New “flatter” organizations – good for small businesses?

Image by Gerd Altmann from Pixabay

By Michelle van Schouwen

As your small business grows, you may be inclined to add new layers of management. Interestingly, the most progressive companies, large and small, are doing just the opposite – they are shedding key aspects of the old hierarchical structure. According to a 2020 report from McKinsey & Company, “even the largest organizations shouldn’t have more than six layers; in truly agile organizations, we often see only three layers.”

For a small business, this could mean a maximum of two to three layers of management – and a rethinking of what a reporting structure means.

-Again from McKinsey, some organizations employ a “helix model” of management, in which two managers take on different roles with an employee. One may manage hiring, firing, vacation time, promotions, and the like, while the other supervises daily work prioritization and process. This model is often used in tech companies, in which the skill sets for the lead people in each role may be substantially different.

-Networks of teams can also provide efficiency to your smaller company. Decision-making is decentralized, and each team’s members are responsible for getting work done and communicating with the other teams. Tech Republic has a good article on this structure and how it can work.

-Assigning non-critical decision-making to the lowest appropriate levels can also speed up work and relieve top management from the burden of making every small choice. Proper training and a level of oversight remain necessary.

-The new pandemic-and-beyond small business often includes remote workers, gig workers, and part-time staff. The more you can assign responsibility to each employee or to teams of employees, the fewer day-to-day headaches you’ll have.

-Removing management layers can also open positive avenues of communication and prevent serious problems from silently festering. Combine the organizational flattening with workable open-door policies, full-staff project premortems, sharing the company’s financials with staff as appropriate, and avoiding negative repercussions for sharing unwelcome news. You’ll foster much-improved communication and the opportunity for enhanced business results.

-Fewer layers of management, and hence a flatter organization, should place more, not less, responsibility on each individual employee. By expecting more from every person, you’ll be in an excellent position to sort the best employees from the marginal ones, and to take necessary steps to improve the quality of your workforce.

How many layers does your company actually need? Do alternate structures exist that allow employees to share responsibility without a “stack of managers”? It’s a question worth serious examination now and as you grow.


Michelle van Schouwen is principal of Q5 Analytics, providing advocacy and communications for climate change mitigation and adaptation. For 32 years, Michelle was president of van Schouwen Associates, LLC (vSA), a B2B marketing company. In 2017, van Schouwen Associates was acquired by Six-Point Creative Works, Inc. of Springfield, MA. Michelle is available for speaking engagements on topics including her work on climate crisis mitigation and Florida coastal water issues. She speaks to business and student groups about marketing launches and entrepreneurship and works with start-ups to support their development.

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