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An organization structure specifies the various job tasks and shows how the

same are formally divided, grouped, and coordinated. It provides an appropriate

framework for authority relationship. It indicates the hierarchy of authority
andthe reporting relationships. It is a means to help the management to achieve
the organizational objectives.As the objectives of the organization are derived
from the overall strategy of the organization, it is logical that an organization
structure is closely linked to its strategy. As such, if the management makes a
significant change in theorganizations strategy, the organizations structure
needs to be modified to accommodate and support the change. There is
considerable evidence to indicate that choice of an organizations strategy is
determined by three basic factors such as (i) the organizations size, (ii)
technology used by the organization, and (iii) environmental uncertainty.

The flat organization structure is a bottom-up approach. A Flat organization structure is also
known as a horizontal organization. It is a level wherein there are very few or often no levels
of management between the staff and the managers. In such an organization the most trained
employees are involved in the decision making process. This structure mostly takes place in
smaller organization. A flat structure is less bureaucratic because fewer managers review the
work of others, and the structure is less authority-laden. A flat structure leads to a wider span
of control, the number of workers reporting directly to a manager.


EBC, a consulting firm which dealt specifically with ethics issues, offered training and a
series of workshops to engage and educate employees on ethical issues as well as advisory
services related to corporate ethics. The company boomed when Mr. Harmon was
interviewed for several articles after the scandal at Enron and WorldComand by its 15 th
anniversary it has grown to 400 employees in 4 global offices. In 2008, Harmon published
FLAT: A New Business Operating System that tapped into growing trends towards
decentralized organizational structures inspired by an increasingly globalised and
interconnected world. In 2009, EBC acquired ROCKSMITH and HANDFORD, a
consulting firm specialized in addressing human rights issues.
In 2010, Bella Wilfer, a graduate from Darden Graduate School of Business Administration
joined EBC.
EBC operated as a democracy, characterized by flat governance, open communication, shared
leadership and radical transparency. The existing leadership structure of the CEO and VicePresidents were made an executive committee that was aided by four committees
democratically elected by all personnel. Rather than organizing the company hierarchically,
employees were grouped into three categories of responsibility: support, seek and see. The
office space was designed to reflect the flatter organizational structure.
The office was very open and full of natural light with all the internal walls made of glass.
Wilfer could see clear across from where she sat. In each cubicle and meeting space was a
copy of the leadership charter.

As EBC was a flat company, Wilfer found it confusing to understand the positions of her
colleagues. Wilfer noticed that she was not referred as an associate but as a person who
operated with a support mindset. Her co-workers were not able to explain the definitions of
support, seek and see.
Wilfer was exited for her first project in which she had to help a major electric utility conduct
and assessment of its internal transparency and recommend ways to improve communication.
The next day Wilfer had to go for a coffee chat with the John Harmon where he addressed the
entire group about his blog post. The issue was not only the election but how Harmon
portrayed it publically. An employee named Jenny Wren was removed from the ballet as he
had only a college degree even if he was working really well.
Later in the week, during a team meeting she became distracted by the conversation by junior
employees called the analysts. They were making the jokes about the Leadership Charter.
Although, Wilfer felt uncomfortable but she did not respond.
Although, EBC was a flat organization, Harmon had a separate conference room named
Passion. Though Wilfer did not have a problem with this but she thought it was weird that
Harmon pretended not to have one.
After the coffee chats, Wilfer had to attain a Town hall meeting which was conducted by
Harmon to response to employee concerns. The concerns were related to the division that had
been Rokesmith and Handford, LLC before its acquisition. The complains were focused on
goals and hiring. Ass per Harmon, only those who achieve a group goal would get a bonus.
The division that had been Rokesmith and Handford was required to double the growth,
whereas the rest of the companys requirement was less than 2%. The employee of the
Rokesmith and Handford division wanted an explanation as to why their growth targets were
so much higher, particularly given that the division was not scheduled for a proportionally
high staff increase. New staff hiring was also taking long because of the council structure
being implemented.
On the third week, four of the most senior employees announced that they were leaving.
According to the people of the organization they left because the flatter compensation plan,
and the bonus plan were not competitive. Some said that Harmon was forcing out anyone
who did not buy into restructuring and the ideas in his manifesto.
The next day, Wilfer had a meeting with all the project managers, most of them concentrated
on the problem instead of the solution. Top people have just stepped out but no one stepped
up as after years of being within a hierarchy her co-workers were not ready to take on the
bigger role in managing the company.
Although Wilfer was initially fine with the idea of a flat organization, but now she was not
sure just how to achieve it. She was worried about what she should do about her current
situation at EBC.

Where did the problems exists:

Low formalization and low hierarchical levels ensured positives for a flat
organizational structure. However, high degree of centralization existed. This was a
mismatch for a flat structure to exist.
Improper role definition and lack of clarity related duties
Disparity between what was preached and what was practiced. Need of more
Inefficient time management and lack of proper redressal of issues.
Lack of initiative amongst employees. This was because the values of the company
were not properly instilled amongst the employees. Thus, organizational loyalty was
Image of the company hampered due to attrition of senior employees

Suggested Solutions:

Decentralization or delegation of authority is important in order to ensure working of

the desired flat structure successfully
Proper role definition and role clarity is required so that there is no ambiguity with
respect to expected performance of the employees.
Trust building activities in order to instill the organizational values into the employees
Proper recruitment of people to ensure right fit of people for such organizational
Focus on building cohesiveness within workforce
Proper compensation and motivational plans to ensure more organizational loyalty
and relatedness.

Advantages of Flat Organization Structure:

Flat organization is less costly because it has only few managers.

It creates fewer levels of management.
Quick decisions and actions can be taken because it has only a few levels of
Fast and clear communication is possible among these few levels of management.
Subordinates are free from close and strict supervision and control.
It is more suitable for routine and standardized activities.
Superiors may not be too dominating because of large numbers of subordinates.

Disadvantages of Flat Organization Structure:

There are chances of loose control because there are many subordinates under one
The discipline in the organization may be bad due to loose control.
The relations between the superiors and subordinates may be bad. Close and informal
relations may not be possible.
There may be problems of team work because there are many subordinates under one
Flat organization structure may create problems of coordination between various
Efficient and experienced superiors are required to manage a large number of
It may not be suitable for complex activities.
The quality of performance may be bad.

Group Members: