Wednesday , September 19 2018

Startups to embrace hierarchical structure

Startups to embrace hierarchical structure

Startups are changing their process of office conduct. From a flat structure, they are finally embracing the hierarchical structure. It is interesting to note because the startups were previously all about revolution. They were incorporating a flat structure – most of these entrepreneurs were young employees in big companies like Amazon. However, now the structure seems to be undergoing a modification.

Startups to embrace hierarchical structure

Here are the examples of new age companies and how they are changing and remodeling their structure as of now –


  • Zerodha has also increased a hierarchical structure in its workforce right now. It started changing its procedures by incorporating fire drills and several other tests.
  • These fire drills were to check how the employees react when they are pushed into a pressure environment. Potential leaders were identified from these tests.
  • Therefore the employees that performed and among them who showed leadership traits were chosen and taken to the next level. The benefit was huge they said.
  • Their team managers were now equipped with better outcomes. They were also trying to find out different ways to make work more efficient.


  • ClearTax, an online tax filling company has also expanded itself to a two tier organization now. So now they have two levels of workforce distribution.
  • This means that the employees will have a better idea of who to report to. It will also help the employees manage the work effectively right now they said.
  • They have said that their employees now have quick decision making capabilities. It has also given them clarity about their own metrics which is very important.

Urban ladder

  • When it comes to incorporating this new trend, Urban Ladder doesn’t seem to be very far. It has done away with annual appraisals – this might not come with much delight to the employees.
  • However the startup has started to have more meaningful career planning conversations with its workforce. That is something that changed for the liking.
  • The appraisals were earlier given on the basis of performance. Hence the entire concept of performance has now been done away with. They now believe in potential instead.

E-commerce startup Voonik on the other hand, has gone a completely different route. They are now hiring people from bigger companies than them. They are hell bent on hiring employees who are leaving Myntra, Amazon, Flipkart, HUL and Target.  According to them they are doing this in order to bring more efficiency in the workforce. They also want experience to be a key factor in determining going forward.

What is the need for this sudden change?

There is a need for a sudden change in the ecosystem of the workforce because the investors are looking for better results. As per experts, the investment funding for startups is not as generous as it was a few years back. Now already a few years into the industry most startups are pressurized to prove the worth of their business model.

This is why they are under pressure to put their framework into more sustainable modules. They are going with what is established and known since times immemorial. They are taking the route of the better known industries and moving off from a hierarchical structure.

Growth is simply not enough now. The startups are forced to show some credibility. They are realizing that having some form of hierarchy would ensure that the fluidity is maintained. This was the same with the old school companies. However, it took the startups quite a few years to adopt this method.

Is this new feature really needed?

Some people have claimed that in times when startups are facing cut throat competition, this is really needed. This is the time of slowdowns and layoffs in the market. Hence to sustain, the new age companies will have to move really smartly. A proactive approach is needed to systemize the hierarchies within the framework.

2016 has been especially tougher for the startups not to mention many startups have quit the market. With the ambience being so struggling and grim, it is a given that the startups have buckled up.

Archit Gupta, the founder of ClearTax, said that earlier the focus was on scaling up and therefore the companies hired employees that suited the task. However, now the workforce will not be so lenient because the focus is now on profitability and each of the employees has to give their best. This is why the employers are now cautious while hiring as well.

Benefits of this approach

Recently a Mumbai based startup Baby Chakra faced a similar question when its junior team member questioned the need for a larger team office. Baby Chakra encourages its team members to ask questions to ensure transparency among all levels. To address the question, the CEO of the company answered that “every dollar counts.” She also mentioned that it is the day and age when innovation will have to thrive side by side beside frugality.

While this is going on, some would argue that it is for the better because discipline is replacing freedom in the workplace. This means that the workforce will now be more focused. Also, if there is hierarchy and structure, then there are no communication gaps.

It will also give the employees distinctive roles. Hence they will have to enhance their skills in a particular area only. This will ensure that their skill mapping is done adequately and that they contribute in a very particular way to the company. In fact, some employees are saying that this is a welcome change. Earlier the employees in a startup did not have any distinctive role which meant that they had to work more than their share. Now they can be focused only on their singular line of work.

This way the company can move forward with better guidance and the teams within the company will row the same boat. The employers are very pressed on this matter right now and they are seeing it as a welcome change.

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