Leistungen // Laterales Management

the fear of flat hierarchies

In the current debate about new forms of management, decision-making and co-operation there is a fear that the new organisations don't work. People are talking about the tyranny of having no structures or responsibility.

Classical hierarchy is an outdated model – this is the fundamental thesis of our book Laterales Management. The Wirtschaftswoche magazine said that "flat hierarchies are the secret recipe for satisfied employees and commercial success but the problems with the system are evident in everyday life". The article referred to the company ePages with 180 employees. The thrust of the article was that flat decision-making structures are dangerous.

The principle of a consultative individual decision

In an edition of Harvard Business Manager (Simpler decisions) there is a further publication about lived democracy in companies. And in Laterales Management, we also take a look at the IT service provider Haufe-Umantis discussed in Harvard Business Manager. The company, which was taken over approximately ten years ago by Haufe-Verlag, is a consulting company and management training provider and is also regarded as a reference company because their 150 employees elect their chief – just like the company Gore-Tex. Direct democratic involvement of the employees in important company decisions is supposed to lead to an improvement in the company's performance. Accordingly, this edition of the Harvard Business Manager is called "Simpler decisions".

The fact that it is difficult to transform a company from a classical hierarchical structure into participative decision-making structures is trivial. Moreover, many organisations have already carried out this task very successfully. In organisations with consistently decentralised structures decision-makers have a duty of consultation. They call it deliberation (Endenburg), advisory process (AES), consultation (dm-drogerie markt), recommendation, waterline (Gore-Tex) or Nemawashi (Toyota) (including Pflägling 2014). But no matter how it works, the principle of consultative individual decisions applies in all companies.

Hierarchies of responsibility instead of hierarchies of instruction

In everyday working life the decision-making role is clearly assigned to managers and employees at different levels in the company. There is a hierarchy of responsibility emerging in place of a hierarchy of instruction. Whoever carries the responsibility makes a decision but consults with relevant colleagues beforehand. This does not require democratic structures in companies - it just needs organisational charts. Moreover, large companies in Germany have already had a democratic constitution because Germany has the Betriebsverfassungsgesetz (Works Constitution Act). The purpose of this law has always been to give rights of participation to employees. Therefore, no one needs to worry about the problems encountered in everyday life when lateral organisations are introduced on equal terms. This has already been done by some very successful companies. Just two important things are needed for this: bold and in-depth knowledge about the variety of successful organisations that have organised management, decision-making and co-operation on a lateral basis. The only people who talk about the tyranny of having no structures or responsibility are those who resist new developments.