Flat Leadership – myth or new reality?

Have you ever heard of a company without a boss? At first glance, you might think – that could never work. But what if we told you that such companies do exist and are thriving? In traditional companies, managers act as a bridge between leadership and employees. In a flat hierarchy, their roles often disappear or transform into facilitators of collaboration.

According to OneDirectory, up to 92% of companies are striving to transition to a flat organizational structure. This raises an important question – do we really need middle management in companies?

What is flat leadership? Never heard of it before.

A flat organizational structure (flat leadership) is a management model that eliminates unnecessary hierarchical layers. Unlike the traditional pyramid structure, where employees report to middle and senior management up to the executive level, a flat organization minimizes these levels. Employees thus gain greater autonomy.

TIP! Did you know that teams in organizations with a flat structure are 21% more profitable and have up to 38% higher employee retention rates? Companies with limited bureaucracy tend to be more efficient and more attractive to talented professionals.

Flat leadership vs. holacracy – what’s the difference?

You might wonder how holocracy differs from flat leadership. Simply put, flat leadership is a general management concept without traditional hierarchy, while holacracy is a specific model within flat leadership but with clearly defined rules and structure.

• Classic flat leadership = A more flexible organizational structure closely tied to company culture. Employees have greater decision-making freedom, and teams operate independently. However, the system varies from company to company.

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• Holacracy = is, on the other hand, a systematic approach with firmly established rules. Companies like Zappos and Medium organize their structures into so-called circles, which function autonomously and collaborate horizontally. There are no traditional managerial positions, but every employee has specific roles and responsibilities that can change according to the organization’s current needs.

The main difference? The level of formality within the organization. However, both approaches share the same goal – to eliminate unnecessary hierarchy and promote effective collaboration.

Four benefits of flat leadership – engagement, quick decision-making, innovation, and lower costs.

Flat leadership brings several advantages that transform how organizations operate. It fosters independence, agility, and efficiency. Let’s take a closer look:

• Higher Employee Engagement = A flat hierarchy encourages open communication and trust. Employees feel heard and can actively contribute to the company’s success.

TIP! We previously mentioned a study conducted by Development Dimensions International (DDI) found that up to 57% of employees who left their jobs cited their immediate supervisor as the main reason for their departure. 

• Faster decision-making = Fewer management layers streamline and accelerate decision-making processes. This is crucial in a fast-changing market, where companies need to react instantly to new opportunities.
• Greater innovation = Without a rigid hierarchy, employees feel more motivated to propose new ideas and innovations. According to Business.com, companies with decentralized management are more creative and better adapted to change.
• Lower costs = Fewer managers mean lower personnel costs. Companies can reinvest the saved resources into product development, marketing, or employee training.

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Where’s the catch?

Imagine working in a team where roles are not clearly defined. Who makes the decisions? What happens when two employees disagree? A flat hierarchy can also bring challenges. What should you watch out for?

• Risk of Chaos = Without clear hierarchy, accountability can become ambiguous. This may slow down decision-making or lead to internal team conflicts.
• Larger Teams = Lower Efficiency? = The model works better in smaller teams. In larger organizations, aligning all opinions and reaching consensus is more difficult.
• Informal Hierarchies = Even if the structure is formally “flat,” informal power groups or dominant individuals may emerge, influencing decision-making.

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Where does flat leadership work? Real-life examples.

To prove we’re not just making this up, let’s look at real-world cases where flat hierarchy thrives.

• Valve Corporation = Since its founding, Valve has operated without a traditional hierarchy. Employees choose their own projects and make decisions collectively. This model fosters creativity and innovation, reflected in the quality of their products.
• Gore-Tex = Operates on self-managed teams without formal leadership. Employees can choose their roles and responsibilities, boosting motivation and job satisfaction.

A company without a boss at the Happiness at Work conference.

One of the biggest leadership events in Central Europe is the Happiness at Work LIVE! conference. Every year, it brings together experts on corporate culture and people management from around the world.

At last year’s event, Alexandra Hubáčková (trainer, consultant, and host of the Lead Simply podcast) and Roman Bittner (shift leader at a foundry company) gave a talk about building a self-managed team in a manufacturing company in Moravia. And it wasn’t without its challenges. They explained the difficulties the company faced while implementing self-managing teams.

This example shows that not every company maintains such an organizational structure, especially when leadership changes occur. But that’s just part of business reality.

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How to prepare a company for the transition to flat leadership?

Shifting to a flat structure is not a simple process. It requires a change in corporate culture, a reassessment of responsibilities, and openness to new ways of collaboration. If done correctly, it can significantly improve company performance and employee satisfaction. How to do it?

• Define Roles and Responsibilities = Clearly outline team competencies, or else chaos will ensue.
• Promote Transparency = Share information across the team to ensure everyone understands the company’s goals.
• Invest in Education = Employees need tools and skills to work effectively without traditional oversight.

Invest in your team’s education. Get professional training with EDU Effective.

EDU Effective combines theoretical approaches with practical applications, making it an ideal choice for companies looking to invest in employee education. It offers tailored learning programs, from 30-day specialized courses to full LL.M., MSc., or MBA programs.

Tuition can be covered by employee benefits such as Benefit Plus, Benefity.cz, or Sodexo, allowing companies to make the most of available corporate perks. Employees learn through microlearning, enabling flexible education without disrupting work schedules. With a wide range of MBA specializations and shorter professional courses, you can select a program that fits your team’s needs.

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Sources: https://www.gallup.com/workplace/236366/right-culture-not-employee-satisfaction.aspx
https://www.onedirectory.com/blog/flat-organizational-structure/
https://hbr.org/2011/12/first-lets-fire-all-the-managers?ref=onedirectory.com
https://www.business.com/articles/flat-organization/
https://www.corporate-rebels.com/organizational-change-flatten-the-hierarchy