Equals / Managers / No Manager

[b]BLUF: Is it okay / common to replace a supervisory manager with an equal? Is it a good management technique or a lazy way out?[/b]

I recently interviewed for a Payroll Manager position with a large firm here in the Denver area. The vacancy was previously occupied by a woman who was the true manager - Maria had Beth and Linda reporting to her though all three were hands-on processing weekly payrolls for the 3,000 employees. Apparently Maria was over-the-top micromanaging down to insisting that Beth and Linda both setup their desks, their files, the color of their sticky flags exactly the way she said to. This ticked off Beth and Linda who then complained up the ladder loudly enough that, Fred, VP of Finance, backed Beth and Linda. Maria, seeing the writing on the wall, up and quit. (Very abrupt departure but supposedly voluntary.)

Once Maria left, Fred decided that there shouldn't be a supervisory manager so all three positions would be equals, with no one reporting to either of the other two, all three going to Fred for any escalated issues.

Fred's words were along the lines of "You're all managers. You all manage and take full responsibility for the FEIN's under your direction, you develop relationships within those companies, you handle everything that falls under your jurisdiction."

My husband's theory was: This is Fred's way of not doing his job and managing how Maria was handling Beth and Linda. Now that Beth and Linda are irritated and have a sour taste in their mouth from Maria's poor management style, he's taking the easy way out and trying to prevent further squabbles.

[b]What are your thoughts on this "flat organization" method/style?[/b]