7. Literature Review Insights
Insight 1: Changing the structure is vital for companies’ success
Society is changing and the traditional hierarchical structure is not responding the challenges posed by the current digital and competitive era. Being flexible, fast and adaptive becomes impossible with bureaucratic processes, slow innovation process and ideas being shared from the top downward.
Considering this scenario, for traditional hierarchical companies to become competitive, they need to change the way they are working. The starting point should be re-designing their structures since organisational structure and design determines how companies will perform. According to Krut (2012) “spontaneous structures have a better ability to meet the needs of the firm and spur innovation”. (Krut, 2012)
Insight 2: Centralization of decision-making makes companies bureaucratic and less creative
Empowering people to take their own decisions is the biggest step for a less bureaucratised company. Self-managed teams proved to be more productive and agile when compared to hierarchical system. They have higher performance — productivity, pro-activity and customer service — and higher attitudinal outcomes — job satisfaction, organisational commitment and team commitment (Zárraga & Bonache, 2005). The less competitive environment also allows people to share knowledge between each other which helps everyone to develop new skills.
Centralising the power of decisions only on top and middle managers has shown to be a trigger to less creative companies. This is because on hierarchical systems “creative ideas stand little chance of being utilized unless they’re being shared from the top downward” (Boynton, 2013). This is a logical process: if companies concentrate the the ideation process on leaders, they will listen to the opinion of the less representative part of their company and consequently they lose the opportunity to listen to the majority of employees. In addition, the bottom of the pyramid should be the most important to be listened since they are the ones facing the daily problems and are closer to the final consumer.
Insight 3: Leadership is still needed in a transitional process
Leadership is the biggest dilemma when talking about self-managed teams and flat structures. While each individual of a self-managed team can be trained and coached to become self-managed (Laloux, 2014; Thibodeaux, 1994), some authors (Baker, 2015; Markova & Perry, 2014) consider that in a structure with no leaders, a natural leader can emerge. This can cause internal conflicts on teams that were structured as equal since any leadership was formally considered.
With that problem in mind, there are two alternatives solutions that divide authors opinion. The first alternative consider a shared leadership among the group, an idea defended by authors like Drescher, Korsgaard, Welpe, Picot & Wigand (2014), Meisel & Fearon (1999), Barnett, & Weidenfeller (2016), Heffernan (2015) and Hoch & Kozlowski (2012) or facilitation and external leadership within the team (Laloux, 2014; Morgeson, 2005). Both solutions do not consider a formal leader in the structure, just a temporary leader or rotating the leadership among the people. The problem with this approach is that a leader still can emerge in this dynamic. The process of becoming self-managed is not fast and the group would still need a lot of support, support that they will not have without a formal leader or coach.
The second approach considers a leader in a self-managed team. The role of the leader in this case should not be seen as a traditional leader. According to Meisel & Fearon (1999), a leader in a flat structure act supporting and integrating the self-managed individuals, is responsible for the team’s maintenance and is responsible for keeping the group’s culture in place. Leaders act more as a coach (Laloux, 2014, p.69), supporting individuals to find their own solutions. One problem related with this approach that the group creates a dependency on the leader, hindering them to become truly self-managed.
By incentivising practices such as shared leadership among the group, leaders on flat structures can decrease the dependency on them. Coaching individuals to be more independent is essential in a self-managed team and it is the leader’s role to coach employees to become leaders themselves (Barrueto, 2015). The dependency on a leader will naturally be high in the beginning of the process but should not be until after some time spent coaching and practicing. On the other hand, leaders are still essential to keep the group’s maintenance and to keep the culture in place. If no one is responsible for that, often groups can lose their cohesion.
Insight 4: Some principles that should be considered when leading a flat structure
There are some important principles that should be considered when leading in a flat structure. This should not be seen as a rule to be followed. Those principles were based in the above literature review and aim to support leaders to establish a healthy relationship with the group, considering ‘best practices’ when leading in a flat structure.
- Enabling and incentivizing trust and collaboration among the team;
- Encourage all individuals to participate with their points of views on discussions;
- Estimate and appreciate people’s opinions;
- Celebrate and appreciate diversity;
- Align the company’s culture to flat structure and individual’s values;
- Incentivise and spread leadership ethics on a daily basis;
