Like many forward-thinking business leaders, you’ve ditched the archaic and limiting company hierarchy. Employees are excited about the changes, and they should be.
In fact, a recent report published by The Stanford Graduate School of Business, When Inter-Team Conflict Spirals Into Intra-Team Power Struggles: The Pivotal Role of Team Power Structures, found egalitarian teams are able to work together while hierarchical team members may feel the need to fend for themselves.
Which means this new company structure will create a dynamic that can only set your team up for success, right?
Unfortunately, this isn’t always the case. Some companies -- Zappos being the most famous -- flatten out their structure before knowing what the next steps are in making the change successful. This sends performance management and employee morale through a major loop.
Making a positive change toward a lateral company structure is a good move, but you’ll need these three tips to make a smooth transition:
- Perfecting holacracy.
Before you know how to perfect holacracy, you need to completely understand what it is and why it’s important in a lateral structure. Here’s the exact definition, according to Holacracy.org:
“It’s a comprehensive practice for structuring, governing, and running an organization. It replaces today’s top-down predict-and-control paradigm with a new way of achieving control by distributing power. It is a new ‘operating system’ that instills rapid evolution in the core processes of an organization.”
One of the first companies that brought this term to light was Zappos. The major online retailer has received both positive and negative reviews for their jump into a flattened hierarchy. However, many tend to sway toward criticism due to their radical and overly complicated approach.
And Zappos CEO, Tony Hsieh, isn’t denying it.
In fact, in a in a 2016 CNBC article, Hsieh said the number one thing he regrets about the structural change is not making it earlier. This is due to the fact that the transition should have taken longer, but many leaders, including Hsieh, jumped the gun and pushed too hard.
Unfortunately, after telling employees to either get on board or leave for $2,000, the company had a mass exodus.
Rome wasn’t built in a day, so don’t expect that of holacracy or your employees. Keeping a positive employee morale and effective performance management system relies on leaders remaining calm and understanding. Even though this transition is positive for employees, all transitions are difficult.
During the transition, host bi-weekly tell-all meetings where employees can safely voice their opinions and questions. Make a list of what has changed so far, how it’s affecting the company and employees, and what improvements need to be made. Then, start implementing them immediately. Your team needs to know you’re on their side and listening to their needs.
- Nurturing an egalitarian environment.
You’ve likely flattened you’re company structure specifically to become egalitarian, or show you believe in all people being equal and that they deserve equal rights and opportunities. But cutting out a hierarchy isn’t going to suddenly create an environment of complete equality.
Even in a flattened hierarchy like holacracy, natural leaders will remain. Keep an eye out for those who are taking this new freedom a bit too far. Create specific policies directing employees on how to lead in a team environment without a defined leader.
Start by making a list of expectations and goals for each employee. Then, ask them to take a few hours to brainstorm their strengths, passions, and missions for the company. Giving each person this opportunity will help them create their own system, making way for easier performance management and a feeling of control over their equality.
- Hold employees accountable.
No matter how flat your hierarchy is, employees will still crave a bit of structure. And as a leader, holding your team accountable is necessary for keeping the team’s morale up and staying updated on performance management.
One of the best ways to do this is by allowing your flattened hierarchy to do its job: give employees the power. Encourage your team to have more social interactions with one another now that they don’t have a specific manager to report to. They may need this more than you think. In fact, 34 percent of employees don't think they have enough social interaction with their colleagues, according to a September OfficeVibe report, The State of Employee Engagement.
Encourage this interaction and keep employees engaged, motivated, and passionate with peer-to-peer reviews and frequent recognition.
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