The Myth of Flat Organizations: The Hidden Costs of Eliminating Managers

The Myth of Flat Organizations: The Hidden Costs of Eliminating Managers

“Less leadership doesn’t empower teams; it abandons them.”

Lately, I’ve been hearing a familiar myth circulating — that companies like Amazon and other industry giants are flattening their organizations, eliminating layers of management, and magically becoming more agile and efficient.

Let’s be honest: this is nonsense.

And more importantly, it’s dangerous nonsense, especially for growing companies navigating complexity, scale and performance.

So, let’s unpack what’s really going on.

The Claim: Fewer Managers = More innovation and agility

The Reality: The data tells a very different story.

1. Bigger Span = Smaller Impact

McKinsey, Gartner, and others have made it clear: when a manager’s span of control exceeds 8–10 direct reports, effectiveness declines, burnout increases and employee engagement drops.

Less leadership doesn’t empower teams; it abandons them.

2. Complexity Demands Leadership

The more moving parts in your business — tech, regulation, customers, talent, global ops — the more leadership infrastructure you need. You need less red tape and more clarity, communication and coordination.

Harvard Business Review research confirms that flat orgs in complex environments lead to bottlenecks and confusion, not speed and innovation.

3. Amazon Isn’t Flat — It’s Structured Differently

Let’s clear this up: Amazon didn’t get where it is by eliminating managers; it got there by embedding leadership deeply into its operating model.

  • Two-pizza teams (small, not self-managed)
  • The famous S-Team (top-tier leadership)
  • Dedicated hiring coaches and decision frameworks
  • Clear ownership across every line of business

What they removed was wasteful management, not needed management.

4. The Flat Org Experiment Has a Track Record — and It’s Not Great

Remember Zappos and holacracy? They only have 18% of their staff left. The company quietly returned to a more traditional model. When middle management disappears, decision-making slows, career paths disappear and the cracks start to show.

5. Strong Managers = Strong Results

According to Gallup, managers account for 70% of team engagement. Companies that invest in their managers, rather than eliminating them, see 20%+ gains in productivity and profitability.

Let’s say that again: leadership drives results.

6. Transition to Tech Managers and Working Managers

If companies say they are flattening their organization with less managers, they are actually moving to Tech Managers or Working Managers

For example, Meta is moving toward a model where:

  • Tech leads and engineers hold more strategic power
  • Managers are expected to justify their role by adding technical or executional value
  • Leadership comes from expertise, not title alone

When they flatten, it’s really a shift in who holds influence, not the removal of leadership altogether.

It’s Not Working for Everyone

  • Internal reports show rising burnout and uncertainty about roles
  • Flattening has led to lower morale, especially in areas where clear management was already thin
  • Some teams are now caught between higher expectations and fewer support structures

Meta’s lean-out of middle layers is a push for executional excellence, and a redefinition of who gets to lead, not a move toward no structure.

For other organizations, this is a reminder: removing layers is only smart if you’re replacing them with clarity, capability, and culture that supports scale.

7. Can Layered Management Work Well

Is there a company where layered management works well?  It does at Microsoft, the quiet giant of healthy structure and high value.

While the tech world chased flat orgs, holacracy, or founder-centric control, Microsoft took a different approach under Satya Nadella.

 They moved to a modernized hierarchical structure that emphasizes clarity, collaboration, and leadership development, and it’s been one of the most successful corporate turnarounds in recent history.

Microsoft’s Structure: Modern, Layered, and Culturally Aligned

Divisional Structure with Strong Cross-Collaboration

Microsoft organizes around major product lines and services (e.g., Azure, Office, Windows, LinkedIn, Gaming). Each division has:

  • Its own leadership team
  • P&L accountability
  • Product-specific engineering, sales, and marketing units

This gives focus and ownership without siloing, because Satya made collaboration a cultural imperative.

What Actually Works

The goal isn’t to flatten — it’s to strengthen and streamline. Strive for:

  • Clarity over control
  • Smart hierarchy over vague autonomy
  • Leadership as a capability, not a title
  • Investing in people who guide, challenge, and grow teams

The Bottom Line

Flat organizations sound great on a slide, but real organizations run on clarity, connection, and leadership. Let’s not confuse fewer managers with better management.

Amazon didn’t win by going flat. It won by getting sharp.

And so will you.

Keep Building Leaders,
Bobbie Goheen