Why horizontal hierarchies are the way of the future for successful businesses

Business and technology are changing so quickly that sometimes it can seem hard for companies to keep up, let alone capitalize on the rapidly evolving industries they’re a part of.

For many organizations, the collaboration and creative ideas of their employees are their lifeblood – or at least they should be. But companies existing in traditional vertical structures may not be making the most of this potential.

Horizontal hierarchies are becoming increasingly popular as a way to empower employees at all levels of the business to contribute in a greater way. These less traditional structures not only benefit the business but also provide employees with a stronger sense of autonomy and purpose.

Beyond the pyramid

By definition, a horizontal structure has fewer managers and many employees, with employees able to make decisions without manager approval.

Meanwhile, a vertical organizational structure is pyramid-like, with leaders at the top followed by middle management and then regular employees. Decisions are made from the top down, with approval working from the bottom up.

Hareta McMullin is the Founder and CEO of Third Space People, which helps companies to develop confident leaders and reimagine their employee experience. McMullin says she’s seeing some companies adopt horizontal structures and believes more companies should also consider it.

"If you design a horizontal hierarchy you’ve got a huge increase in productivity and innovation because people feel they have a bit more creative license to just get on with it," she explains. "And everyone feels more like stakeholders in the business."

Traditional structures can be too bureaucratic, she adds, with managers and individual positions the bottlenecks to getting things done.

Vertical or horizontal?

When deciding whether a vertical or horizontal structure is best for your business, careers website Indeed says there are various aspects to consider.

"Your strategy, objectives and goals are often the most important factor in determining the right organizational structure for your company," it advises. "Think about what your company does, the industry you work in and what’s required to ensure your company stays competitive."

Indeed suggests that vertical structures can work for larger companies because they provide structure, but they can also help new companies navigate how to be successful and scale as they grow.

Vertical structures may also provide clear pathways for advancement, and they may be better suited to companies with clients that require stricter approval processes or those in industries where safety is paramount such as health care, engineering and construction.

On the other hand, horizontal structures can have a wider variety of employees and give them more freedom to acquire new skills and be creative, which could be preferable for companies servicing a wide variety of clients or those that rely on creative ideas such as the tech industry, retail, architecture and media.

Making the change

McMullin suggests companies take some time to analyze their structure and hierarchy, and review what is and isn’t working. To get a clear picture from all levels of the business, this entails running focus groups and interviewing staff from leaders to interns and freelancers.

If you decide to make a commitment to flatten your business structure, communicating effectively to everyone what this entails and why it’s happening in the business is key, she stresses.

"It’s almost like building a whole marketing campaign around this decision," she points out. "Once you’ve got over that initial communication, it’s backing it up with activities to help people understand the new way of doing things."

"And then separately to that, backing it up with the logistical element, the processes, the procedures and who’s responsible for what.

"People need to have the chance to get used to the new way of doing things. Managers, in particular, need to be offered training in change management so they can put out spot fires along the way before they become bushfires."

Challenges along the way will be inevitable, McMullin admits. These can include people feeling like they have fewer opportunities to move up the career ladder, confusion around boundaries and middle managers reluctant to give up some control.

However, she believes these obstacles can all be managed with planning. For example, when staff are promoted sideways not upwards – and taking time to truly celebrate when that happens.

"Make it about upskilling them and then offering chances for them to use those skills, such as new projects or travel opportunities," she suggests. "And leaders must be taught how to empower their team without feeling at risk in their own job.

"People need to understand what the new boundaries are but ultimately, it’s about educating and empowering them to make their own decisions so that they don’t need to keep going up the ladder for permission, which benefits everyone."

Business structures should adapt over time and CEOs should regularly analyze whether their current hierarchy is the right one based on their clients’ needs, new technology, what’s going on in their industry and where their company is going, McMullin adds.

"There’s a fair amount of guesswork there, which I think is the real skill. But once you’ve got that clear vision, your role as the CEO and as the leader is to bring your people – and that’s all of your people – along on the journey."