Flattening an organization’s hierarchy has become a business trend as companies increasingly toss aside the corporate ladder
At one point or another, most of us have had a common fantasy, in which all those overbearing supervisors and helicopter managers are fired, leaving only the employees to run the show. (Who better to call the shots, after all, than the people doing the work?)
For most of us, that’s all it’s ever been ― a fantasy. But what if it wasn’t?
Enter the “teal” workplace management philosophy. It was envisioned by former McKinsey consultant Frédéric Laloux in his book Reinventing Organizations, in which he classified workplace structures on a colour spectrum, ranging from more primitive, wolf-pack like structures (red), through to our current highly structured corporate models (orange) all the way up to teal, which Laloux described as a situation where self-management replaces hierarchy. It was, to Laloux, the direction the workplace was ultimately heading.
Since then, the teal management approach has gone from a theoretical future to one that is being applied in the real world. The online shoe company Zappos is probably the biggest example, with their official policy of “Holacracy,” which eliminated managers in 2014. (None of them were fired; managers got to keep their salaries as they transitioned into new roles.)
There’s a rationale behind it, state experts. “A hierarchy of managers exacts a hefty tax on any organization,” wrote Gary Hamel in the Harvard Business Review. “Managers add overhead, and as an organization grows, the costs of management rise in both absolute and relative terms.”
As a company grows, explained Hamel, layers of management need to be added that expand labour costs. Moreover, managers create more risk around decision-making. “Hubris, myopia and naïveté can lead to bad judgment at any level, but the danger is greatest when the decision maker’s power is, for all purposes, uncontestable.”.
Teal management structures can now be found in pockets of the workforce around the world, and it’s slowly gaining more adherents. And interestingly, the biggest hurdle most organizations have faced in implementation is the transition process – at Zappos, 15 per cent of the workforce took a buyout rather than transition.
But for those that have transitioned, many have found success with it – especially through Covid, when the lack of rigidity helped some teal organizations respond more quickly. “I’ve been able to learn, and do so many things that I wouldn’t have otherwise,” said one employee of the fintech company Smarkets. “Now I’ve tasted that I wouldn’t want to go back.”
Content written by Kieran Delamont for Worklife, a partnership between Ahria Consulting and London Inc. To view this content in newsletter form, click here.