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.
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.
Natalie Regoli, Esq. is the author of this post and the editor-in-chief of our blog. She received her B.A. in Economics from the University of Washington and her Masters in Law from The University of Texas School of Law. In addition to being a seasoned writer, Natalie has almost two decades of experience as a lawyer and banker. She is a child of God, devoted wife, and mother of two boys. If you would like to reach out to contact Natalie, then go here to send her a message.