Flat Organizations: Why Companies Do NOT Need Middle Managers

Although the horse won the race, the demonstration of the new innovation turned out to be successful. After all, Tom Thumb was easily able to pull quickly away from the horse until the mechanical breakdown caused the locomotive to lose power, allowing the horse to win the race.

I promise I’m going somewhere with this.

Even though the horse-drawn carriage won the race, we all know now that the steam engine turned out to be the future of travel.

Tom Thumb reminds me of the contemporary discussion about flat organizations.

What are flat organizations?

Let’s ask Wikipedia:

"A flat organization (also known as a horizontal organization or flat hierarchy) has an organizational structure with few or no levels of middle management between staff and executives. [...] A "strong form" of flat organization is an organization with no middle management at all."

Let’s talk about this "strong form" of flat organizations, i.e., companies that organize without middle managers.

In contrast to what many people think, flat organizational structures are not a novel concept recently conceived by savvy tech start-ups in Silicon Valley. It is instead the opposite.

The concept of flat organizations feels as old as the Road to Rome. Still, although relatively small in size, organizations like Semco, BSO, and Morning Star have all thrived with flat organizations in the previous century.

Disclaimer

A quick disclaimer: I'm undoubtedly biased about flat organizations, mainly due to my previous work experience with a horrendous middle manager. However, that doesn’t mean that I'm writing this to do some random manager-bashing, as fulfilling as that would probably be.

And to be clear, I'm not against the phenomenon of middle management in general. I'm especially not against the people that fulfill the middle ranks in hierarchical companies. In fact, I'm sure there are plenty of great middle managers around that do very valuable work. I'm also sure the companies they work in benefit considerably from their genuine efforts.

So yes, I agree, middle managers can be helpful for companies. But just because something is functional doesn't mean it is also the best or most efficient thing to do.

Just as horse carriers can still take you to your destination these days, middle managers can still add value to your organization. It’s just not ideal.

Rebelling against false claims

Just as people quickly understood that iron horses were vastly more effective than horses, pioneering organizations understand that a company run on a flat organizational structure is considerably more effective in a digital technology-dominated world rather than one run on a multi-layered organizational structure including several levels of middle management.

But just like the people back in the day who doubted that Tom Thumb would beat the traditional horse-drawn cars, there are now loads of skeptics who doubt companies can function adequately without middle managers. Among them are respected writers and thinkers like Bartebly, a columnist at The Economist.

I rebel against the false claims of the skeptics, non-believers, and doubters who argue that companies need middle managers to be successful. I rebel against those who portray flat organizations as false utopias ruled by petty tyranny due to a supposed leadership vacuum.

Why? These false claims ignore—intentionally or not—real-world, compelling, and well-described evidence that clearly shows the opposite.

Real-world examples

There are plenty of examples of real-world companies—large and small—with a flat organizational structure.

Let me illustrate my claims by highlighting just four of them.

1. Buurtzorg

The perfect go-to example for all flat organization fans is an organization called Buurtzorg. This Dutch healthcare organization employs about 15,000 people, yet no middle manager can be found there.

Does this pique your interest? Check the animation below and find out how they work.

2. Viisi

Critics often treat Holacracy and flat organizations as if they were one. They then argue that flat organizations are dysfunctional by highlighting holacratic companies that have run into problems (most notably, Medium).

However, this logic is flawed by conflation, as they have falsely merged two different things (Holacracy & flat organizations). Holacracy is just a commercial tool that facilitates organizations to organize without middle managers.

However, companies that move beyond Holacracy show that they can be highly successful. Take the Dutch financial firm Viisi. They have no middle manager in the firm, yet they were recently awarded as the best place to work in Europe! That’s some compelling evidence, right? (Zappos is another example of a firm moving successfully beyond Holacracy.)

Curious again? Check the video below to learn how Viisi works without middle managers.

3. Haier

Critics typically say, “That is nice that it works in The Netherlands, but that is just because the country scores low on the power distance dimension, blah blah blah, and blah, plus more blah.”

Sure, this low power distance stuff might make it easier for Dutch companies to be flat. But this doesn’t mean there are no examples to be found in other parts of the world.

In fact, the most prominent example we know of is Haier, which is based in China. (Another example can be found in Russia with a supermarket chain called VkusVill.)

Check the video below to learn how Haier works.

4. Ner group

Flat organization critics also typically say, “Those examples are nice and all, but these are just outliners; lucky shots. This only works for them. They are special cases. This will never work in my company because of this or that. Because we are special.”

The ner Group in Spain shows the exact opposite. They proved that all kinds of different companies could turn themselves into flat organizations without any middle managers.

Find this hard to believe? Check the animation below for more details.

Misconceptions

As I wrote above, there are many misconceptions about how firms without middle managers work in practice. It is, for example, often claimed by critics that these firms are both structureless and leaderless.

They argue that these firms must be in complete chaos and anarchy due to the alleged leadership vacuum or that the firms must be run by informal cliques and "soft power" of the most popular employees.

But practice (and our animations) show something completely different.

Structureless Structured

Although these companies operate without layers of middle managers, that doesn't mean that these companies thrive on chaos, anarchy, and mayhem. It's actually the opposite. Our animations clearly show that these firms are still structured and ordered.

After their radical decentralization efforts, they all implemented clear organizational structures, frameworks, and mechanisms to avoid chaos.

Leaderless Leaderful

The fact that flat organizations run without middle managers doesn't mean that the firms are leaderless or bossless. Flat organizations are not the opposite of hierarchy whatsoever.

First of all, these unconventional companies still have a group of top managers who possess the type of formal authority found at other organizations. This means that a flat organization still has a flat hierarchical structure.

So, technically there is still a hierarchy. A flat hierarchy, admittedly.

It’s just that the span of control of the top manager is extensive. In fact, as we saw in the animations, the ideal manager-to-staff ratio can run up to 1:thousands.

Also, the fact that there are no middle managers in the company does not mean that there are no leaders present. I would instead argue the opposite: Flat organizations are full of leaders. They are not leaderless, but leaderful. However, these natural leaders do not have formal authority over the people they lead.

The future is flat

The misconceptions from flat organization critics are based on an outdated management view rooted in the previous century.

The management challenge of the previous century was all framed around trying to solve the problem of command and control. Many believed we could rectify this by creating hierarchical companies full of middle managers run by top-down management.

But these traditional beliefs are increasingly challenged and catalyzed by the business challenges created by the COVID-19 crisis.

The rise of remote work during the pandemic should have been the canary in the coal mine for many traditional companies.

They should now all realize that many employees have tasted the sweet, sweet nectar of their sudden freedom and will increasingly demand more autonomy at their workplace as time goes on.

This means that management challenges will gradually shift from trying to solve the problem of command and control to the problem of freedom and trust.

Companies should no longer ask themselves how they can best control their people who have to do the work dictated to them. Instead, they should ask themselves how they can provide their people with the freedom to do their best work.

So, there is no doubt in my mind that the future of flat organizations is very bright. Conversely, it seems that the future of the traditional middle manager is quite bleak.

Become flat yourself

Are you eager to learn more about the four flat organizations discussed above? Are you keen to know what you can learn from these companies to become flat yourself?

Well then, check out the 6-week course in our Corporate Rebels Academy.