ETHICAL BUSINESS COMPANY (EBC)

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 Vice-Presidents 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 coworkers 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:

Improper role definition and lack of clarity related duties

Disparity between what was preached and what was practiced.
Need of more transparency.
Lack of initiative amongst employees. This was because the values
of the company were not properly instilled amongst the employees.
Thus, organizational loyalty was low.
Image of the company hampered due to attrition of senior
employees

Suggested Solutions:

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 structure.
Focus on building cohesiveness within workforce

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 management.
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 manager.
The discipline in the organization may be bad due to lose 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 manager.
Flat organization structure may create problems of coordination
between various subordinates.
Efficient and experienced superiors are required to manage a large
number of subordinates.
It may not be suitable for complex activities.
The quality of performance may be bad.