Former Valve employee Jeri Ellsworth has spoken of the company's famous flat management structure, calling out several shortcomings as part of an interview for the Grey Area podcast.

Because of Valve's success and profitability, the unconventional management structure – or, more accurately, the lack of one – has achieved a kind of legendary status. The much-circulated Valve employee handbook (PDF) explains: "Nobody 'reports to' anybody else. We do have a founder/president, but even he isn't your manager. This company is yours to steer – toward opportunities and away from risks."

[partner id="wireduk"]It's an idealized presentation (well, it is a handbook designed to enthuse and welcome new employees) and Ellsworth says as much. But she goes on to describe in greater detail shortcomings she observed during her time at Valve.

"It is a pseudo-flat structure where, at least in small groups, you're all peers and make decisions together," she said. "But the one thing I found out the hard way is that there is actually a hidden layer of powerful management structure in the company and it felt a lot like high school. There are popular kids that have acquired power in the company, then there's the trouble makers, and everyone in between."

One of the most frustrating aspects for Ellsworth was the hiring process. "I was struggling in the company to make a difference and to make the hardware group move forward. We were having a difficult time recruiting folks. We would interview very talented people but they would be rejected by the old timers at Valve as not fitting the culture."

"Valve promised me the world and then backstabbed me."The hiring process in Valve's flat structure is a curious one and is described in detail as part of an Econtalk podcast interview with Yanis Varoufakis, Valve's former economist-in-residence. Varoufakis' explanation is lengthy, but it makes it easy to see how problems might arise if the need being filled is contentious:

"Let's say you and I have a chat in the corridor or the conference room and the result of this chat is that we converge to the view that we need an additional software engineer or animator or artist or hardware person. Or several of them. What we can do is we can send an email to the rest of our colleagues at Valve inviting them to join us, forming a subcommittee that actually looks for these people. Without seeking anyone's permission in the hierarchies, because there is no hierarchy.

"Then we form spontaneously the search committee and we interview people, first by Skype; then we bring them, if they pass that test, to the company for a sort of face-to-face, personalized interview. Anyone who wants to participate does participate and then during that day – usually a day-long event – emails are fired all over the place with views whether this person should be hired or not, until some consensus is reached where there is effectively no one vetoing the hiring of that person."

Asked whether these problems arose as part of a company desire to move away from hardware she responded: "I have no definitive proof on that but they pretty much killed off our project." That project was CastAR – augmented reality glasses which Ellsworth is now working on as a separate project, having been handed the legal rights to do so by Valve. Referring to a press release saying that no projects were being cancelled she added, "I guess it was cancelled by proxy of none of us being there."

Ellsworth's experiences have not put her off flat management entirely, however. According to the interview, it works well for small groups like her hardware team. The problem as she sees it is one of scalability. What works for five or 20 people doesn't necessarily support 300.

Ellsworth prefaces her remarks with praise for a number of her colleagues: "I have a lot of friends at Valve, there are some great people there, especially in my team, the hardware team. We were really close knit." But the disparity between the handbook and her experience has left a bitter taste. "[Valve] promised me the world and then backstabbed me."

You can listen to the entire interview on the Grey Area podcast.