When you think of a company’s organizational structure, what comes to mind? A boss, some supervisors, and then the rest of the employees? Departments with specific specialties? How about teams from a bunch of different departments with a project supervisor overseeing each group?
Whatever its shape, organizational structure shapes your business decisions. It can boost innovation and influence your company culture. And corporate culture is a big deal: 83% of employees believe their wellbeing is just as important as their salary, so an unhealthy work environment can complicate your talent recruitment and retention efforts.
How you structure your company is an intentional choice, as not every company takes the same shape. In fact, there’s a surprisingly large variety of organizational structures out there you can leverage. We’re going to do a deep dive into one of the options — flat organizational structures — to explore how it works, as well as its advantages and disadvantages. This will help you evaluate whether it’s the right structure for your company.
So, without further ado, here’s what you need to know about the flat organizational structure.
What Is Flat Organizational Structure?
So you probably are wondering, “What is flat organizational structure?” Does it sound a little… well, flat and uninteresting? Fortunately, it’s actually pretty cool! Flat organizational structure is when there are minimal hierarchical structures and no middle managers.
When you set up an organizational structure, you are determining how many levels of leadership there are, who reports to whom, and what groups that will inevitably collaborate are. Many organizations use a hierarchical organizational structure, which looks a lot like a pyramid and includes multiple chains of command. The CEO is on top, followed by high level managers, followed by another next level of management, and so on and so forth.
That’s a pretty typical organizational structure, so if you haven’t been a part of it, you’ve probably seen it. That structure is also where you might have a “corporate ladder” where people work to move up in the pyramid and into “higher ranks.” It’s all hierarchical.
And flat organizational structure is essentially the opposite of hierarchical structure. The organization isn’t set up with different levels of hierarchy or management, but instead, the CEO or high-up management is on top, and everybody else works together and reports directly to the highest managers. You might, for example, have everyone at the company on the same level and all reporting to the CEO on how projects are coming along.
This approach is typically used by smaller companies as a flat organizational structure can encourage engagement, innovation, and collaboration. Large and medium-sized companies typically can’t employ a completely flat structure (it’s a bit tricky to have 1,500 people reporting to one individual) but there are adaptations they can make. In these instances, the aim typically is to reduce the amount of middle managers and foster collaboration. Employing it can be a bit complex, so we will examine this in more detail later on.
Advantages of Flat Organizational Structure
Now that you have a better understanding of what flat organizational structure is, let’s talk about the advantages to this approach.
- Employee autonomy and individual responsibility. Employees have more autonomy with flat organizational structure. Without middle managers, there’s no one looking over an employee’s shoulder to make sure they’re getting every little detail done. Instead, employees are responsible for their own work — they have to get it done and taken care of on their own, without someone checking in. Luckily, autonomy also improves employee engagement, so it’s a win all the way around.
- Collaboration and innovation. Here’s the thing: when employees are all together on one level, it’s easier to support each other and work together toward solutions. And that means collaboration. About 75% of senior HR managers agree that collaboration is a key feature of high-performing workplaces. And that increased collaboration can result in a swapping of ideas that boosts innovation.
- Efficiency. Ever heard the phrase, “Cut out the middleman?” There’s a reason for that. Having to go through a middleman to get anything done slows down the process. Without middle managers, leaders communicate directly with their team members. Issues can also go directly to the CEO without delay, so a flat organizational structure has the potential to increase efficiency while simplifying communication channels.
- Increased input. Two heads are better than one! When multiple team members are involved in decision making, it’s easier to find your blind spots, boost morale, and improve employee engagement. A flat structure brings everyone together, making this process more organic.
Disadvantages of Flat Organizational Structure
But what’s the catch? There are a few disadvantages of flat organizational structure to consider as well.
- Miscommunication. When everyone’s talking to everyone, conversations can easily get messy. Perhaps there are too many people messaging on one email chain. Or an important decision is made, but nobody in the meeting thinks to tell the CEO because, well, somebody else might have done it already. Without the traditional hierarchy, communication responsibilities may have to be specifically allocated.
- Overworked. Flat organizational structure can mean everybody’s supposed to be a “jack of all trades.” If it goes unchecked, this can lead to people becoming overworked as they try to do it all.
- Power struggles. Without a formal power structure, there is the potential for power vacuums to arise. These can lead to power struggles as employees jostle for informal influence or cultural capital.
- Messy transitions. A flat organizational structure isn’t particularly scalable; it isn’t going to grow with your company. And moving into another type of organizational structure can get complicated — you have to iron out new forms of leadership and workflows, and build new habits with employees accustomed to the flat approach.
The Bottom Line
There you have it: the ins and outs of a flat organizational structure. It can improve your organizational culture, but it’s not the only way to help your employees thrive. Benefits are a great way to improve your company culture without having to overhaul your organizational structure. Talk to a wellbeing specialist today to learn more!
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The Gympass Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.