Many companies present their flat hierarchies as a quality feature and an advantage for the employees. Behind this is the assumption that flat hierarchies usually lead to faster decisions. However, this is usually a mistake and the solution that really works looks different.

The number of hierarchical levels actually has little significance for the individual employee in operational reality. After all, what added value do flat hierarchies bring for me as an employee? Direct contact with the boss? You either have good and direct contact with your personal superior or you don't, but that doesn't depend on the number of hierarchy levels. Direct contact with hierarchical levels above one's own direct superior? Maybe even the possibility to communicate directly with the board or management? That, too, depends on the communication culture in the company and not on the number of hierarchical levels. And the personal level of communication, being "on a first-name basis" with the boss, a relaxed and pleasant working atmosphere etc. depends - if you think about it carefully - on your own and the boss's personality and not on the number of levels.

The only real advantage one could expect is actually faster decisions. But is that really true? Do flat hierarchies lead to significantly faster decisions? Let's do a little thought experiment:

A fictitious company A has perhaps 1000 decisions to make in a certain period of time. If these 1000 decisions now travel through let's say 5 hierarchical levels, then of course there are time losses: lying around in email inboxes, competence ambiguities or disputes, delegations back and forth, responsibility ping-pong. Let's imagine the same company with 3 hierarchical levels. We still have 1000 decisions to be made by the same number of people. There is still lying around in email inboxes, lack of competence etc. What is actually saved is a little travel time between the levels and perhaps one or two delegations. Experience shows that the gain in effectiveness is 10% to 15%. The whole thing backfires if the reduction in the number of levels is accompanied by a reduction in the number of managers and the number of decisions remains the same. Then each manager has more decisions to make and the average time per decision will even increase.

The speed of communication across all hierarchical levels, which is often cited, is hardly changed by reducing the number of levels. Critical information passed on by e-mail can travel through the levels within minutes and if such information sits in a mailbox at any level for hours or even days, it doesn't matter how many levels it has to overcome afterwards.

This consideration makes it clear that the solution is not to be found in the number of levels. Instead, we need to look at another variable in the equation: the number of decision-makers! We don't need fewer of them, but more. Significantly more! Those who now fear an inflation of managers are thinking in the wrong direction. What I mean is: I have to prevent decisions from moving through the hierarchy levels at all by enabling every employee to make as many decisions as possible on his or her own. If each employee is the decision-maker for almost all decisions, THEN I have actual quick decisions!

What does this look like in practice? In our company, we have first of all eliminated the decisions that we call "non-decisions" or "bullshit decisions". These are decisions that only pretend to be decisions, but in reality only employ people pointlessly. A few examples:

  • An employee needs a new mouse or keyboard or monitor or laptop. In many companies, this requires the approval of a manager. Why is that? Has anyone ever actually experienced a manager telling an employee: "No, you're not getting a new mouse, you can work without one for a few weeks"? Or, even worse: "Please first prove to me that your laptop is actually broken." Then I can tell my colleague straight away that I don't trust him and that I think he's a potential waster of money or even a cheat. Our colleagues simply order the things they need. Of course, sometimes things go wrong or the laptop is configured a little more lavishly than is absolutely necessary. But if you set that against the time saved for such "non-decisions" by various managers, it's also a good deal from a business point of view.

 

  • An employee wants to visit a customer and is planning a business trip. Why should she have to have it approved? What manager would seriously object to customer appointments? Our employees decide on their business trips themselves and book them themselves (so we still save a lot of money by doing without central "travel departments" etc.). Of course, this is not always the cheapest hotel. But again, the money saved by avoiding "non-decisions" and control instances always easily outweighs this.

 

  • Other examples of "non-decisions": Holiday requests, home office, procurement of office material or books, seminar attendance...

Of course, this is not completely uncontrolled. Our teams, divisions and projects have an annual budget for procurement issues or business trips, for example. This budget is decided on jointly. But within the budget, everyone makes their own decisions. And that works.

That leaves only those decisions where there is actually something to decide. Let's take the hiring of a new colleague as an example. Here, too, we avoid decision cascades. Who better to decide on the "fit" of a new colleague than the team he or she will later work with? So the team (or part of the team) makes the decision. Sure, a team can be wrong sometimes. But we all know that this also happens to professional recruitment managers in HR departments - and not even rarely.

Our goal is for every employee or team to be able to make more than 95% of all decisions themselves. THEN we actually have fast decision-making - namely 95% of all decisions immediately. Of course, we expect our employees not to make decisions lightly, but in a well-considered manner and, if necessary, to seek help and support, e.g. from colleagues. Our motto is: "Act in the best interests of the company!" If an employee is unsure about a decision, he or she is also welcome to ask his or her respective manager. However, our managers usually do not take the decision away from the employee, but ask "What do you need so that you can make the decision yourself?

For our employees, this decision-making culture creates a great deal of freedom for meaningful action and thus, of course, also a great deal of responsibility. For managers, this means the complete renunciation of micromanagement. Managers who measure their professional effectiveness in terms of the number of decisions made or who cannot tolerate employees acting without consultation are wrong with us.

(In this context, we can immediately dispel another myth: the management span. The standard opinion is that a management span of 7 employees is optimal. We say: a management span of 50 employees is optimal. With such a number of employees, the manager does not even have the idea of interfering in decisions or micromanaging. Instead, they have to agree on goals, areas of responsibility and competences with the employees and then trust that the employees in their area of responsibility already know what they are doing).

Let's summarise: I get quick decisions when every employee makes as many decisions as possible himself. This requires trust and responsibility among staff and managers. If I have a very high level of decision-making authority among all employees, the question of the number of hierarchical levels is completely irrelevant. So if I, as a potential employee, am interested in a company with "flat hierarchies", I should ask very precisely about the decision-making competences and decision-making structures, because that is actually the relevant issue.

Of course, with a decision-making culture like ours, mistakes do happen. The second essential building block or complementary addition to our decision-making culture is therefore a matching error culture. But that is the subject of another blog post.