Going Flat: Pursuit of a Democratic Organizational Structure

Alessandro Paolucci

Professor Michael Coombs

BUAD 304 – MW 8.00-9.50

Going Flat: Pursuit of a Democratic Organizational Structure

Background information

Bella Wilfer is a new employee at Ethical Business Company (EBC). The company purpose is to help companies prevent ethical problems rather than deal with them after they happened. The company is proud to have changed its structure becoming a flat organization, but the people, including the CEO John Harmon, do not respect the company culture.

Issues

1. Is a flat structure right for all companies and people?
2. What would have Wilfer done if she had been in Harmon’s place?
3. What should she do about her situation at EBC?

I am going to use the USC-CT model to address the different issues presented in this case. Once I will have provided a strong analysis of the case, I will individually address the questions. However, in the case analysis through the USC-CT model I will explore the best solutions for the company, which already will present what I think Wilfer could have done in Harmon’s place in order to allow EBC to be a true flat organization.

Uncover

The Ethical Business Companies shows an array of circumstances that may be the potential cause of the difficulties in managing the company.

• John Harmon is not being an effective leader. He does not practice what he preaches. He proclaims his company to be transparent and open, supporting a flat structure, but he has a private office and does not call meeting to discuss the changes in the company but just to announce what he has decided and what is going to happen. He is in the hidden quadrant of the Johari Window, because he does not disclose himself with the employee. He keeps the “Passion Room” as a meeting room while instead it is his office (page 6), he does not explain his decisions. According to the Vroom-Jago Leader-Participaion Model he most probably is an Autocratic I leader, because he makes the decisions by himself using the available information, without consulting with the employees (page 7). Harmon is not a communication champion: he is neither frank nor straightforward, he never clarifies the meetings purpose and he does not answer the question made during them (page 7). He does not link action to his vision: he is a dreamer, but he is not a doer, he does not implement his ideas. He is the first one to not follow the company culture, weakening it. As a result, the public image of the company does not respect what really happens in the company, and the employees make fun of the core value of the company culture (page 6). He does not set the example, because he does not show humility and will, the two key elements for a leader to be executive according to the Level 5 hierarchy.
• There is no equity. Some departments are asked to double their results while others need to add only a 2% to meet the goals settled by Harmon (page 7). The comparison between input and output from the employees is not equal, and as explained by the Equity Theory, employee do not feel motivated. The reward system is unfair, because the flatter organization involves a flatter compensation plan, which is no longer competitive in the industry and the collective goals have replaced individual metrics, so the bonus are not competitive too (page 8). As a consequence, according to Expectancy Theory, people are disappointed and not committed to the achievement of the goals. Moreover, even if the company’s manifesto clearly states a horizontal structure where everybody has the same opportunities, the elections are not democratic and only members of the senior leadership can be selected for the committee (page 5), without any explanation given by Harmon.
• People cannot be retained accountable. Even though in the meeting between Wilfer and all the project managers everybody contributed to the list of what needed to be done, nobody offered to do anything. They concentrated on the problems instead of the solutions (page 8), they are not a resource. Moreover, when Wilfer felt uncomfortable while “the employees formerly known as analysts” (page 6), she did not say anything because she did not think it was her job to instill respect towards the Company Culture in her fellow employees. In an environment like this, it is very easy to start the Blame Game, where people finger point each other, do not take initiative and narrowly define their job to only a specific task. Because of the inefficient reward system, Social loafing is encouraged. People do not have a team mentality yet, so the group reward is not working.
• The employees do not agree and/or accept the company culture. It does not motivate employees to high performance; the system and procedure do not reinforce the organizational mechanisms. There is not a widespread consensus upon the culture and people have lost trust in the system because it was not working. Some of the hygiene factors of the Herzberg’s Two-Factor Theory are not satisfied; for example, the company policy is unclear, people are looking for more strict supervision, have difficulties in socializing because the roles are ambiguous and the career path are unintelligible, nobody even knows what the different sections of the company are. Moreover, slogans are inefficient and people make fun of them (page 6).
• The roles are not clearly defined. The three groups of employees (Support, Seek, and See) do not have a firm definition, and the employees do not know what their categories stands for (page 4). As a consequence, new employees do not to whom they should ask for information about the company and their job, as it happened to Wilfer during her first day at EBC (page 3). This leads to a lack of Hard Power sources in the organization.
• The meetings do not have a clear purpose stated in advance. The names given to the meetings confuse people, who feel like wasting their time, and do not listen to the speaker (page 7).

Select

        I think that the root cause of all the problems stated above is Harmon’s deceiver behavior. All the issues come from his avoidance to disclose himself and the reasons of his decisions. His hypocrisy has probably led people to leave, or even worse he forced them to leave because they did not agree with his vision. He does not share information; he proclaims it after he decided it by himself. He is not implementing a Positive leadership attitude; he never has an affirmative bias and does not facilitate intrinsic goodness. He dreams about a Web structure for his organization, but still acts according to a Set graph. In a flat company with a web structure, everybody would be a manager with decision power. However, in reality, Harmon stays away from the action, above all the employees, making the decisions by himself.