Business organisational structure

Flat organisational structure is an organisational model with relatively few or no levels of middle management between the executives and the frontline employees. Its goal is to have as little hierarchy as possible.

How does a flat organisational structure work?

For a small business with a handful of employees, having a flat or horizontal structure is often the logical approach. The staff-level employees usually report directly to the business owner. There is typically no formal management structure.

If a management level does exist, the chain of command from top to bottom in a flat structure tends to be very short. The span of control is wide with each management level controlling a broad area or group. Employees all report to one or few overall managers and are empowered to contribute to decision-making. Managers have the authority to make business decisions with little to no involvement from the top.

What are the advantages of a flat organisational structure?

While it will not suit all types of organisations, the benefits of a flat structure are:

• better communication and relationships between different roles
• better team spirit as there is less hierarchy
• simple, faster decision making as the chain of command is shorter
• better ability for the business to change and adapt
• greater job satisfaction when employees are given more autonomy
• more self-direction can lead to more innovation and efficiencies
• ability to lower operational costs

Flat structure is suitable for small to medium-sized organisations or companies that start flat and scale this approach gradually as they grow. The lack of hierarchy is rarely practical or scalable for larger organisations with hundreds or thousands of employees. Those types of companies tend to have a hierarchical organisational structure.

What are the disadvantages of a flat organisational structure?

Like any other organisational model, flat hierarchies have their downsides. The common disadvantages of a flat organisational structure are:

• risk of generalisation and confusion if it's not clear who to report to
• lower sense of accountability as employees may have more than one boss
• risk of power struggles arising in absence of a formal system
• lack of employee specialism and specific job functions
• lack of long-term growth or opportunity for promotion
• difficulties in scaling up and growing the company

If they want to flatten their organisational structure, hierarchical organisations will need to invest significant time, resources and investment to achieve this.

What does flattening an organisation mean?

Flattening an organisation or transforming a hierarchical organisation into one with a flatter structure is known as delayering. This process involves:

• opening up lines of communication and collaboration
• removing one or more levels of hierarchy from the organisational structure

Often, it is the middle management layer that is removed. Delayering doesn't necessarily mean cutting jobs and overheads, but it does usually increase the average span of control of the senior management within the business.

Although challenging and time-consuming, flattening can be an effective strategy for boosting operational efficiency, decreasing wage costs and removing red tape.

If you decide to change your organisational structure, make sure that you manage the process correctly. See best practices in change management.