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042-The Decentralized Culture: Impacts of Flat Structure in Organization
*Farah Laili Muda @ Ismail
Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia
Anita Ismail
Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia
*E-mail: [email protected]
ABSTRACT
In ensuring the viability of a business organization in the industry, there is no doubt that organizational culture plays an important role. Whether the culture comes from outside or sown from within the organization, it is found that organizational culture can boost the performance of an organization. Through a strong culture, employees will better understand and conform to the work culture and at the same time be able to ensure a good and equal outcome.
Organizations with decentralized culture seems to be popular nowadays where the employees are given freedom to choose their styles of working and make decisions. This kind of organizational culture also usually has a flat structure in which the employees do not have to go through many hierarchies when interacting or communicating with the highest position in the organization. This paper will explore the positive and negative impacts of flat structure towards the organization and employees in the decentralized culture.
Keywords: Decentralized culture, Organizations, Flat structure
INTRODUCTION
Decentralisation is referred to as a form of an organisational structure where there is the delegation of authority by the top management to the middle and lower levels of management in an organisation.
In firms that practice decentralization, decision-making power is given to middle managers and subordinate staff of the organization (Hales, 1999). This decentralization also opens the opportunity for managers to make their own decisions about internal organizational issues and take appropriate actions in response (Haustein et al., 2014), and this situation may increase organizational flexibility (Lee and Edmondson, 2017).
Nowadays, many organizations opt to choose a decentralized way of working to give freedom to employees to design and arrange their tasks as long as they may achieve the target.
In this kind of organization type, flat structure is always being popular. The flatter the structure, the easier decentralization to be implemented.
411 FLAT ORGANIZATIONAL STRUCTURE
A flat organizational structure is an organizational structure that does not involve many layers of management. It means that this organization involves little or no management layer between the top executives and the lowest level management. In this regard, employees are given more power by the company to achieve the set goals in their own way. Therefore, they need to be independent and receive enough training to do the job and achieve the organization's goals.
In Markus Reitzig’s book, Get Better at Flatter the benefits of flat structure in organization are highlighted. Through flat structure, employees become more productive either when working individually or in groups. In addition, they are given freedom in managing their work without strict supervision by managers (Reitzig, 2022).
Among the organizations that commonly use a flat structure are small businesses. A small business has a relatively small and simple organization with few employees. Employees usually hold several different responsibilities and tasks. And, as businesses start to get bigger, tall structures are usually an option. Organizations and jobs are becoming more complex.
Therefore, it requires a more structured arrangement.
A flat structure is chosen to narrow the hierarchical gap. As a result, upper-level management will be able to communicate more closely with lower-level management without going through middle management as an intermediary. With this structure, communication between the two parties and the decision-making process will be faster because it goes through fewer layers of management. A flat structure also gives more authority and autonomy to subordinates. In this way, they will have more opportunities to make decisions in the organization.
CHARACTERISTICS OF A FLAT ORGANIZATIONAL STRUCTURE
Companies that use a flat structure have a short chain of command. Each manager will hold a wide scope of work and more subordinates to supervise. In terms of communication, the delivery method is easier because it does not involve many layers (Reitzig, 2022). This flat structure will also create a larger work area because employees must play various roles and tasks.
However, with a broader and less specific field, employees can work more flexibly and cross-functionally (Senior and Swailes, 2010). However, in this way also the employees will be encouraged to work in a team.
A flat structure is an appropriate approach for small businesses because their operations and organizations are relatively small and have few employees. Therefore, middle managers are not very important, and they cost a lot. In this organizational structure, staff-level employees will typically report directly to the business owner (George, 2016).
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If an organization needs middle managers, this means that there is a specialization of tasks related to finance, operations, marketing and human resources. And usually, these organizations are quite large and these departments are headed by middle managers.
Therefore, this flat structure is seen as unsuitable for large companies. With many employees and more complex departments, a tall structure is more appropriate because it involves several layers of management (Sorenson, 2022).
ADVANTAGES OF A FLAT ORGANIZATIONAL STRUCTURE
Among the advantages of a flat structure is that it eliminates many layers of management and can reduce costs. In addition, this structure also encourages employees to work flexibly and speed up communication within the organization. Through direct communication, messages can reach managers easily and top management decisions can be delivered more quickly and effectively.
Through the trust given to employees, they are empowered with work management and decision-making. With the autonomy given to employees, they will be more independent in their work and able to take on more responsibilities (Zubair & Kamal, 2016). This autonomy and responsibility can give job satisfaction to employees. Job satisfaction is very important because it can also be linked to good job performance (Sawang et al. 2020). Through a more flexible and independent way of working, employees will be happier and more sincere in carrying out their duties.
A flat structure in the organization also encourages employees to be more creative while working. When they are given the freedom to be creative, they will do their best to excellently contribute to the organization. Creativity will also lead to innovation where employees are able to create or improve existing things in the organization (Lee, 2022). In enhancing innovation, cooperation among employees is a very critical factor. This can create a positive atmosphere in the organization, especially when they become closer and interact well. In fact, through interactions better decisions may be attained using all available information provided by everyone in the organization (Altmann & Koohborfardhagighi, 2017).
DISADVANTAGES OF A FLAT ORGANIZATIONAL STRUCTURE
However, this flat structure also has its own weaknesses. A flat structure is not effective for large organizations with many employees and scope of tasks (Reitzig, 2022). Thus, managing them all under multiple managers can be problematic. In addition, responsibilities and roles in a flat structure are usually not very clear. As a result, employees can lose direction and focus, and at the same time managers may face difficulties controlling employees.
The flat structure causes the employees to hold various roles. As the layers in the organization get shorter, an employee will be given a greater scope of work along with
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decision-making authority (Brazeal et al. 2014). With more roles this sometimes gives a great burden to the workers.
Sometimes there is also an unclear division of labor in a flat structure, which causes confusion among employees. This kind of confusion needs to be overcome because it will affect the course of work in the organization (Brazeal et al. 2014). A flat structure can also cause conflict among employees because sometimes jurisdiction is not very clear. This resulted in a power struggle and an unwillingness to take responsibility in carrying out duties (Lee, 2022).
As is known, flat structure is suitable for use in small organizations and not so suitable in large organizations. By maintaining a flat structure, the organization may not be able to grow. This is because when an organization is developed, the structure within the organization needs to be changed (George, 2016).
This structure also does not encourage promotion among employees. There are very few opportunities for promotion because there are not many layers of management in an organization. As a result, employees who are motivated to get promoted in their career will start to leave the organization and look for opportunities elsewhere (Senior and Swailes, 2010).
CONCLUSION
As a conclusion, in implementing decentralization with a flat structure in organization, many factors are highlighted. The physical factor of the organization, employees’ tasks and organization capacity must be considered before choosing the most appropriate structure. The debates on its advantages and disadvantages are very much influenced by the factors in the organization. Even though the flat structure offers many advantages, the leaders in the organization should choose wisely to pursue with it or not, as the wrong choice may end up with suffer organization.
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