Flat management: does a no-manager policy really work?

Sep 11, 2020

6 mins

Flat management: does a no-manager policy really work?
Joanna York


At the age of 22, Michele Rees-Jones got her first promotion to a managerial role. Over a decade later, she was head of marketing at digital health company Mayden and had built her professional life around “really traditionally climbing the career progression ladder”. Then, as she was about to return to work from maternity leave, a senior colleague invited her to lunch to share some big news: the company was switching to a new style of organization. A system with no managers: flat management.

“I just thought, ‘Oh, crap,’” she said. “That’s 15 or 16 years of my professional identity just gone. Suddenly, I was nothing. I didn’t have a job title at all.”

Flat organization is a way of structuring a business without relying on managers. If the traditional work hierarchy is a pyramid, with employees starting at the base and progressing upwards through different layers of management throughout their career, flat organization aims to remove as many of those layers as possible.

Dutch nursing provider Buurtzorg, for example, is famously flat. It employs more than 10,000 nurses and assistants, 15 regional coaches, one CEO, and no managers—in the traditional sense—at all.

One of the original pioneers of the flat concept was Brazilian businessman Ricardo Semler, who dramatically fired 60% of all the managers at Semco when he inherited the company from his father in the 1980s. He has since experimented with other democratic management systems such as letting Semco’s 3,000 employees set their own salaries. At the heart of these experiments is a fundamental culture shift away from top-down management, and a desire to empower employees to make their own decisions.

It’s a concept that resonated with Alison Sturgess-Durden, director at Mayden—and the colleague who took Rees-Jones to lunch. “The way that hierarchy works is that you manage work by managing people. But, at the end of the day, it’s the work that needs managing,” she said.

“If you follow the premise that most people can manage themselves—because we all do, because we’re adults—then why, when they get into the workplace, do we think that people can’t do that?”

‘I have the freedom to work on whatever I want’

Flat organization has found a natural home in the tech sector. In 2002, Google became one of the first Silicon Valley companies to experiment with removing middle management. A decade later, video game developer Valve was widely praised for its flat model, which included quirks such as desks on wheels to make colleague collaboration easier and a pay system that involved staff assessing each other’s skills. And in 2013, online retail giant Zappos publicly adopted a holacracy model to encourage “purpose and agility” among staff.

Zack Topuzov works for fintech company Smarkets. He acknowledges that the company’s flat system relies on adaptable, flexible employees.“When you wake up on Monday morning, you’re gonna have 1,520 emails, and 10 of those you’re probably not going to expect because something happened over the weekend or something new came up,” he said. “But I think tech attracts those types of people.”

“Engineers generally think managers are at best a necessary evil, but mainly they get in the way, create bureaucracy, and screw things up.”

In this context, employees need to be adaptable, motivated, interested, and able to advocate their ideas. All qualities that tech teams, many of whom use agile methodology, are well-versed in. Agile methodology follows 12 widely followed principles that aim to streamline production and organize tech teams, one of which states: “Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done.”

For tech companies, the concept of flat organization and self-management often originates with an agile software development team and then seeps into wider company culture. For Topuzov, who works as a finance manager, this means a unique position of “freedom to work on whatever I want”, as long as it is productive, and in pursuit of the company’s overarching goals.

“If you have an idea, people will say, ‘Let’s work on it together, or what do you need? Or go ahead and do it’,” said Topuzov. “The only time people push back on an idea is because they think that it’s counterproductive or counterintuitive to [a] goal.”

And so, the workforce organizes itself. And, if a company is full of self-motivated, collaborative employees, what do they need managers for?

This is the question Google was asking when it conducted its experiment into removing middle management. As Laszlo Bock, Google’s former senior VP of people operations, said: “Engineers generally think managers are at best a necessary evil, but mainly they get in the way, create bureaucracy, and screw things up.”

‘Some people really thrive on having a manager’

The lack of management left a power vacuum that was filled by social structures which empowered only the most popular staff.

Google’s decision to remove middle managers didn’t stick. They were reinstated, and in 2008 the company ran Project Oxygen to try and understand the role managers really played in their teams. Far from finding managers to be irrelevant, the study found that good managers are invaluable.

For Zappos and Valve, results were mixed. Years after Valve was praised as a pioneer in flat organization, employees came forward and claimed the concept was a sham. The lack of management left a power vacuum that was filled by social structures which empowered only the most popular staff. Ultimately, working at Valve “felt a lot like high school”, said one former employee.

“Everything seemed to take an age, which was not good for a go-getter like myself.”

At Zappos, too, many staff were unenthused about working in a flat organization. In 2015, when the controversial shift in management structure was announced, 200 staff —14% of all employees—took voluntary severance rather than make the change.

Flat organizations can fail for a number of reasons. Matthew Dailly, now managing director at Tiger Financial, found them frustrating and unproductive. “Everything seemed to take an age, which was not good for a go-getter like myself,” he said. Dailly finds hierarchical structure more efficient. “Having someone to lead a team of people, or a section of the entire team, means that you can have questions answered quickly.”

“Heirarchy is important to make tasks clear.”

Erik Rivera, CEO of telehealth company Thrivetalk, found his staff weren’t keen on the “no boss” approach. It lowered work quality and they became unclear about their responsibilities. After their feedback, Rivera decided to return to a macro-management structure—a balance between giving staff direction while being “as hands-off as possible”. Productivity and morale have since improved. “Hierarchy is important to make tasks clear,” he said.

When Rees-Jones returned to work after maternity leave, she was keenly aware that a flat model might simply be too challenging. Some people really thrive on having a manager. They feel safe with what they’ve known,” she said. “Being told, ‘Right, you’re responsible for your own decision-making’, but having nothing in place is horrendous for some individuals.”

‘I wouldn’t want to be a manager ever again’

What convinced Rees-Jones that a flat model might work was its emphasis on ideals that resonated with her work style: taking responsibility, a strong team ethos, and collaboration.

Another aspect that she feels works well at Mayden is the coaching scheme. Rees-Jones is a coach and she also has one herself. In fact, everyone has a coach within the company, even the founding director.

This differs from having a manager, she explains. “It’s very much more about working on an individualistic basis and making the most of your talent and your skills in the business that you’re part of.”

Rees-Jones believes that this works because coach-coachee relationships are strictly confidential and objective. Staff are encouraged to choose a coach who they don’t already know or work with directly. Coaches are not there to tell staff what to do. Instead, they help employees find their own solutions.

The coaching model won her over. “I couldn’t go back,” said Rees-Jones. I wouldn’t want to be a manager, in the traditional sense, ever again.”

‘You will need to find other ways of organizing work

There is another reason that flat organizations may start to appeal to more companies: recession.

What leads companies to test flat organization? In Mayden’s case, it was the desire to shift company culture. For Smarkets, the initial driver was productivity. In fact, Rees-Jones said that Mayden’s flat model had helped the company weather the Covid-19 crisis. “None of us have been in the office together in months, and we’ve maintained our productivity,” she said.

And Topuzov has certainly felt the benefits. At Smarkets, he explains, “I’ve been able to learn, and do so many things that I wouldn’t have otherwise. Now I’ve tasted that I wouldn’t want to go back.”

There is another reason that flat organizations may start to appeal to more companies: recession. Cutting middle management salaries is an undeniably quick and effective way to respond to sudden budget cuts, as many Silicon Valley companies realized in the wake of the 2008 financial crisis.

A changing workforce may also naturally favor less management. In a PWC study, 65% of millennials surveyed said they felt rigid hierarchies and outdated management styles failed to get the most out of younger members of the workforce.

For companies considering a switch, Sturgess-Durden says it takes time and dedication. “You will need to find other ways of organizing work,” she said. “And it requires a huge shift in culture and attitude, all of which requires new skills as well as a new mindset from employees.”
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