How Flat Organizations Become Toxic

Six months into her new job, my client was frustrated, depressed, and debating whether to leave.

It was a stark contrast to how she felt just six months earlier.

At first, Alicia had jumped at the opportunity to be part of the marketing team at a dynamic and promising startup. After 10 years with a traditional consumer goods company in the midwest, this felt like the perfect career move.

She had flown out to the west coast and spent time in the company office, experiencing the open, creative, and flat culture—a breath of fresh air, she thought, in contrast to her current workplace. By the end of the visit, she was sold.

But now, she complained, the reality was far from the promise.

The collaborative, creative culture? Sure. But also chaotic and ambiguous.

Too much collaboration meant no one owned decisions; accountability was completely lacking. And decision making involved grueling rounds of discussions that inevitably turned contentious and nasty.

Democratic and flat? Alicia quickly learned that there were hidden power structures. Gender differences were stark—the Vice Presidents, with the exception of one, were all men, and part of the early founders’ group. “It felt like high school,” she told me. “The influence you had depended on whether or not you were part of the elite in-group.” 

A free and open culture? Sure. But also undisciplined and inappropriate.

She learned to head home quickly on Fridays to avoid the weekly “beer-cart,” when things turned ugly, quick. Sexual jokes and horsing around often went too far, and if anyone complained they were simply reminded that it was “all in good fun,” and “that’s just how we do things around here”. 

After 6 months, Alicia went back to her previous role. Boring? Perhaps. But for Alicia, the transparency, clarity, and buttoned-up culture now came as a relief.

Not all flat and open organizational cultures are like the one Alicia left. There are tremendous benefits to the flat organizational structure. Greater employee autonomy results in more job satisfaction, engagement, and employee motivation. Self-managing teams can accomplish more at greater speed and efficiency.

Egalitarian and flat cultures are created with the best of intentions.

And yet, as Alicia found, just because your organization is flat doesn’t mean it can’t be toxic. As Uber, Zenefits, Vice, Google and similar high-profile incidents surrounding supposedly progressive organizations have shown, where power is decentralized, where informal norms apply, and where there are fewer layers of management, toxic behavior can and does still take root.

How did we get here? How did we fall prey to the notion that a flatter culture would necessarily be more humane and ultimately healthier?

It starts with two common misconceptions about hierarchy and power.

 

Myth #1: Only hierarchies can be authoritarian

It’s an assumption I hear frequently: hierarchical organizations are authoritarian. But in reality, authoritarian leadership styles are found in every kind of organization. In my work, I have witnessed autocratic behaviors in every sector and industry —from self-managed cooperatives to multinational corporations—and at every organizational level.

The good/bad dichotomy between flat vs hierarchical organizational culture misses the point that each has its purpose: just as there is a clear business case for a flat organization and empowered employees, there is also a clear business case for hierarchy.

For instance, flat, self-managing structures benefit collaboration, while hierarchy can enable greater specialization and coordination—and both can be productive and healthy. It depends on the context and manner in which they are employed. 

 

Myth #2: Dispersed power is better power

Just as it’s common to assume that authoritarian leadership is the province of hierarchical organizations, it’s also common to assume that power in the hands of more people is automatically better used than power in the hands of the elite or powerful few. But is power pushed down a better use of power or just a different use of power?

While a flat company can encourage more creativity, it can also produce toxic office politics, bullying, and a culture of preferentialism. You don’t need a title or position to abuse your power. You have power by virtue of your loud voice, seniority, access to information, expertise, ability to influence others through charm, persuasion, intelligence, and—importantly—your social identity.

Therein lies the trouble with the ‘gospel’ of flat organizations: just because your organization is flat doesn’t mean it can’t be toxic. Where power is decentralized, where informal norms apply, and where there are fewer layers of management, toxic behavior can still take root in your organization and damage productivity, innovation, and your core company brand.

 

How Flat Organizations Become Toxic

 

1. Power Hides (Transparency Dies)

In a flat organization, the ease of connection and ability to make decisions without having to defer to a manager can lead to quicker and more spontaneous decision-making. But the lack of management also means that decision-making is not always transparent, and that makes it hard to know who’s got the power.

When power resides in a manager role, you know who makes decisions, where to go for clarification, and what the processes are for decision making, performance evaluations, promotions, and the like. But when the manager role disappears, the source of power shifts from your position in an organization to less formal and more insidious sources of power: personal influence, insider status, friendships, and personal preference.

In the absence of managers, it can also be easier to assert social identity power, such as race, gender, age, and sexual orientation. All of these can ultimately lead to charges of bias, discrimination, and cronyism.

 

2. The Loudest Voice Prevails

Flat organizations require greater coordination and group decision making, which can increase group conflict as there are more things, normally decided by a manager, to decide and discuss. Without conflict resolution skills, decision making can easily default to rule by the loudest, strongest, most senior, or most socially privileged members of the group.

This lack of coordination can result in a “Lord of the Flies” dynamic where the most aggressive individuals dominate others and sink organizational productivity. Toxic insider-outsider dynamics flourish under these conditions, leading to a kind of tribalism, and creating an exclusive, inequitable culture, if not in fact, then in feeling. People become distracted and consumed by these dynamics, leading to a loss of productivity and diminished morale.

Flat and informal organizations also reward those who are self-motivated, self-assertive, and comfortable working without much guidance. But they harm employees who need or want more coaching, support, and direction because there are fewer managers and often a weaker HR function.

Because people have to advocate for themselves more, this structure favors extroverts and those with more social boldness or sense of belonging. It also disadvantages newcomers, women, and minorities who may be less likely to ask for help and advocate for themselves, furthering a potential experience of inequity.

 

3. Blurred Boundaries 

Flat and informal organizations, by definition, are more fluid and relaxed when it comes to roles and relationships. While this more open atmosphere can make work more fun and thus engaging, it can also lead to overly loose, inappropriate behavior, blurring of boundaries, and sexual relationships that present a conflict of interest.

Informal banter can quickly devolve into sexual innuendo, inappropriate jokes, and gossip, creating a divisive and unsafe atmosphere.

 

4. Lack of Process

Organizations in highly competitive industries or startup environments also risk having a lopsided focus on sales and growth at the expense of compliance, governance, and training functions.

Early startups (and some hypergrowth companies) often decide to put their focus (read: money) on sales, marketing, and product development, and skimp on, or defer altogether their human resource functions.

Processes for promotion, development, hiring, compliance, and training are given short shrift, or none at all. People aren’t given any training for managing others, or in the people skills necessary for working with and through others. Lack of training, lack of oversight, and lack of regard for compliance or due process is a disaster waiting to happen.

So what are some ways we can avoid these potential pitfalls awaiting every flat and modern organization?

 

How To Ensure Your Flat Organization Is Healthy

 

1. Emphasize Transparency