Why corporations are adapting to the startup structure

In an almost ironic turn of events, startup structures are now increasingly envied and even copied by bigger companies trying to adapt to this new internet-led economic model, embodied most perfectly by startup businesses.

It’s an economic model based first and foremost on exponential growth: startups develop small but innovating products that grow fast, they come up with options and solutions which are tested with no fear of failure, and decisions have to be taken rapidly.

From an HR perspective, it also means a flatter organizational structure and more collaboration between all employees, managers and business owners. Such approach brings a more rapid decision making and increased flexibility, two aspects which are often lacking within bigger companies.

The new mindset of multinational corporations reached a turning point in 2013, when Microsoft decided to scrap stack-ranking its employees — meaning it stopped classifying employees according to their level of performance.

Companies seem to have finally realised that stack-ranking was hurting employee performance instead of promoting it.

Inspired by the startup business model, corporate human resources now tend to become more flexible in their approach, based on feedback rather than on somewhat arbitrary figures which are supposed to reflect an employee’s performance in various areas.

Practically, such dynamic, startup-inspired approach has also created the need for a new generation of HR-focused SAAS (Service as a Software) that enables small and big companies alike to monitor and manage their HR department via cloud-based services, accessible virtually anywhere in the world.

Opting for a flat organizational structure also implies a very direct impact on your business.

Whereas bigger corporations can be plagued with many different layers of management, all staff within a flat structure reports directly to the business owner/director.

Decision making is made easier, with fewer steps and faster outcomes: you will be able to respond to new business opportunities and react to business developments and issues more rapidly.

This means communication is also easier and improved between all members of staff, with higher transparency and a better understanding of the business goals and issues for all.

Overall, the cost involved will be smaller too because higher distribution of responsibility means less will be spent on recruiting managers.

Within this structure, employees are also more adaptable: they often find themselves in situations where they have to react quickly within a team and become more agile, creative and productive.

It’s not all sunshine and rainbows though as a few experts in the field agree that there are a few risks and disadvantages to the flat structure: fewer promotion opportunities can discourage employees, while managers can easily become overworked, resulting in a loss of control.

As your business grows, you’ll have to spend more time thinking how to manage your employees and structure the company.

 

While you do so, always bear in mind that many corporate organisations have been spending millions on consultancy agencies to try and go back to a flatter organizational structure… So don’t jump too fast on the corporate wagon!