Hierarchical organisations understand that they need to flatten their structures to take advantage of the environment that is swiftly changing.
Although Malaysian businesses are starting to see the advantages of agility, de-layering the organisation will probably present several difficulties. There will inevitably be opposition from top management, who must be prepared to cede authority, as well as from other employee groups who are just obstinately clinging to their ways and refusing to change.
One notable example of a company where there was resistance at the top initially, but eventually saw success after flattening its structure, is W.L. Gore & Associates, the maker of Gore-Tex fabrics.
W.L. Gore & Associates had a traditional hierarchical structure in its early years, with clear lines of authority and decision-making. However, as the company grew, it faced challenges in maintaining agility, fostering innovation, and adapting to a rapidly changing business landscape.
In the 1980s, Bob Gore, the son of the company's founder, recognised the limitations of the hierarchical model and advocated for a more decentralised approach.
He proposed a shift towards a lattice structure, a model of communication that flows horizontally rather than through traditional hierarchies. The structure allowed employees to have more autonomy, flexibility, and freedom to pursue their ideas.
However, there was significant resistance from top management, who were accustomed to the traditional command-and-control style of leadership. They were concerned about losing control, maintaining efficiency, and ensuring accountability in a more decentralised environment.
It managed to forestall resistance by showcasing successful examples of decentralising that brought about positive outcomes such as increased innovation, faster decision-making, and improved employee engagement.
W.L. Gore & Associates, instead of flattening the structure immediately, started with small-scale pilots or experiments that allowed them to test new models in controlled environments, gather feedback, and adjust. It demonstrated the benefits of lattice organisations in these pilot projects that gradually build confidence and support among top-level executives.
It continually engaged in open communication and dialogues that were essential for addressing resistance, and they had many constructive debates on the merits of the lattice structure.
It also identified and empowered internal champions of the lattice organisations, which was crucial for overcoming resistance, as they were advocates who were mid-level managers or employees who played a role in promoting the benefits of the flattened structure and allowing for the adaptation of top management.
It had numerous fruitful discussions about the advantages of the lattice structure and consistently engaged in the kind of open communication and dialogue that were necessary to overcome resistance.
To overcome intransigence, it was also essential to identify and strengthen internal champions of the lattice organizations. These advocates, who were mid-level managers or staff members, helped to promote the advantages of the flattened structure and made it possible for top management to adapt.
Despite the initial resistance, Bob Gore persisted in his vision and gradually implemented changes to flatten the organization's structure.
He introduced the concept of "associates" rather than employees, emphasizing the importance of collaboration, trust, and shared ownership.
Over time, the benefits of the lattice structure became apparent. Associates were empowered to take initiative, experiment with new ideas, and collaborate across functional boundaries. This led to a surge in innovation, with numerous breakthrough products and technologies emerging from within the company.
The flattened structure also enhanced employee engagement, satisfaction, and retention. Associates felt a sense of ownership and pride in their work, knowing that their contributions were valued and recognized. This contributed to a positive company culture and strengthened Gore's reputation as a desirable employer.
Among the steps that Gore-Tex took to flatten its structure was organised into small teams and establishing a set of core principles such as fairness, freedom, and commitment to innovation.
It also has a "Dual Lattice Structure" consisting of functional and product-oriented "gore-ites."
Functional leaders provide expertise and support to product teams, while product leaders focus on driving innovation and market success.
The underlying value that underpins the decentralized structure is that leaders must trust, and this is what Gore-Tex has permeated throughout the organisation. Leaders must trust associates to make decisions autonomously, while associates trust leaders to provide support and guidance when needed.
If Malaysian companies are to de-layer their structure, they must come to terms with the fact that they are bound to be met with opposition and challenges from top management, but the founders of the organisation must take the lead in embracing the change and understanding agility is the key to the long-term survival of the business entities.
Malaysian companies too have followed the examples of successful firms that have undertaken to flatten their structure, such as W.L. Gore Associates. A good example of a company is Axiata Group Bhd, a leading telecommunications company that chose to flatten its structure and faced considerable resistance from employees, particularly from middle management.
One of the major concerns of employees was the fear of uncertainty, which was addressed through a robust communication strategy to articulate the vision and the benefits of de-layering. It was crucial for employees to understand why the change was necessary and how it would benefit the company and employees in the long-run.
Axiata adopted an inclusive approach by involving employees in the decision-making process. They organised workshops and focus groups, allowing employees to express their concerns and share their views.
After overcoming resistance, the company helped employees transition into new roles and responsibilities within the flatter structure by organizing skill development courses, including technical training, and mentoring by senior team members.
To facilitate the transition, Axiata implemented a structural change management framework with clear timelines, milestones, and deliverables. They also appointed dedicated change agents within departments to support the transition.
The benefits of a flatter structure for Axiata included reduced bureaucracy and greater agility, enhancing the company's responsiveness to market changes and technological developments. Employees became more empowered, gaining greater autonomy in decision-making, which led to increased job satisfaction and reduced labor turnover. Axiata also fostered a culture of innovation, crucial for long-term business sustainability in a rapidly changing environment.
Axiata, a home-grown company, benefited immensely from flattening its structure. Many Malaysian companies can learn from Axiata's experience in their quest to excel and become exemplary companies of the future.
Axiata also adopted an inclusive approach by involving employees in the decision-making process. They organized workshops and focus groups that allowed all employees to express their concerns and articulate their views.
After overcoming resistance from employees, the company got the employees to adopt new roles and responsibilities in the flatter structure, and the company organised skill development courses such as technical training and skill training with senior members of the team mentoring the members.
It also implemented a structural change management framework that included clear timelines, milestones, and deliverables to facilitate the transition and appointed dedicated change agents, or champions, within the departments to facilitate the transition.
Among the benefits that Axiata gained from a flatter structure were reduced bureaucracy, and greater agility, with companies enhancing their responsiveness to market changes and technological developments.
Axiata also saw the employees being more empowered as they began to have more autonomy to make decisions, which led to greater job satisfaction and reduced labour turnover
It is paramount that Malaysian companies stay agile and flatten their structures, and many Malaysian companies can take a leaf from Axiata in their quest to excel and become exemplary companies of the future.
*The writer has an MBA from the University of Strathclyde in the UK, has worked in the financial markets, and has lectured extensively on management. He was also formerly attached to a leading think tank. The views expressed in this article are the author's own and do not necessarily reflect those of Business Times.