Apply now to be an Entrepreneur 360™ company. Let us tell the world your success story. Get Started »
Bill Gilmer runs his 16-person commercial printing company with as few managers as possible. "We're an extremely flat organization," says the owner of Wordsprint Inc. in Wytheville, Virginia. Gilmer, 48, has made big investments in technology to make sure each of his press operators and other key employees has all the information he or she needs to make decisions without a supervisor.
"Everything is in the system, from schedules to the latest breaking news about a job, so every worker has access at their keyboards to the same information as management," Gilmer says. "So why have management?"
Why, indeed? The answer is that an organization can be too flat. Sometimes managers are necessary. The key is to make sure your organization doesn't have too many managers-nor too few. When you have too little hierarchy, decisions don't get made or are made wrongly by employees who lack experience, accountability or motivation to do the work of the missing managers.
"Hierarchies are going to be with us whether we like it or not because hierarchies are effective for getting things done," says Harold Leavitt, professor emeritus of organizational behavior at Stanford University and author of Top Down: Why Hierarchies Are Here to Stay and How to Manage Them More Effectively. "I'm all for humanizing organizations, but they can flatten so much that you lose control."
Leavitt's thesis highlights one inescapable fact about flatter organizations: The more you flatten, the less you control. To some extent, technology can be used to oversee employees by, for instance, monitoring their productivity using job-tracking systems. It can also be used to empower employees to make their own decisions, as in Gilmer's case. Gilmer also gives employees incentives to take responsibility for decisions that might otherwise be made by a manager, by basing much of their pay on individual, departmental and company productivity.
But even flattening can go too far. "We skate the edge all the time," Gilmer says. He knows he's gone too far when decisions are not made or are made improperly. Sometimes, the problem is that the employee isn't up to the self-management job, an issue Gilmer tries to avoid while hiring. "You have to have people who are willing to make decisions and [who] are interested in the big picture," he says. "We have that now, but at times we haven't."
Gilmer spends most of his day on business development, but a certain part of many days is spent dealing with management matters. If too much of his day is consumed with that type of work, he begins to suspect he's too flat. But the solution of having a manager oversee production staff is one he's rejected.
For Leavitt, the issue is not so much whether a company is flat, too flat or not flat enough. It's that the entrepreneur is aware of the issue and prepared to grapple with it as part of a growth plan. "Small companies often don't like the idea [that] they are going to formalize and get hierarchical as they get bigger," he says. "They can do it well or badly, but it's going to happen."
Gilmer anticipates Wordsprint expanding in sales and employment as the economy rebounds. He believes that incentives, a corporate culture that prizes self-starters, and a good dose of IT will help Wordsprint get bigger without getting more hierarchical. Only if he can't continue to find good employees does Gilmer plan to add more layers. "When you have [lower-quality employees]," he concedes, "you need a supervisor to tell them what to do."
Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.