Many organizations have embraced the idea of reducing hierarchy and thus becoming flatter. This has come to the call for the need to widen the span of their control and ensure everything runs smoothly in their operations. This has also seen a remarkable improvement in the way these organizations are run compared to the earlier forms of management which relied majorly on hierarchy system.
Flattening of Organizations
Flattening can be defined as ‘delayering’ or the act of eliminating the layers of a firm’s hierarchy system thus broadening the span of control of the management. In some organizations, flattening means delegating roles in autonomous teams in which the team so selected is composed of various experts, and defined roles with team members actively taking part in the monitoring of the performance and activities of the entire group.
Reasons for the Increase in Flattening
Due to the increase in competition and the emergence of many organizations which offer a variety of services to customers what is known as ‘all under one roof,’ business has become more competitive and this calls for swift actions and being astute when it comes to making decisions regarding how an organization or firm is to be run.
Individuals and firms now seek an approach in which more interactive sessions and interactive management style are exhibited, where one can easily pass information to his or her senior and get the feedback almost immediately without having to go through some form of levels. With the pace of development and innovations, time is also of essence and thus the need for a faster way of making decisions and executing actions on the decisions made.
All these issues have been addressed by one factor and form of organization known as flattening. In this way businesses can make quick decisions and workers and their executives can also exchange ideas on how to improve performance and achieve their goals jointly.
Advantages of Flattening Approach to Organizations
Flattening of operations has proven to be cost effective. Consider an example like the Banks and other financial institutions which basically rely on the interests on loans, mortgages, ledger fees on its accounts and basically the deposits from customers as sources of income. When the loan book goes down and there are fewer deposits, the only way to reduce costs and ensure the bank remains operational is through flattening. They do this through eliminating layers and ranks in management accompanied by the changes in the pay structures. Roles are divided and new people take on challenges from their bosses. This signifies that, there are some decisions which were previously done by higher managers but has now been delegated to lower levels (Milgrom & Roberts 1992, p. 473).
There is a remarkable decrease in the costs associated with the payment of salaries to the managers when most decisions are delegated to the lower managers (Kister & Hawkins 2005, p.127). When many functional managers are joined to the top team, their functions are taken over by divisional managers at a lower level who are paid less. This ensures that there is a structure in which there is much involvement of the CEOs and the top managers in the running of the business while at the same time ensuring the bulk work is left to the lower level managers.
Due to cost reduction, Banks have come up with products which are tailored to benefit their customers at no extra costs. Savings accounts such as fixed deposits have been made to encourage savings and earn interest. Insurance firms have also come up with products such as; preventive care which is free not to mention very affordable health insurance policies. All these have been possible as a result of cost reduction created by flattening.
There are closer operations between the executive management and the line workers in a flat hierarchical type of operations. When the top managers work hand in hand with the lower level managers, there are better operations for the top managers get to understand what actually takes place on the ground. There is also free information flow from both ends; in flat system information flow is from any direction; from lower level managers to executives and from executives to the lower level managers (Demand Media Inc 1999, p.1). This will ensure there is equality in passing information and each partner view the other as an equal partner and contributor to the goals and objectives of the company.
In this error of financial crisis, it is important for Bank’s CEOs and their juniors to freely share ideas if they are to remain competitive in the market. This can be achieved through flattening in which there is partnering and working closely with each member in the organization, this way, there will be adequate disclosure of investment information. This way, the banks take advantage of market dislocations and focus on their core goals in order to maximize their profits.
Faster customer response
With the flattening of operations and decision making being pushed downwards, it is now possible for individuals and employees of a given firm to interact faster and exchange ideas in an amicable way without having to wait for information to climb up the ladder to the senior management before they are worked on. Minority employees of the firm have been mandated to make some decisions in the interest of the company, while attending to their customers.
Firms such as insurance companies and the banks really need faster customer service to stay on board amidst stiff competitive. With an increase in the number of insurance firms and banks all over the world, customer service has been the bottom line of having a competitive advantage over another firm, this can be achieved through faster response to customers since this will make them feel they are valued and attended to appropriately.
Improvement in market responsiveness
Flattening of operations has also seen improvement in the way customers responds to products and services of an organization especially when it is a new product or service in the market. Taking a typical example of insurance companies; speed really matters when it comes to settling of a claim. It is now easy for insurance companies to respond faster to customer claims because of flattening since levels of hierarchies have been reduced. The claim department need not to wait for authorization from the top managers for them to settle urgent claims for example those related to accidents. Due to these faster responses, the market response has greatly improved with customers been delighted each time a new product is launched into the market.
Communication plays a key role in the running of any organization. There should be a proper channel of communication and a well laid down channel. In flattened organization, the communication channels are easy to follow since everyone is free to pass information from each side; bottom up or across the management levels. This ensures easy passing of urgent information that needs to be worked on from any angle to the concerned party. In the long run, it smoothens the operations and daily activities of the organization.
Maintaining a competitive Advantage
A lot of firms today try as much as they can to ensure they remain the proffered firm in the most competitive market. Today, there is increased competition and for an organization to be competitive enough, it has to convince its customers that it offers the best relative to its competitor.
To maintain this, firms nowadays embrace flattening where there is a streamlined and efficient organization structure capable of responding more quickly to their customers. This way customer loyalty is created. Through quick response, the organization also learns new insights on how best they can improve their customer service since, it is easy to get the responses from customers in time and rectify any mistake before it works to the disadvantage of the firm. Ensuring customers are satisfied means that they have a good chance of recommending others to the organization and this way the firm improves its customer base and remains competitive thus enjoying its own competitive advantage.
Improvement in Accountability and Morale
Flattening ensures that only managers who add value to an organization are recommended and those that do not are deployed. This ensures that there is hard work and morale as those people who perform well are heavily rewarded. This type of reward system has the potential of improving performance and morale among the workforce. It also assists in developing good workforce as various people are trained on taking managerial roles once they climb up the ladder.
When people are empowered to make various decisions on behalf of the organization, they feel part and parcel of the organization (Ogbor 2001, p.560). This has continually improved their morale in the workplace and all these trickle down to good and efficient customer service. Holding people countable by giving them various duties which originals were done by a senior manager also helps to train them and empower them for greater challenges ahead. It also helps in ensuring problems made are traced accurately to an individual who committed it.
Flattening organizations have proven to de-emphasize hierarchy and authority thus favouring personal autonomy and cooperation. This can create a good working environment and a workplace that delights employees. When people are motivated and happy in their workplace, a good environment for nurturing innovation is created. People are free to share ideas and come up with various alternatives on how they can do something differently. Through this, various talents are born and nurtured successfully.
Individuals are also trained on how to take up roles and operational challenges that come with the absence of the hierarchy. This way, workers are trained to be managers in their own capacity capable of handling difficult issues without necessarily relying on the top managers’ decisions.
Functions of Culture in Firms and Organizations
Every organization has its own culture and the way in which they do things, culture can also perform the major role of providing informal traits, values, beliefs and norms meant to provide control of the actions of groups and individuals and the way they interact both internally and externally with the organization. A strong organization culture would therefore present a shared commitment and focus on the core values upon which the organization is built.
In many ways, culture tries to define where the organization came from and where it is headed. In the absence of culture, it is difficult to know where the organization is going, what its main focus is or even how to measure its success or failure since they all depend on this fundamental pillar. The following are the functions culture play in firms and organizations;
Each organization should have its set philosophy and the core values upon which all performances are measured. This is portrayed in any organization culture. Organizational culture usually gives employees some sense of direction and what is expected of them (Anat 2011, p.136). This assists in keeping them on track and focused on their core tasks. Everyone knows what his responsibilities and roles are prior to the establishment of deadlines and how they are supposed to accomplish them.
Each organization has its goals, missions and visions; these are fundamental cultural practices in any organization and they define what each member of the organization is focused to achieve. Culture also spells out the mechanisms through which the organization responds to crisis. This will assist the parties involved in the amicable resolution of a problem as and when it occurs as it clearly points out the course of action to be taken in different scenarios.
It is however important to note that, a very strong organizational culture can present barriers to change and instead of giving direction, it can be misleading as well. This is because, when people only focus on the mission or vision of a given organization, there is little room for diversification of thoughts to other things which might turn out to be productive. It is evident that; changing a vision or mission of a company is not easy since this is the culture the organization has embraced for years. This will mean that, a vision which was set years ago, which has now become obsolete may be still in use. In this way it may not be helpful and serving as needed. Therefore, it is important to embrace cultures which have the provisions for change and can thus adapt to emerging issues in the world today.
Assist in the Management and internal integration of the firm
Organizational culture tends to define power and the distribution of status within the organization. Thus outlining out clearly the role each individual is supposed to play in ensuring the success of the organization. Any organization requires fundamental internal integration tools which include; common language. In order for communication to be effective, members within the organization must come up with common words and course of actions to be followed. Another key element is boundaries. Culture defines the boundaries in any organization by defining who should or should not be a member. One can be a member of two or more organizations but anytime he acts in the interest of one organization to the expense of the other, he is treated as an outsider. When he or she comes in, he has to make the necessary transition from the older form; that is, it is not possible to wear a staff barge of company x while working for company z. The other vital element is how power and status are distributed. Culture will propose to define how one should earn power, distribute it and how one is expected to handle authority in his or her docket. There is also a fourth element which is how to develop friendship with internal and external members of the organization. Each company has its unique culture which spells out the accepted customs and norms when it comes to relating to staff or customers.
Culture also outlines the rewards and punishment as a result of taking certain duties, they dictates how promotions, demotions and values are shared within the firm.
When unity is talked about, it is evident that people or groups share something in common. Whenever people work for a common objective, common goal, vision or mission, they tend to support one another and work hand in hand for the success of their success wholly. Culture helps in defining roles, missions and much more. Therefore, a shared culture assists in uniting employees from different demographics.
The work brings people from different families, traditions and cultures together by serving a common goal. Sharing this common culture at the workplace makes people have a sense of belonging and attachment to the organization they are working in, thus ensuring understanding and unity. People from a given organization can be identified by the way they talk, the terminologies they use and what they hold in common. Take for example; bank employees may easily understand one another when they start communicating, the same way lawyers can communicate freely using their jargons which could prove to be very difficult for a common person to understand. This shows that, these groups are connected and united by a common goal which is the culture of the organization in which they serve.
Culture also assists in promoting better relationship, communication and minimizes conflicts. In addition, organizational culture that is well tailored will promote equality in the workplace by ensuring there is no discrimination as everyone will be treated equally.
Gives a sense of identity
Each organization has a unique culture from the others and this tends to define its identity. The values, beliefs and the way of doing business of an organization together contribute to its image and brand by which people know and respect it. Both the employees and clients of a firm will determine it by set of cultures that it possesses different from the other players. Generally, one is by saying; his/her colour, language or the way he does things differently from the others, this is what will make one to be an Asian, an African and much more. Likewise, an organization is identified by its culture, how its employees speak, the jargons they use, what they believe in, their visions and even their actions. The reason for this is that people within an organization will follow their cultures thus making them distinct from the rest. Culture is what brings people together when serving a common goal since everyone will have the same focus and interests of the organization at heart.
A good culture serves the purpose of creating a unique brand which is adored by customers and employees of the firm (Edgar 2004, p. 325). It is therefore very important to have a good culture in your organization capable of giving it a competitive advantage.
Managing external adaptation to an organization
Organizational culture establishes mission, shared understanding and primary tasks of an organization. This gives a platform through which the employees can be vetted in terms of their performance and how well they are capable of steering the organization to greater heights. They also set out repair strategies by outlining the means through which these roles are to be achieved.
Outlines how to deal with difficult situations
An organization's culture will give direction on how to deal with difficult situations like the dissolution of a firm, merger, during emergencies and even how to handle conflicts. In cases of emergencies where strong actions are needed, organizational culture spells out clearly who is mandated to oversee the entire process thus avoiding conflicts and a situation where no one is willing to take charge. It does this through the laid down rules and regulations which govern operations even in cases of emergencies.
In difficult situations, organizational cultures comes into test because; one can recall a similar situation and how it was dealt with and apply the same based on the rules that were set at the time of the occurrence. It will also provide a structured way of thinking, feeling, believing and even responding to a demanding task. In summary, because of the culture of any organization, individuals within an organization will tend to give close or similar solutions to a common problem thus are able to solve it amicably without having to struggle much on decision making since they will be acting on a common goal of the organization.