How flat should the organisational structure be?

An autumnal hat tip to Jill McAloon for recommending this superb edition of The Bottom Line (first broadcast on 3 Nov 2011) which spends the last 10 minutes considering the value of businesses having flat organisational structures.

Joining Evan in the studio discussion are Mike Roney, chief executive of business supplies distributor Bunzl; James Reed, chairman of recruitment specialist Reed and Nicola Shaw, chief executive of HS1, the fast rail link from London to the Channel Tunnel.

The piece on flat organisational structures begins at 20.00 into the programme. I jotted down some brief notes from the discussion (below). There are some great “depends on” points made - ideal material to show students the value of evaluation!

Well worth asking your students for their thoughts on the points raised - a good way for them to revise organisational structures if they have already covered it.

Bunzl:
A big company
5 layers between the CEO and someone having constant contact with the company
Depends on the nature of the business and their decision-making structure
Quick decisions - better to be fat
Complex, risky decisions - tall likely to be better

Investing in systems allow you have fewer layers + standardising structures across different business units
Reed - more of a cellular organisational structure to provide better employee empowerment

Hierarchy is associated with bureaucracy

Flat is good - but in some situations you need layers to make proper decisions

Still important for senior management to have contact with customers

Managing by wandering around (MWA) - important for the CEO to get out and see the operation in action

Layers of hierarchy closely linked to the leadership style of senior management & the culture of the organisation

If you really need to get things done quickly, then an autocratic approach can be pretty effective (top-down direction) rather than a collaborative approach

The aim is to be as flat as possible - but not always possible.