The fallibility of flat structure

We often hear that Organisations are becoming flat structured. That means decrease in number levels within Organisation hierarchy and easy Executive access to everyone within Organisation irrespective of their rank and file. We also have seen that office lay out changed dramatically from rooms to Executives to open cubicles to every one. The execs started using meeting rooms, which increased in numbers for their meetings and of course for bashing as well :) 

I am just wondering whether the flat structure really understood well by the Executives themselves and the other associates working within Organisation?? This doubt stems from personal experience through observation and sharing by professional acquaintances from different Organisations. 

The flat structure is good idea and improves the coordination and speed of communication between employees. Fewer levels of management encourage an easier decision-making process among employees.

On a flip side of flat structure also leads to by-passing in decision making, which I observed and heard. This is a result of over zealousness of executive. Some anecdotal experiences. 

1. An appointment letter was issued to a potential candidate as a practice head for technology. Doing this, the executive (who is a bully) by-passed the head-hr and got the work done with a lower rung employee from HR was informed to keep it Confidential by the bully. When things started going out of control of this bully, the head -hr was roped in. 
2. A manager(working in India) approached VP (who sits in USA) for a decision to increase head count in his/her Organisation. The VP without even consulting the local Director (who is sitting in India) acceded to the request. The Director in India is completely blind to the decision till HR sent an MIS on recruitment. 
3. After completing an appraisal process, an employee approached his/her VP with questions on how that increment was awarded, what was the criteria selected etc. The VP, who participated in appraisal discussion with the said employee was completely blind folded on the decision of increment. He/she was not involved in salary increase discussions. The executive above VP, based on his/her bias (may be information) awarded the increment. 

All the above situations leads to animosity between people and which is easily avoidable. The psychological safety (https://rework.withgoogle.com/blog/five-keys-to-a-successful-google-team/) is violated in all three cases. The best way would have been communicating about their decisions and taking people in confidence instead of by-passing.