Today, the world economy is shedding age-old, outdated practices of top-down leadership and traditional pyramid structures. The old-school management assumes that traditional leadership consists of managers and subordinates. However, modern, contemporary structures blur the lines of this conventional hierarchy – and creates an even playing field that allows businesses to leverage employee talent, passion, and expertise to face business challenges. This foundation represents the nature of leadership in a flat organization.
What is a flat organization?
A flat organization is characterized by little-to-no hierarchy levels that intervene in decision-making or differentiates between managers or employees. For the last couple of years, businesses are willing to flatten their hierarchical structures to empower employees with decision-making discretion. Flattening of organization structures refers to eliminating layers in a firm’s hierarchy and the broadening of the span of control of the top management.
A flat organization cuts through the hierarchy layers and boosts the speed of when and how decisions get made. The time it takes to bring a product/service to the market reduces, and decisions are implemented speedily and efficiently. Companies can also reduce overhead costs by minimizing the layers of management and, in turn, empowering employees to take the lead and pursue their passions.
Such organizational structure is most common in small organizations and young startups. Some entrepreneurs also make conscious decisions to choose a flat organization structure to spark unprecedented collaborations, leading to creative initiatives. While others may start as a flat organization at a nascent stage, and as it grows further, the management may introduce a few hierarchy levels without losing the fundamental nature of being a flat organization. A flat system can also occur organically when a team of specialists comes together to pursue a business idea.
Companies like Zappos, Buffer, and Medium have all harnessed the power of the flat structure to unite their employees and empower them to think out of the box. However, as companies grow and expand, the need for a unique vision and leadership increases, and without a plan in place, everything could collapse. Flat organizations often stagnate if the proper employee evaluation system is not in place, as an entrepreneurial spirit alone is not enough to power business expansion.
Why is employee performance critical for a flat organization?
The biggest challenge of a flat organization is creating an employee evaluation process to ensure every employee is meeting expectations. When your team is empowered to manage themselves, it’s still important to evaluate their performance from time to time. The top management puts a lot of trust in their employees, thus it is crucial that every employee has clearly defined goals and consistently delivers outstanding results.
Here is how you can conduct a performance review in a flat organization :
HR and the top management should lead the process
In a traditional organization, the HR department oversees the performance review process and is executed by team leaders and managers. However, in a flat organization, the CEO and senior-level executives need to assume the managerial role and review each employee’s performance.
Now, this could lead to a lot of time investment for the management, especially when the team strength is increasing. In such a case, the HR department can create a basic performance review model to lessen the burden and ensure every team member gets a fair appraisal.
Use goals to inform employee performance reviews
Goals help drive the employees’ performance, remove the guesswork when completing an employee’s performance review, and help share frequent feedback. It also gives a clear picture to the management if a particular employee lacks performance or is not on pace to meet the set target. This way, management can offer valuable inputs to put the employee back on track.
Take advantage of 360 degree feedback
All the above methods listed can be time-consuming and inaccurate. It is possible to take a lot of work off the management’s plate and ensure that the employee evaluation process is smooth, quick, and error-free. 360 degree feedback collects feedback from multiple stakeholders that an employee interacts with – this includes coworkers, subordinates, supervisors, and even customers and suppliers. The result is an accurate, fair, and comprehensive review that provides a holistic view of an employee’s working relationship within the organization.
This is simpler to achieve in a flat organization, where employees who are on the same level of the hierarchy chart evaluate each other. 360 degree feedback offers a powerful way to supplement the management’s efforts as employees are evaluated from multiple perspectives, resulting in accurate and thorough feedback. 360 degree feedback provides an objective framework for identifying performance gaps, developing confidence and motivation. It also enables you to identify how self-aware your employees are and understand their impact on the rest of the organization. Also, as employees in flat organizations collaborate regularly, it is prudent to ask their peers about their performance.
Use meaningful and effective KPIs
AssessTEAM offers technology that can help flat organizations with the digital skills transformation process. The highly automated performance management system allows assigning strategic KPIs to employees and monitor performance against hundreds of goals on a regular basis with little manual effort. AssessTEAM includes a 3000+ KPI Database, and each KPI has been designed to meet a specific business need. The KPIs in the database have been designed for many industry verticals, including health care, travel, manufacturing, IT, health care, travel, hospitality, and governance. Clear KPIs not only aid in efficient evaluations but also help to define job requirements and reinforce goals.