The flat hierarchy’s fall from grace

14 Feb 2019 By Mark Childs

While less rigid management structures have been touted as creating agile companies, younger workers are actually seeking a more structured career path, says Mark Childs

Non-financial incentives, a sense of purpose, and flexible working are all well-known millennial working-style priorities. It would seem a logical assumption that this generation might therefore think twice about a structured and hierarchical career path, preferring the flat structure of some of the larger tech giants, perhaps – but the reality couldn’t be further from the truth.

In fact, for the millennial generation, for who studies have shown career progression is a priority, clear career pathways and regular formal feedback are part of a much sought-after employee value proposition.

According to research cited in Gallagher’s 2018 Organisational Wellbeing and Talent Insights Report, 91 per cent of millennials consider the potential for career progression a top priority when looking for a new job. And while three-fifths (60 per cent) would like formal feedback on career and professional development every one to three months, almost two-fifths (38 per cent) receive it just once a year or less. 

In recent years, flat organisational hierarchies have been lauded as a way to promote agile development and increase employee engagement – emulating the cutting-edge, self-managing teams of large software and sportswear companies in America, for example. Vanguards of the “delayering” movement – whereby middle management positions are effectively wiped from the organisation – argue that the productivity of workers measurably increases as they become more intimately involved in the decisions steering the company. 

In practice, however, this utopia is yet to materialise. Companies often aren’t able to get it right. In 2013, an exposé from an ex-employee of a video game company widely held as a pioneer of flat organisational structures, alleged “a hidden layer of powerful management in the company”, powered by a culture of favouritism and the “soft power” of popular employees. While this is a rather extreme example of a fall from grace, it neatly summarises how powerless employees can feel in an organisation that lacks clear roadmaps for progression, feedback and issue-flagging. 

Research from Gallagher shows that removing the bureaucracy and hierarchical status associated with multiple layers of job and pay grades has made career pathways more opaque. Alarmingly, this has fuelled a troubling belief among many employees that you have to leave a company to get ahead. 

Coupled with oblique promotion criteria, the so-called ‘broadbanding’ of compensation – consolidating salary grades into fewer, but broader, pay ranges – is a frequent cause for complaint. A generation whose careers started (and suffered) in the dark days of the financial crisis now find themselves in a labour market where opportunities are legion, yet lacking the career path and earnings progression clarity that well-defined job levels and transparently fair pay structures provide.

Overcoming the urge to blindly pursue flat hierarchies is essential for business leaders, whose millennial workforce cohort is set to swell to 75 per cent by 2025. The way forward needn’t necessarily be to abandon flat organisational structures entirely: employers must just ensure that such structures are paired with felt-fair methods of analytical job evaluation, helping employees grasp what is required to progress.

One way forward could be to bolster job levelling, a process designed to aid employees by helping them understand the competencies and key skills needed for advancing positions. Determining the relative value of jobs in an organisation not only helps employees, it also aids the business’s HR function by providing an objective foundation for reward and talent management programs. Most importantly, however, the process ensures that line managers are better equipped to provide regular and meaningful feedback to employees. 

With a post-Brexit labour shortage and slide in immigration supposedly pressuring the UK, listening to current employees’ concerns should be at the forefront of employers’ minds. In fact, organisations should be delighted that millennial employees seek transparency in their pay progression and  career paths. It shows ambition and, ultimately, a wish to visualise how they might play a fuller role in the future of the business.

Mark Childs is MD of Total Reward Group

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