Confused customers become unhappy customers and that can change their brand loyalty. 2. This could easily erode motivation, giving people no reason to take the extra mile in their work. When there is confusion within the employee base, that often translates to confusion within the customer base. Some studies, however, show otherwise. Highly-skilled workers often struggled in structured hierarchy environments because their creativity is often limited. There are advantages to this -- it lowers the problems caused by unhealthy competition. A flat organizational structure is defined by few management layers that have a broader span of authority. 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. The flat organizational structure eliminates middle management and adopts a more casual, people-powered approach to running a business. So, we have already pointed out the advantages of a flat organizational structure. Flat Structure Improves Communication One of the disadvantages of a tall organizational structure is the slow rate of communication due to the number of management layers between executives and staff employees. Because middle management positions are naturally limited in this business structure, there are fewer advancement options. In my opinion the benefit of tall organizations really benefit larger publicly traded companies like that sit on the Standards & Poor 500 list. Bad decisions can be made under the guise of expertise. Organizational structure varies in each company. That lessens their effectiveness and ultimately is costly to the employer. Instead of relying on an intercessory, the C-Suite gathers information directly from the source and this can limit the amount of miscommunication that can occur at the workplace. Flat organizational structure Advantages of a Flat Organizational Structure 1. Answer (1 of 9): The main advantage of flat organization structure in increased coordination and timely spread of information among different departments. Some founders do make a conscious decision to have a flat organization but it usually occurs organically when a small team of specialists come together to pursue a business idea. 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. Fewer people have to be consulted about a decision, allowing the management to provide rapid response to any issues or concern. Why Consider a Flat Structure for Your Organization The main purpose of having a flat organizational structure is to encourage all employees to become more active and productive by giving them … 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. Small organizations, naturally adopt this structure because of limited employees. 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. That is especially true for workers who might be in a satellite office. There must be strategies in place to deal with the potential negatives which like to occur under this structure. It Makes Employee Retention Difficult Who does not want a promotion? 1. 1. When communication is passed across many management layers, there is a high chance of miscommunication. 4. for the management level. This structure can limit productivity. Here are some of the additional flat organization structure advantages and disadvantages to think about. In an SMB, the C-Suite might involve just one person. Employees are not supervised by many levels of management. It also involves a chance to pursue their passions and this business structure can make that happen. 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It is more cost-efficient. … Flat organization structure refers to having a relatively small number of layers in your company's organizational chart. A flat structure (or a flat hierarchy) is an organizational structure that has significantly fewer management layers and significantly wider spans of management control than another organization, for example, an organization of comparable size, in the same industry (or an organization unit in the same corporation), with a similar business model and purpose. For many workers, career satisfaction isn’t just about the size of the paycheck. Benefits or advantages of a flat organisation structure are as follows: Flat Organisation is less costly because it has only few managers. Advantages and Disadvantages of Functional Organizational Structure In this type of organization, the emphasis is on managing some functions wherever the function may be performed in the enterprise. In this structure the most trained employees get involved with decision making process. It lacks close supervision in many instances, which means workers can get away with not working at all on some days. 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. For example, a company could have a group working in information technology, another in marketing and another in finance.Each department has a manager or director who answers to an executive a level up in the hierarchy who may … There are fewer eyes looking over their shoulders or criticizing their ideas, which allows each worker to focus on what they do best instead of focusing their efforts to please a supervisor who controls the feedback that goes into their personnel file. There is less miscommunication. 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. Then, of course, flat organizational structure is for everyone. Why have a flat organizational structure? When correctly used, it can lead to faster decisions, happier employees and satisfied customers, but when implemented the wrong way, it can cause job confusion and low levels of … 4. 2. If that person leaves, the employees bicker amongst themselves about who should be in charge when a replacement is not named. It Promotes Faster Decision Making Another advantage about a flat organizational structure is there are less decision-making hoops. Consequently, what is a flat Organisational structure advantages and disadvantages? An employee who needs something fresh or new to do may find few options available to them, which encourages them to seek out a new job instead of staying put. The flat organizational structure is most common in young startups and small businesses. It Is Cost Efficient As mentioned, in this organizational structure, there are fewer (or no) manager layers between the executive and the staff. 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. If someone does not have the level of expertise that their job requirements demand of them, the C-Suite could make decisions based on false expertise. The functional structure is one type of organizational structure that helps companies manage employees and meet their business goals. Highly-skilled workers also like having opportunities to advance upward through the chain of command. This means that there are less wages, fringe benefits, and so on, to pay for management. Hey there Adam, I enjoyed reading your summary regarding the difference between a tall organization and flat organization in addition detailing the advantage and disadvantage between the two organizational structures. Organizational structures play a key role in effective communication and decision-making. An example often used to … Although large companies can struggle to implement this structure because of the dynamics of size, SMBs who implement a flat organizational structure effectively can see tremendous savings. The fewer individuals who have to be consulted for a decision, the quicker it is to be made, making a flat organizational structure really beneficial. 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. It isn’t scalable. It can improve employee retention. - Definition, Advantages & Disadvantages Employees in this type of structure do benefit from being able to approach the C-Suite with their ideas. Tesco has a tall structure. There can be a lack of responsibility definition. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. 6. 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. Because there is a focus on hiring the best people possible for each position, less turnover typically occurs. One of the most significant advantages of a flat structure is that the economic costs are lower as there are far less employees. The disadvantage of using the flat organizational structure is that it can create role confusion within highly structured teams. In comparison to a tall organizational structure, a flat organisation structure has fewer levels of management and therefore a short chain of command. Functional structure. Tall and flat organisations The staff structures of a tall organisation and a flat organisation Tall organisations Advantages. 8. 2. The functional structure is a centralized structure that greatly overlaps with the … That makes it difficult to stay focused on a specific task for many workers. In a flat organizational structure, there is very little room for employees to move up through the business. While reporting directly to the company president has its advantages, there are also several disadvantages to this type of organizational structure. Advantages of flat organization structure The benefits of a flat organizational structure are Cost-efficient – There are very few managerial layers in a flat organizational structure. The advantage of this horizontal organizational structure is that it allows decisions to be made faster. Although there are monitoring programs that can track productivity or worker presence, that isn’t always the same as having a manager be responsible for team productivity. It May Hinder Growth Change is often times difficult and poses a lot of what ifs. It is designed to minimize bureaucracy. By eliminating multiple layers of middle management, a flat organizational structure can quickly save hundreds of thousands, if not millions, of dollars for certain businesses. 5. Faster decisions create highly satisfied customers and often improves employee morale. 7. 2. In a flat organizational structure, their creativity is encouraged. Let us now take a look at its limitations.1. When a company utilizes a flat organizational structure, there are fewer, if any, levels of middle management included within the chain of command. Organizations choose their organizational structure based on many factors like: size, its geographic location, the manner of delivering different products and services that they will offer. 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. The flat organizational structure naturally increases the levels of independence that workers experience in their job every day. It is a structure that improves employee morale. That makes it difficult for some workers to turn away from their professional duties when enjoying personal time, which affects their work-life balance. Whether or not it is for your business, it depends on the size and type of your company. 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. 7. This structure isn’t scalable, so fast growth in an SMB or startup can cause the C-Suite to lose control over their workplace. 3. Let us now take a look at its limitations. When it comes to discussing the advantages of horizontal organizational structure, the benefits are typically limited to smaller, less complex organizations. In other words, employee involvement is promoted by decentralizing the decision-making process and elevating the levels of responsibility of employees. The top management is closer to the middle management which makes it easier for the upper management to communicate effectively to the lower level management. A flat organization – sometimes referred to as a horizontal organization – has few, if any, layers of supervision and management between staff and the company's top executives. It can lead to a lot of wasted time. Some companies, even when they have already grown or expanded retain a flat structure. Because there is a lack of management definition in most flat organizational structures, a power vacuum is created when the C-Suite is not present. 1. That can lead to poor decision-making experiences, unproductive behaviors, and other negative workplace experiences. That bickering leads to confusion, which leads to resentment, and that leads to a lack of productivity. 4. 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). There is a certain “responsibility” that comes when the C-Suite sends out an email asking for a job to be completed or feedback to be offered. However, the flat structure also makes it harder for ambitious employees to find satisfaction. Instead of having a defined role, many companies that incorporate a flat organizational structure tend to ask people to do a little bit of everything. Flat organisational structure is a structure where there are no levels or very few levels between managers and staff. Advantages of a flat organizational structure. So, we have already pointed out the advantages of a flat organizational structure. The hierarchy still begins with the company’s C-Suite, but there isn’t a “buffer layer” between them and the front-line staff. Salary-related expenses are reduced, enabling the company to save money as well as provide better pay for its workers. If you’ve had a job, you likely worked in a functional organizational structure.The functional structure is based on an organization being divided up into smaller groups with specific tasks or roles. There is a lack of work-life balance. 3. READ MORE on smallbusiness.chron.com What Is a Flat Structure in an Organization? The rise of new leadership models, the development of technologies, and the multi-generational workforce mix tend to challenge traditional organizational structures. Flat and Hierarchical Organizational Structures refer to the typeof order a business or corporate’s managers, subordinates and staff are positioned for reporting, supervision and communication purpose. A line organisation has only direct, vertical relationships between different levels in the firm. Flat structure is also known as horizontal structure. Quick decisions and actions can be taken because it has only a few levels of management. When there is confusion within the employee base, that often translates to confusion within the customer base. Google’s organizational structure and work environment are one of the most idolized and studied aspects of the organization. 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. That can lead a business down the wrong path very quickly. The advantages and disadvantages of a hierarchical organizational structure involve communication, innovation, and collaboration. 5. This makes it hard for workers to focus on their tasks and specialize at their jobs. The system can pose a problem to the whole organization when the ratio of employees to managers become too out of proportion. It is one of those organizations where the employees literally get to practice the freedom of speech and their work rights that are the … It is a structure that improves employee morale. 2. 1. There is less dominance in the workplace. Without middle management expertise, the flat organizational structure requires the front-line staff to be experts in their job responsibilities. The system can pose a problem to the whole organization when the ratio of employees to managers become too out of proportion. 6. 3. Many people who work within a flat organizational structure find themselves always connected to their work. Thus, carefully consider the pros and cons discussed above before adopting this structure in your own organization. At the same time, the front-line staff receives direct communication from the C-Suite, allowing each worker to make clear adjustments to their responsibilities when necessary. Flat structures tend to empower the employees more and allow them a greater sense of responsibility and autonomy. Instead of the C-Suite needing their middle managers to collect information assets from the front-line staff and then reporting it to them, they can obtain the information directly. Benefits in a Flat Organizational Structure One of the disadvantages of a tall organizational structure is the slow rate of communication due to the number of management layers between executives and. It creates fewer levels of management. 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. 4. The flat organizational structure assumes that each worker is going to give their best effort every day. Like many other organizational structures, the flat organization structure also has its share of advantages and disadvantages. This structure works well for small organizations, but what happens if a company experiences high levels of growth over a short period? Is Tesco a tall or flat structure? The cost structure of a business is improved. It simply states who works for who. It means that the company has to shed out less amount of money in terms of salaries, benefits etc. 2. Flat organizational structure helps avoid this by allowing the upper management to take direct input from employees, and vice versa. Matrix Organizational Structure: Advantages, Disadvantages & Examples What Is a Flat Structure in an Organization? This structure generally occurs in a small organization or in a smal… 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. The lower number of employees who are focused helps in ensuring that the business is able to manage without complicating things for the organization. The advantages of tall organizational structures are more opportunities for advancement and more specialized managers; the disadvantages are higher costs and reduced empowerment. There is also a lot of time spent talking with others to ensure that an idea isn’t being duplicated before it is presented. Much media attention has focused on holacracies, but actually holacracy is just one type of flat hierarchy that became popular due to its adoption by well-known companies operating in Silicon Valley and the wider technology sector.. What holacracies and other forms of flat hierarchies have in common is a smaller-than-normal layer of middle management. There are only line… Functional Organization : All of the companies define its organizational structure to determine the reporting relationships that will exist in the company. Fewer bosses means fewer conflicts and that makes for happier employees as well. As a results, advantages of a flat organizational structure are many. One of the greatest costs to the annual budget for a business is labor. For the average person, up to 15 minutes of lost productivity can happen whenever a task is switched. The disadvantage of using the flat organizational structure is that it can create role confusion within highly structured teams. 5. In this article, we discuss the advantages and disadvantages of the functional structure, plus learn about other organizational structures in business. Every structure has certain challenges that must be met, but when these negatives are proactively approached, their impact to the business and each worker can be effectively minimized. 3. The flat organization supervises employees less while promoting their increased involvement in the decision-making process. 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. 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. It can hinder employee retention. Advantages, Disadvantages and Impact. Because this organizational structure is based on direct contact, there are fewer opportunities to misinterpret feedback or ideas. Only a few levels between managers and staff levels or very few levels between managers and staff occurs in satellite. 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