#Org structure

Make principled decisions in a crisis

In just eight weeks, Airbnb lost 80% of their business due to the pandemic. Co-founder Brian Chesky learned quickly that "there's not a lot of data in a crisis." Instead of relying on data-driven decisions, he needed to act swiftly and make principled ones. As he explains, "A principled decision is if I can't predict the outcome, how do I want to be remembered?"

Chesky developed four fundamental principles to help guide the company during this time:

• Principle 1: Act fast. Be intuitive. Be courageous. Going into the pandemic, Chesky had concerns that Airbnb was becoming too bureaucratic. There were at least ten divisions, each having their own operations, design, and marketing teams. The pandemic forced Chesky to pull the trigger on rebuilding the company from the ground up, consolidating all divisions so that there would only be one operations group, one design group, and so on for the entire company.
• Principle 2: Preserve cash. Airbnb cut the size of its staff by 20%, reduced executives' pay, and reduced the Marketing budget to zero. Chesky instead gave over 100 press interviews that year.
• Principle 3: Act with all stakeholders in mind. Brian approached the pandemic with the idea that Airbnb needed to be as "generous as we possibly could be." Each person who lost their job was given 14 weeks of severance and one year of health insurance. The Airbnb recruitment team also helped them find new jobs. Guests received full refunds for any cancellations due to the pandemic. Airbnb also dispersed $250 million amongst Hosts to compensate for the $1 billion in cancellations that occurred.
• Principle 4: Play to win the next travel season and continue to move forward. Within three weeks, Airbnb enacted a plan to cut back on products like luxury home rentals and hotel expansions and shifted towards rural vacations that people can book within a day's drive, long-term rentals, and virtual events.

Have no less than seven direct reports

When it comes to organizational design, Google's rule is to keep it as flat as possible.  At Google, there are only four levels of employment: individual contributor, manager, director, and vice president. For a while, Google experimented with having no managers at all but then landed on the guideline that managers should have no less than seven (7) direct reports.

While this is the complete opposite of most servant leadership practices, Google believes that their philosphy:

• Makes it nearly impossible for managers to micro-manage
• Increases employee freedom
• Gives all staff direct access to decision-makers

Keep your organizational structure flat

Southwest believes that when you minimize the layers of management, you are able to streamline communication channels and eliminate miscommunication and red tape. That is why at Southwest, they:

• Do not have more than four layers of management between a front-line supervisor and the CEO.
• Do not have assistants, as they only add layers to the hierarchy, increase overhead, and create more formal communication channels.
• Limit the number of committees as they overcomplicate decision making structures and waste time.