When it comes to running a business, there are a lot of things to take into consideration. One of the most important is how you structure the organization. Organizational structure describes the day-to-day set-up of a company, with everything from how many managers you have to the skillsets your employees possess to how decisions are made. There are two main types of organizational structures: tall and flat, both of which have pros and cons. Which one you choose will depend on your business’s size, industry, and goals. However, you may find that a hybrid of the two best suits your needs. If you’re unfamiliar with organizational structure or trying to determine which one is right for you, we’re here to help. We’re breaking down the differences between the two primary types, the pros and cons of each, and why we think adopting a flexible organizational structure is crucial for an organization’s success.
What is an Organizational Structure and How Does it Impact an Organization?Organizational structure refers to how an organization arranges its employees, roles, and resources to achieve its goals. It helps define the hierarchy, reporting relationships, and communication, which greatly influence how the business functions. There are a few ways that it impacts an organization, including defining roles and responsibilities, decision-making, efficiency and productivity, employee morale, and more.
What are the Differences between a Tall and Flat Organizational Structure?Tall and flat organizational structures are two different approaches to how a company is organized, and each one has distinct characteristics. Here are the key differences you should know.
- Hierarchy – In a tall structure, there are multiple levels of management and authority. It often consists of many layers, including executives, managers, supervisors, and employees. Flat structures have relatively few levels of management, often with only a few layers. Sometimes, there will be just one layer between the top management and employees.
- The span of control – The span of control (aka the number of employees reporting to a single manager) is relatively narrow in a tall structure. This means that each manager supervises a smaller group of employees. The span of control in flat structures is broad, meaning that managers oversee a larger number of employees.
- Specialization – Employees have well-defined, specific roles and responsibilities in tall structures. In flat structures, employees may have broader roles and responsibilities. They are often expected to wear multiple hats and handle various tasks.
- Communication – Flat structures encourage more informal communication and collaboration, whereas, in a tall structure, communication is more formal and can be more difficult because of the layers of management.
- Decision-making – Due to the multiple layers of management, decision-making can be slower in tall structures. Since there are fewer layers of management in flat, organizationally structured businesses, decisions are typically made more efficiently, and responses to changes are often quicker.
- Control – A tall structure allows for greater control for higher-up managers. In flat structures, senior management has less direct control. They rely on employees and middle managers to take on more responsibility.
Benefits and Drawbacks of a Tall Organizational StructureNot sure if a tall organization structure is right for your business? This type of structure can provide several benefits, including:
- Clarity and stability – A clear chain of command can help reduce confusion and ensure that everyone knows who is responsible for what. This can also lead to a more stable and predictable work environment.
- Enhanced control –A tall structure gives senior management more control over the company’s operations. This can be helpful in ensuring that the company is reaching its goals.
- In-depth specialization – When employees are able to specialize in a particular area, it can lead to increased efficiency and productivity, as employees can focus on their areas of expertise. This increased efficiency and productivity is good for your business and can also help the employee feel useful.
- Slow decision-making – As we mentioned earlier, decision-making can be slow because there are so many layers of management. If you’re running a fast-paced business, this can be a problem.
- Lack of innovation – Tall structures have also been known to stifle innovation, as employees may hesitate to take risks or try new things for fear of upsetting their superiors.
- Communication challenges –Communication can be challenging in a tall structure, as information can get lost or distorted as it travels up and down the chain of command. Think of it as one giant game of telephone.
Benefits and Drawbacks of a Flat Organizational StructureA flat organizational structure can be beneficial for businesses that are open to change. However, managing a flat organization can also be challenging since there is less oversight and coordination. Some of the benefits of a flat organizational structure include:
- Increased employee satisfaction and engagement – Employees in flat organizations often feel more empowered and have a greater sense of ownership over their work, which can lead to increased satisfaction and engagement.
- Improved communication and collaboration – Flat organizations often have more open lines of communication. This can help harness an environment of collaboration and teamwork.
- Increased innovation – When employees are empowered to take risks and try new things, there’s typically an increased rate of innovation. This experimentation can lead to some great results.
- Reduced costs – Flat organizations can often operate more efficiently because they have fewer layers of management. The fewer the employees, the fewer people there are to pay.
- Difficulty coordinating and managing – Flat organizations can be difficult to manage because there is less oversight and control. This can lead to a domino effect of problems with communication, decision-making, and accountability.
- Lack of specialization – When employees have too many tasks on their to-do list, they can feel overwhelmed, which can lead to decreased productivity. Not only that, but this lack of specialization in the work can cause it to be done poorly compared to those who are an expert at what they do.
- Increased stress – When there is less structure within a business, employees may feel an increased stress level, as they may feel more pressure to perform and be responsible for a wide scope of work.