Organizational diversity concepts and practices

Flat Organization Defined

Why would a company become a flat organization? What is the motivation? (Pros?)

Cost reduction

Process of alignment with advanced technology

Efficiency

How would you go about creating or changing an organization to represent this structure?

Align process of management

Align employees with technology and skills

Re-structure communication processes between management and employees

Create a team model that empowers the employees to help in making decisions. e. Communication within all levels.

Negative attributes of re-structuring an organization (Cons)

Additional training expected

Hiring of new employees that have skill set of a more integrated style

More work with same or less pay V.

Summary

A Flat organization is defined as: "An ORGANIZATION with relatively few levels in its HIERARCHY. An oft-quoted example is the Catholic church, a global organization with only five levels from parish priest to pope." (Statt, 2004, p. 52) When an organization desires a restructuring that empowers front line employees and reduces restrictions associated with the hierarchical models a "flat organization model" where members of the team have real authority to make changes when they are needed is a solution, especially where such change is managed well. Thierauf & Hoctor explain one aspect of reorganization that addresses both the flat organization model as well as the cost reduction it can elicit through streamlining employees, so they are more aware of the whole of the system of production and implementation.

At Boeing, which implemented target costing as a pilot project and now uses the strategy companywide, reaching target costs is a challenge for the company's entire value chain. The company works with its suppliers to explain the current market pressures on cost and works together to find solutions to the challenges it faces. Sometimes this means changing requirements to enable suppliers to achieve both the performance and cost goals. (Thierauf & Hoctor, 2003, p. 290)

Flat organization models have been favored in the most recent past, as those which empower employees to seek excellence in production and create team systems that offer more efficient production and possibly better innovative systems, as hierarchical models tend not to allow those with hands on experience the opportunity to elicit change, possibly in a manner that would increase production, as a result of the skill set of the individual low level members of the team. The Boeing organization has been forced to come into line with high technology, in both production and structure, through emphasis on smart plane technology, company networking and redistribution of production. (Thierauf & Hoctor, 2003, p. 192) to do all this simultaneously and maintain itself as a leader in aircraft production the Boeing Corp. opted for a flat organizational model, that contrasts to it traditional hierarchical management model, the need to reduce employment numbers as well as many other trends discussed here were the reason for the change.

One aspect of target costing that can get ignored, as a result of the industry specific work that Boeing does is the international sales trends that dictate traditional domestic manufacture, of which Boeing has been a large part for many years. In the new trends in the aircraft industry can be found the seeds of the need for restructuring, and example being that if Boeing sells aircraft to China a good portion of the product must be built there, as per purchase agreements. The Aircraft industry has recently been inundated with purchaser demands that force restructuring. (Macpherson & Pritchard, 2003, p. 221)

In a larger firm, such as Boeing it may not be possible to develop a pure flat organizational model as the need to make decisions and implement change may need to be done at a higher level, to some degree. In this case a quasi-flat system can be initiated but some of the existing structure of management must be maintained to ensure that there is at least one person who is aware of all levels of business activity, as when it is complicated by diverse activities all members of the team may not be fully aware of all aspects of production. This is unless the organization is willing to implement a more varied structure, where many individuals are capable and do complete varied functions, as a way to better understand the whole of the system. (Foss, 2005, p. 162)

Smaller firms of coarse will find this transition easier while larger firms may need to create quasi-flat systems that better serve multi-factoral production systems and require the system to work together in a streamlines fashion, without one area of production causing unintended problems for another.

To create a system where a flat organizational model can be implemented in a large organization such as Boeing several aspects must be taken into consideration and implemented. The organization must align employees with high technology and skills, through recognition and training. Additionally, in what can only be defined as a quasi-flat organization, with less management hierarchy but with management still in place the communication must be improved between those in management and those in production. This communication model requires transparent leadership roles and intense observational and communication skills on the part of both segments. The system must also ensure the development of a team structure among employees that strengthens the individual and group ability to communicate and work together to create innovation and for individuals to be a part of decision making and to be empowered to do so. Lastly, the whole of the organization must improve and implement a high level of communication on every aspect of production, including cost, implementation and actual structures and needs.

Regardless of the best case scenario there are known concerns both realized and expected from the implementation of a flat organization model. Restructuring of any kind is a difficult transition period, at the wake of reduction of many jobs Boeing is in a position to fall prey to some of these downfalls. The need for additional training of new and old employees is essential and can create problems, such as overload and time constraints, taking employees away from traditional production tasks and utilizing resources that may not be complete. Hiring of new employees with skills outside of the traditional, to work within this new flat organization may strain the system as well. Employees may feel and realize that the expectations of their work have increased while compensation may or may not follow.

A study of Boeing employees found that individuals who experienced a high degree of emotional stress on the job were more than twice as likely to file back injury claims than other employees (Gaines, 1993). Working harder to cover the tasks of others also results in a higher accident rate. One study of 177 companies found that although the average workforce was cut by only 13% over a fifteen-month period, fully onethird of the firms reported an increase in workers' compensation claims. One in five companies said their workers' compensation costs increased between 50 and 100% ("A Study of Worker, "1992). (De Meuse & Marks, 2003, p. 27)