When you work in a big company, even an MNC, you notice that the structure of the company is very evolved and organised. There is a CEO, to whom a VP reports to whom AVP reports to whom directors report and so on. The designations might vary from industry to industry but the principle is similar — a hierarchy that gives employees a clear route on how to solve their daily challenges.
This is useful as well because the hierarchy is built in a way that the higher level has folks with bigger and better experience than folks at lower level in the same subject matter. For example, an assistant manager (Marketing) will report to the manager (Marketing) who will report to senior manager (Marketing) and so on. The marketing team will suddenly not start report to say BD team.
But will such a structure be correct for a startup?
The answer is no! Startups often have just a handful of employees and usually each employee performs a different function. A person who is managing sales might not know about marketing or product or tech. And it would be disastrous to get one line of people report to people from another background. So what is the best structure for startups? A flat structure, of course, where all employees typically report into the founders. The founders might appoint a chief of staff to represent them when required to take updates and communicate next steps.
The three benefits of flat structure are:
Cost Optimization: Startups often do not have resources to spend into hiring an entire lineage of subject matter expertise. And why should they? The founder can directly guide the personnel handling a certain project.
Open Communication: Since no one is above the other and no is below the other, folks can freely and openly talk which is very much important to maintain a healthy employee relationship. Egos outside, work inside!
Team Spirit: Since people can talk freely, they tend to work better together. The key is to instill sense of respect towards each other instead of jealousy and egos. Everyone has a different capability — let each one perform to his best potential.
If you have any queries, write to Rajeev@TBSPlanet.com
Rajeev Tamhankar
Twitter@rajeevtamhankar
Rajeev Tamhankar is IIT-R Alumnus, Entrepreneur of The Year’17 (Print Business) and the Founder of TBS Planet Comics