Every business, no matter the size or age, has short-term goals and long-term objectives that help guide it towards realizing its vision. In order to achieve success, an organization must leverage the resources at its disposal as efficiently and effectively as possible to minimize costs and maximize output. The most valuable resource a business has is its employees and, as with physical resources, a company should use its workforce to its full capacity.
Organizational structure, or hierarchy, is the key to optimizing a workforce. It has a significant impact on how successfully a business operates. Organizational structure is often loosely divided into two categories: tall (or vertical) and flat (horizontal). Each type has its own advantages and disadvantages.
A vertical hierarchy is the more traditional organizational structure. Generally adopted by larger, more established businesses, it’s characterized by a pyramid-like model that integrates levels of management spanning from low to high. The CEO sits at the pinnacle, with each manager responsible for, and delegating tasks to, a small number of lower-ranking employees. Low-level managers are generally responsible for day-to-day activities, and senior managers handle more high-profile decisions and long-term strategy. Accordingly, higher-level employees also have authority to assign responsibilities to those below them, as well as hold them accountable for their work.
In general, startups and companies with fewer employees prefer a horizontal structure because it involves minimal management tiers. As a result, many (or all) employees report to a single supervisor. There’s little real hierarchy, and most employees function as equals. This system emphasizes collaboration, and employees work together to accomplish short-term tasks and to decide the direction the organization should move in the future. In flat organizations, employees usually have a large amount of autonomy, and their responsibilities are less rigid. In general, however, the supervisor still has the final say on company matters, wielding significant authority within the organization.
Tall vs. Flat Hierarchy: An Employees Perspective
Each organizational structure cultivates a different type of work environment that, in turn, influences how employees feel and how they work. The greatest advantage to a vertical structure is the sense of order it furnishes within the workplace. Employees are given clear tasks to perform from upper management. Many employees prefer the sense of clarity provided within the hierarchy: They know exactly what their tasks are and when they should be completed. The greatest disadvantage to the vertical structure, however, arises from this rigidity. The environment is often less successful at nurturing creativity or providing employees the opportunity to innovate. This can lead to some employees feeling uninspired, unmotivated, and less productive.
The horizontal structure offers employees ample possibilities to be creative by fostering a work environment that is more loosely structured. Autonomy can inspire some employees to think outside the box and explore ideas that might ordinarily appear too risky, which can lead to successful innovation. The absence of a vertical hierarchy can make many employees feel more comfortable approaching others in the workplace, resulting in increased collaboration and more positive work relationships. However, the greatest disadvantage of the horizontal structure also arises from its greatest benefit. The lack of structure may promote collaboration and creativity, but if not controlled it can also create disorder. Employees may feel lost and confused about the scope of their responsibilities, becoming detached and unmotivated.
When deciding between tall and flat, the most effective structure may lie somewhere in between.
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