Companies With ‘Flat’ Structures Rarely Work. Is There a Solution?

But do flat structures work? André Spicer, a professor of organizational behavior at the Bayes Business School in London, said that, while the “cultural zeitgeist when I was growing up was that hierarchies are bad,” there’s been an increasing recognition of both the need for them and the fact that they often reappear in businesses ‌that, at least theoretically, reject them. “People aren’t just willing to jump on the bandwagon and say, ‘Yeah, let’s have this nonhierarchical structure.’ There’s some degree of suspicion around it.”

In 2012, Valve’s handbook for new employees was leaked, revealing its defining feature: eschewing managers in favor of an autonomous system in which employees can move between projects when they chose.

But in a 2013 interview, Jeri Ellsworth, a former Valve employee, said that at the company, “there is actually a hidden layer of powerful management structure in the company and it felt a lot like high school.” A report in 2022 by People Make Games, a YouTube channel of investigative journalism about video games, highlighted Valve’s issues with diversity and job assessment, among others. (Neither Ms. Ellsworth nor Valve responded to requests for comment.)

Clifford Oswick, a professor of organization theory at Bayes, pointed out “inherent risks” of discrimination in companies with extremely flat structures. The companies may reflect the same biases as society, without safeguards to avoid them. This means that often in such companies, Mr. Oswick said, “you’ve still got middle-aged, privileged white men making decisions at the top.”

Mr. Spicer is particularly critical of start-ups that have attempted, or claimed to attempt, flat structures, suggesting that failures — and at least one major scandal — have emerged from these workplaces. He pointed to Elizabeth Holmes and Theranos, her health care technology start-up. In a 2015 interview, Ms. Holmes said that Theranos was “a very flat organization and if I have learned anything, we are only as good as the worst people on our team.”