Low-hierarchy--or “flat”--management has been praised, questioned, and sometimes outright maligned. But it was the first and only choice for Rishi Shah and Shradha Agarwal (pictured). They run ContextMedia, which creates and distributes health-focused programming on dedicated TVs and tablets in doctors’ offices, as well as educational tools for physician practices. While at Northwestern University, Shah and Agarwal built several student organizations using flat-management techniques, which, they found, created engaged, loyal teams with big ideas. They’re certain that using the same structure at ContextMedia is a chief reason the company generated $30 million in sales in 2014 and forecasts $60 million for 2015. Agarwal explains how to use a low-hierarchy style to fire up employees and boost the bottom line.
1. Remove layers, unleash creativity
Twelve department heads join Shah and Agarwal to form a leadership team, the only management layer in the 160-person company. Employees are expected to contribute ideas to the team, which aims to prevent their being watered down or overanalyzed along the way. One product idea came from account managers rather than product developers. They saw that, increasingly, doctors have patients waiting in exam rooms, which lack ContextMedia’s TVs, instead of reception, where the TVs are located. ContextMedia sells eyeballs to advertisers, so the account managers proposed a tablet patients could watch in the exam room. “Identifying that as an opportunity happened absolutely at the grassroots level,” says Agarwal.
2. Hire for character, not the job
To evaluate job candidates, Shah, Agarwal, and talent director Katie De Voto use a five-step hiring process. It includes multiple interviews and a test or role-play exercise for every position. Agarwal says it is an exacting system. De Voto says she hires on the basis of “character, aptitude, and then skills,” and she’s interested in candidates who have organized volunteer groups for their school, community, or house of worship; it shows an ability to operate within traditionally flat organizations. Her first recruit was a teacher--for an account manager job. Agarwal credits employee values and work ethic for a successful 2014, when ContextMedia more than doubled the number of its installations.
3. Guard your culture
The company is serious about dispatching those who threaten its ethos. Agarwal says she recently fired an employee partly because he didn’t demonstrate empathy for others. ContextMedia developed this stance following a crucible moment in 2009, when, after a cash-flow crisis kept the company from making payroll, everyone on staff either quit or was let go. When cash flow improved and rehiring began, “we realized we needed to do a much better job communicating the mission [of educating patients] and hiring based on it,” Agarwal recalls. Today the company is growing fast and plans to add another 600 employees by the end of 2016.