My current Russian client, a large and very successful petrochemicals company, has had many reorganisations in the last couple of years. One of these that they are implementing in all their production locations, is a systematic delayering.

 

I recently designed and ran a workshop for thirty production engineers on one of their largest sites about change and transition. And so we talked about delayering which there had only happened six weeks previously, how they had experienced it and what they could do to make it a success.

 

Delayering is defined as the removal of one or more levels of hierarchy from the organsational structure. This leads to a flatter organization, increasing the average span of control (number of direct reports) especially to senior managers (as it is often middle management that is ‘delayered’). Therefore in theory leading to more delegation.

 

Sometimes it is described as moving from a tall pyramid of an organisation to a flatter pyramidal hierarchy.

 

I reminded them first of the advantages of delayering and why many leading international companies do it.

 

  • Better delegation, empowerment, freedom and motivation

(the number of managers is reduced and authority is passed down the hierarchy)

  • Improves communication; decision making quicker

(messages have to pass through fewer levels; reduced chain of command)

  • Removes department/silo rivalry

(department heads removed and the workforce is organised more in teams)

  • Brings managers closer to business customers

(should improve customer service)

  • Reduces costs

(less expensive as fewer expensive managers needed)

  • Encourages innovation

 

Incidentally with my client the idea is not to reduce costs (or staff). Any savings arising from less people will be paid out in increased salaries to those remaining. Their aim of delayering is to encourage new ways of working.

 

I however also reminded them of the disadvantages of delayering that have to be managed to be successful. And some of these are actually the opposite of the perceived advantages.

 

  • Negative impact on motivation

(job losses, reduces job security, loss of status, loss of future career moves, loss of promotional steps and hence opportunity to grow salary)

  • Damages communication

(managers have a wider span of control and if too wide can hinder their communication & management of subordinates)

  • Not all organisations are suited to flatter structures

(e.g. mass production with low-skilled workers)

  • Increased workload of remaining managers with wider span of control

(quality, safety and timing can suffer, which was a real worry for our production staff in the petrochemicals industry)

  • More difficult to develop and grow future leaders

(fewer steps in the organisation to learn people management)

  • Disruption as people take on new responsibilities and fulfil new roles

 

We talked about actions which they could do independently and together to help delayering become a success. And they came up with a number of excellent proposals that they will take further.

 

It is also worth considering the different skills that might need to be developed for successful implementation of a delayered and flattened organization. Especially when moving from a traditional control-and-command, top-down, hierarchical leadership.

 

  1. Less layers and a larger span of control should result in instilling greater empowerment and autonomy into the workforce. So frontline managers will need to develop the management skills to respect & support empowerment and autonomy at the working level. And this goes all the way to the top. Senior management needs to develop this vis a vis their frontline management. No more micromanagement!

 

  1. Flatter delayered organisations can only work if there is an increased emphasis upon teamworking and flexibility within teams. So communication skills, collaborative competences and conflict resolution become more important.

 

  1. Successful delayered organisations also encourage cross-functional working with the use of project groups and task forces, set up to deal with particular issues for a finite period of time, before being disbanded. Flexibility and dealing with ambiguity are both plusses.

 

  1. Indeed delayered, flexible organisations therefore require a wide range of self-skills in individuals. Such as self-assurance, self-motivation, self-learning, self-development and self-regulation. Difficult to suddenly develop if the organization has always been hierarchical & top-down, but this doesn’t mean we should leave people to ‘sink or swim’! People can be helped to learn how to take more control themselves in a more ambiguous environment.

 

  1. Finally talent development and reward processes need to be remodeled to support the delayering. Flattened organisations can no longer offer as many promotions throughout a career as a way of paying people more, motivating and retaining those employees. One way leading companies mitigate this challenge is to define jobs more broadly and increase the bands of salary ranges for these jobs. It is also necessary to rethink how leaders are developed. Flatter organisations mean less chance to develop man-management skills on smaller groups lower down the hierarchy. And when someone is promoted, there is consequently a much bigger status and responsibility step than previously in a tall pyramidal structure. So the risk is greater and company needs to get such decisions right!

6 Comments

  1. Ezequiel

    Appreciate this post. Will try it out.

    Reply
  2. Daniela

    I wanted to thank you for this great read!! I absolutely enjoyed every bit of it.
    I have got you saved as a favorite to look at new stuff you post…

    Reply
  3. Raymondhip

    good! super!

    Reply

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