elegantly with a company card. Employers can transfer EUR 44 per month to this. The amount is available to the employee as a net benefit in kind. He can go out to eat with it, fill up his car or save the money. Such a benefit is worth more than a pay increase of 100 euros that has to be taxed.
  5. retirement provision
    Many employees would like the boss to help with their retirement provision. Companies should therefore offer a company pension scheme. For contributions that you transfer to the private pension of the employees, proportional social security contributions do not apply. If the boss puts this 20 percent on top as a subsidy, it is also a good investment in the working atmosphere.
  6. Health care
    If the health of its employees is particularly important to a company, company health insurance is a good tip. It saves the employee, for example, the expense of glasses, dentures or alternative practitioner treatment. Advantage for the employer: he can initially take out the insurance for one year, for example as a bonus for successful employees, and extend it later if necessary.
  7. Credit from the boss
    Due to their often large loan volumes and the necessary creditworthiness, companies receive favorable interest rates. They can pass these on to their people. The employee pays four percent to his boss instead of eleven percent overdraft interest at his house bank.
  8. Independent working
    Employees attach importance to the fact that bosses trust them and trust them to carry out the assigned tasks independently. In terms of an agile corporate culture, they want to independently develop tasks based on agreed guard rails such as sales, profit targets or product innovations.