What are the advantages of flat organizational structure over tall organizational structure?

An organization’s structure impacts everything from how the organization operates to how well employees communicate internally. A well-defined organizational structure helps employees work more efficiently, laying the groundwork for internal operations, establishing a chain of command, and helps with transparency in the workplace.

Companies typically adopt either a hierarchical or a flat organizational structure to break down their internal operations and how the work will be carried out across teams. A number of factors, including size, goals, skills, and number of employees, determine the type of structure that best fits an organization.

In this article, we’ll break down both hierarchical and flat organizational structures: what they are, the pros and cons to using each type, and examples of companies that operate in each of these ways successfully.

What Is a Hierarchical Organizational Structure?

Hierarchical organizations resemble a pyramid and rely on a vertical chain of command, with the CEO at the top and several layers of management underneath. Large companies and government agencies with a high number of employees typically adopt a hierarchical structure to better accommodate their size and clarify reporting relationships.

Advantages of a Hierarchical Organizational Structure

There are plenty of pros to a hierarchical structure. For example, this type of structure presents a number of opportunities for employees to “climb the ladder” and grow with the organization. Hierarchical organizations have a clear career path, enabling employees to gradually advance and reach more senior positions. Reporting relationships are also clear thanks to the top-down structure.

Companies with a hierarchical organizational structure typically consist of several departments and are likely to have more niche positions than flat organizations, which allows employees to become experts in their field, with many opportunities to specialize.

Disadvantages of a Hierarchical Organizational Structure

But, of course, there are disadvantages to a hierarchical structure as well. Organizations with this type of structure are prone to bureaucracy and tend to experience communication silos and a lack of collaboration across departments. The bureaucracy and red tape can also cause roadblocks that slow innovation and prevent work from getting done.

Amazon’s Hierarchical Organizational Structure

Amazon is an example of an organization with a hierarchical structure, largely due to its size. As the largest internet retailer, the company currently employs approximately 560,000 people around the world. With the hierarchical structure, all of Amazon’s employees report up to the founder and CEO, Jeff Bezos.

Under Bezos, there are several levels of management across many departments, such as:

• Software development

• Information technology

• Legal operations

• Human resources

• Finance and administration

• Business operations

• Product management

The hierarchical organizational structure works for Amazon because the company is organized into a number of small teams under separate management. This structure allows managers to work more closely with heir team members and to facilitate control over their department.

Here is an example of a hierarchical organizational structure:

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What Is a Flat Organizational Structure?

Flat organizations have a structure with few levels of middle management between leadership and employees—or, in some cases, no middle management at all. Small organizations and startups often have flat structures because they have fewer employees and less of a need for hierarchical management.

Although hierarchical organizational structures have been the go-to option for a long time, many modern companies are opting for flat structures that allow for a collaborative, interconnected team where everyone contributes equally.

Advantages of a Flat Organizational Structure

A flat organizational structure has its advantages as well. With this type of structure in place, employees often have more responsibility and are more involved in important conversations. Transparency is also a big advantage when using a flat organizational structure thanks to the limited bureaucracy. Having fewer levels of management also simplifies internal communication and enables fast decision-making, and because the layers of middle management are removed, power and responsibility are divided evenly throughout the organization.

Disadvantages of a Flat Organizational Structure

On the other hand, a flat structure can sometimes make it difficult for employees to specialize in specific roles. In many cases—especially with startups—each employee is expected to be a “jack of all trades” and to pitch in on a number of different tasks. Because there are few (or no) management layers, managers are often stretched thin, which can sometimes cause confusion among employees and lead to issues such as poor oversight and a lack of direction.

Valve’s Flat Organizational Structure

Like many modern organizations, a video game company called Valve has adopted a flat structure for organizing employees and clarifying roles and responsibilities. In fact, the gaming startup has placed an increasing emphasis on the decision to go completely boss-less. Although the company does technically have a founder and CEO, Gabe Newell, his role is much more hands-off than that of the average executive.

“Everybody is expected to essentially vote on what is most important to our customers by the projects that they work on,” explains Newell. “So none of them are working on those projects because somebody else told them to work on them. Everybody’s working on those projects because they thought they could make the largest contributions to our customers by working on them. People move around all the time.”

Here is an example of a flat organizational structure:

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Bringing Your Structure to Life with Org Chart Software

Traditional org charts make it difficult to depict cross-team collaboration, dynamic roles, and limited management roles. However, with more companies moving toward progressive, flexible styles of working, modern org chart software is becoming increasingly essential to accurately illustrate organizational structures and keep them up to date as they evolve.

Whether your company has a hierarchical or a flat organizational structure, using modern org chart software like Pingboard makes it easy to create a holistic visual representation of your employees, roles, and functions. Pingboard org charts are interactive and highly customizable, meaning they can be adapted to fit the needs of any organization, regardless of how it’s structured.

Choosing the right structure is essential in order for companies to provide clarity around roles, operate more efficiently, and be more successful overall—and interactive org chart software is essential for painting a visual representation of that structure and sharing it across the organization to bring it to life.

Flat organizational structure is an organizational model with few or (in most cases) no levels of middle management between the executives and the staff level employees. It was designed with the idea that knowledgeable and well-trained workers will be more productive when they are directly involved in the decision making process of the organization, rather than being supervised by many management layers. In other words, employee involvement is promoted by decentralizing the decision-making process and elevating the levels of responsibility of employees. With this organizational structure, customer comments and feedback will reach all the personnel involved in the decision faster, enabling the company or organization to make a rapid response to customer feedback.

Often times, you will see this model used in very small businesses, where there is a lack of middle managers because there are too few employees to handle. In a small boutique shop, for example, the business owner or business head may perform some of the functions that middle managers in hierarchical organizations perform. Some companies, even when they have already grown or expanded retain a flat structure. This is especially true in those organizations with self-managing teams, where individual staff organizes and performs their own work without the need for close supervision.

Then, of course, flat organizational structure is for everyone. Startups and small business should weight its advantages and disadvantages before deciding to implement it in their own business.

List of Advantages of a Flat Organizational Structure

1. It Is Cost Efficient
As mentioned, in this organizational structure, there are fewer (or no) manager layers between the executive and the staff. This means that there are less wages, fringe benefits, and so on, to pay for management. Salary-related expenses are reduced, enabling the company to save money as well as provide better pay for its workers.

2. It Promotes Faster Decision Making
Another advantage about a flat organizational structure is there are less decision-making hoops. Fewer people have to be consulted about a decision, allowing the management to provide rapid response to any issues or concern. It creates a direct communication line between the person sitting behind the desk (the owner or CEO) and the people on the front line (the workers).

3. It Allows Clear Communication
What usually happens when information is passed on through a series of ears and mouths is that it ended up either distorted, puffed up, or deflated. When communication is passed across many management layers, there is a high chance of miscommunication. Flat organizational structure helps avoid this by allowing the upper management to take direct input from employees, and vice versa.

4. It Requires Less Dominance and Supervision
Many believe that a company’s head must be able to monitor and manage anything and everything that is happening inside his or her organization, including the employees. Some studies, however, show otherwise. This is because the less time managers have to helicopter and micromanage their employees, the more productive employees can get in day as these can give them a higher sense of responsibility.

List of Disadvantages of a Flat Organizational Structure

So, we have already pointed out the advantages of a flat organizational structure. Let us now take a look at its limitations.

1. Management Can Easily Lose Control
As mentioned above, this structure is ideal for startups and small business where the number of employees is still manageable. The system can pose a problem to the whole organization when the ratio of employees to managers become too out of proportion. The management can easily lose control when there are less people to put a brake to bad behaviors and less individuals to support or back them up on their decisions.

2. Work-Relationship Could Struggle
When managers have too many people to manage every day, they may find it difficult to connect with their employees on a personal level, which is crucial in maintaining trust and in stepping up the baseline of employees’ responsibility and accountability for the work and the organization as a whole. This con can have a great impact on the issue of respect and morale of an organization on levels of authority.

3. It Can Create Power Struggle
Under this organizational structure, it is observed that employees often lack a specific boss to report to, especially when the owner or CEO is not around. This can create confusion and possible power struggles among management employees.

4. It Makes Employee Retention Difficult
Who does not want a promotion? Excellent employees who are looking for an improvement in their rank, aside from an increase in their salary, may find it hard to find job satisfaction in this kind of organizational set up. They may end up looking for a job somewhere else where they believe their efforts will be rewarded with a promotion.

5. It May Hinder Growth
Change is often times difficult and poses a lot of what ifs. Because of this, management may decide against new opportunities in an effort to maintain the structure which, as a result, may limit the long-term growth of the organization.

6. There Is Less Motivation
While a flat organization structure may lessen the problems caused by unhealthy competition among employees, it makes it harder for ambitious workers to move up the ladder as there is very little room up there. This could easily erode motivation, giving people no reason to take the extra mile in their work.

7. Can Result to Role Confusion
An employee may go to work for a flat organization expecting to fulfill a defined role, but find out later that he or she needs to do many pieces of other jobs. This makes it hard for workers to focus on their tasks and specialize at their jobs.

Conclusion

Like many other organizational structures, the flat organization structure also has its share of advantages and disadvantages. Whether or not it is for your business, it depends on the size and type of your company. Thus, carefully consider the pros and cons discussed above before adopting this structure in your own organization.

Author Bio
Natalie Regoli is a child of God, devoted wife, and mother of two boys. She has a Master's Degree in Law from The University of Texas. Natalie has been published in several national journals and has been practicing law for 18 years.