Flattening Your Organisational Structure for Greater Agility

Thailand is poised to become a regional leader in the post-COVID world but faces significant challenges due to cultural and structural issues that affect management styles. Compounding this challenge is the fact that Thailand is quickly becoming an ageing society whose shrinking workforce is leading to a scarcity of young talent. 15% of the population is already over 60 years old – a number which is expected to rise to 25% by 2030. Businesses nationwide must change how they are structured and run to attract the most talented workers and retain them.

Employees in our post-pandemic social media age have new values and perspectives which businesses must learn to accommodate. For reasons of culture and overall efficiency, we are beginning to see a shift across the private sector towards a flat organisational structure. Within such a system, distributed, decentralised work leads the way, leaving behind the rigid and traditional hierarchies of the past. It is, therefore, worth understanding the underlying issues that limit the effectiveness of a top-down hierarchical structure and why flat organisations show such promise moving forward.

The rise and fall of top-down management

The hierarchical structure of most companies resembles a pyramid. Power and decision-making flow down the ranks from the head of an organisation, filtering through Team Leads and then down to the front-line staff. This method is often called command and control or “autocratic leadership.” The key benefit of this approach is that its centralised decision-making allows for “big-picture” thinking. The company vision is decided at the top, its strategy is filtered down, and subordinates are tasked with implementing decisions made by their leaders.

However, hierarchical structures discourage employees from taking initiative. As workers are conditioned to do as a centralised authority tells them, they grow accustomed to waiting for instructions – resulting in bottlenecks and slower decision-making processes. Even worse, top-down decisions are made by those who are furthest removed from the front line of the company, where the actual interactions occur with customers and partners. Inevitably, the high-level decision-makers have less hands-on experience than the employees they oversee, and their instructions will reflect this lack of expertise.

The new generation of workers demand more autonomy and expect to be trusted by their leaders to take initiative. They are prepared to use their skills to help achieve the company vision, but they first need to feel like valued stakeholders whose decisions carry real weight.

By contrast, top-down decision-making teaches passivity, which damages employees' morale. Treating workers as pawns rather than partners in a shared mission is bad for company culture. Over time, leaders internalise this power differential and begin ignoring employee ideas, often hindering trust relationships in doing so.

In many cases, companies go out of their way to hire the best staff they can find – only to ignore them after they arrive. As technology improves and automation accelerates in the years ahead, companies will require more qualified and specialised workers. It makes it even more important to listen to their employees' ideas and utilise their entire talent pool more effectively.

Flat organisational structure and its benefits

A flat organisational structure means few or no levels between management and staff, allowing for greater autonomy among all employees to achieve the company's stated goals and objectives.

At its core, a flat organisational structure promotes individual project ownership over defined tasks. It encourages staff at all levels to perform in the company's best interests based on their position while utilising their unique skills and perspectives to find creative and efficient solutions that move toward the larger goal. A flat organisational arrangement allows for maximum flexibility, as top-down management structures are often not quick or agile enough to deal with rapid shifts in circumstances.

Today's workforce, especially members of the younger generation, tend to be more ambitious and better educated than previous generations. Companies should try to harness their skills by providing more opportunities for assertive employees to effect meaningful change. A flatter organisation structure elevates the responsibility level of employees within the organisation, leading to a greater sense of purpose and self-worth.

In this way, flattening the structure leads to a “cell-structured organisation,” as largely independent cells of people work together to achieve specific goals. These groups work in tandem with other cells within the organisation, improving overall coordination and communication between team members, which solves the bottleneck problem affecting hierarchical structures.

Keep in mind that such increases in efficiency and productivity will not spring up automatically; personnel must be trained in the dynamics of a flat organisational structure and made aware that intelligent decision-making will always be rewarded and encouraged even if the eventual outcome is not always successful. The cultural shift toward flat operations is just as essential as the structural shift; without both transformations occurring together, employees will not take ownership or initiative. Only through careful communication and training can a team learn to play by new rules.

Business in a changing world

Given the expected volatility of the post-pandemic business environment, companies can no longer afford the time lag required to move issues up and down the chain of command. Individual cells within the company must have the ability and autonomy to react swiftly to rapid changes, given their specialised understanding of the issues that arise. Flattening the organisational structure allows companies to adapt to changing circumstances more efficiently, which is important for business resiliency moving forward.

Post-pandemic, the need for creativity and speed are paramount. Due to internal limitations, the top-down hierarchical structures of the past will struggle to remain nimble or agile enough to deal with sudden changes in the business environment. A flattened or cell-based organisational structure can insulate the company from risk while meeting the needs of a younger generation of employees who are hungry for self-determination. Flat organisations let educated workers use their skill sets to react quickly to change and implement a company's vision more effectively.

As companies automate more of their tasks, they can focus on hiring more qualified, independent-minded workers who are well-equipped to achieve defined objectives without the need to "follow the chain of command". Advancements in technology also allow managers at the top to review each cell's performance, reducing the need for direct day-to-day oversight.

Staying on track

Although flat organisational structures can bring massive potential improvements, even a successful transformation will not solve all problems. Flat organisational structures bring their own pitfalls, notably concerning bad decisions under the guise of expertise and limits on scalability. Cell-based operations can also lead to power struggles, given the lack of a clear chain of command. Work-life balance issues may also need to be addressed, as all staff are more responsible for, and connected to, organisational objectives.

In addition, remote work and decentralisation make it harder for company leaders to observe and assess employee performance. This difficulty could result in more passive monitoring and a desire to implement more traditional performance evaluations. Intelligent staffing, as well as a clearly defined and communicated organisational vision, can help mitigate these risks.

Despite these challenges, flat organisational structures are best suited for success in a world marked by the current pandemic, the rise of automation, the push toward remote work, and the ageing society. To facilitate your shift to a flatter organisation, contact Grant Thornton today.