Why a Flat Management Structure Could Be Costing Your Business Top Talent

When successful startups and their staffs expand, many founders intentionally retain the bare-bones hierarchies that made their business leaner, faster, and less expense to operate as they grew.

Recently, and sometimes very publicly, larger corporations and smaller companies have been joining the spreading trend of firms reducing both the layers and overall numbers of their middle managers, seeking similar flexibility and efficiency. However, research indicates that strategy can carry a hidden cost — fewer women want to work in those pared-down structures because they worry about transparency and fairness.

That risk was highlighted by a recent article by the news site of University of Pennsylvania’s Wharton School. The post revisits a study co-authored by Wharton management professor Saerom (Ronnie) Lee that was originally published last year as the trend toward having fewer middle managers began spreading. It described two experiments whose results showed women are less likely to apply for a job that’s described as being part of a flattened management structure. The reason for that aversion, Lee said, was that candidates often regard those thinned-down structures differently based on their gender.

The result, the experiments found, was that while postings for jobs stipulated as being part of a flattened management organization did not decrease the overall number of applicants, they did produce a 8 percent drop in the women applying for the positions.

“Flat structures might appear egalitarian and inclusive,” Lee told the Knowledge at Wharton site. “But for many women, they can raise red flags about fairness, support, and opportunities for career growth.”

That concern may affect diversity at companies that lose out on top women job applicants.

That strategy got widespread attention when tech giants like Google, Amazon, and Microsoft embraced it, cutting the layers and overall numbers of their middle manages to reduce costs and enable quicker decision-making. It has more recently been adopted by Walmart, Starbucks, Ernst & Young, and companies of all sizes across most sectors.

That flattening trend resulted in the number of layoffs of midlevel managers expanding to nearly 30 percent of all headcount reductions in 2024 — up from an average 20 percent between 2018 and 2022. It has also coincided with a 40 percent drop in job postings for those positions since 2022, according to some estimates.

Amid the increased reduction of managerial ranks, Lee and his fellow researchers began suspecting women weren’t as keen on the results of the flattening trend, or how it affected their career prospects. To test that theory, they conducted two different experiments.

The first involved sending recruitment emails to 8,400 employees for two management positions, one in software and the other in business development. Some of those stipulated the employer had a flattened structure, while the others made no mention of that detail. The result was the portion of women applying to job notices in flat organizations dropped to 19 percent, compared to 27 percent who responded to offers in unspecified structures.

The second step in the research involved a survey of 8,500 workers that produced similar results.

“Relative to men, women job seekers are disproportionately less attracted to flatter employers because they perceive them as offering relatively less autonomy than men, as well as engendering informal workplaces where they will encounter greater difficulty in fitting in and in progressing their careers,” the study’s conclusion said.

What’s that wariness based on? Many women respondents said they suspected the cut-down, aired-out ranks of managers created a higher degree of autonomy and margin for maneuver that may allow certain male employees to fall back on outdated and prejudicial stereotypes, attitudes, and behaviors.

While those are less prevalent in business today than in earlier eras, participants said they still remain strong enough to continue limiting equal opportunities for women in most workplaces. Many experiment participants viewed the risk of those coming back to the fore as being higher in flattened structures.

Explaining those concerns, one survey respondent said in a free-response section that flat structures have “the potential for decreasing unnecessary bureaucracy… [but] that alone will not solve systemic issues like those faced by women in many companies.”

“I think of [a flat structure as allowing] prejudice in the workplace preventing upward mobility of marginalized employees,” another female respondent said.

Given rising adoption rates and benefits to businesses of management flattening strategies, Lee said his objective in revisiting the study isn’t to convince companies to reverse their restructuring. Instead, he wants employers —especially startups — to be aware of the “diversity debt” they risk by marketing their thinned out organizations as a dominant workplace characteristic.

“For companies trying to hire more women, the message is pretty clear: Flat doesn’t always feel fair,” Lee told the Wharton sit. “If a flat hierarchy is core to your venture’s identity, avoid overemphasizing it in recruitment — or pair it with clear assurances about fairness, workload, and career progression.”

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