A flat organizational structure occurs when there are no levels of middle management that exist between the C-Suite, ownership, or executive team and the entry-level staff. This model makes it easier to communicate from top-to-bottom in the business, giving each person more influence over the decision-making process to elevate individual responsibilities.
List of the Pros of a Flat Organization Structure
1. It is a cost-effective method of doing business.
Because there are fewer managers involved in the hierarchy of the company, fewer labor costs must be paid during each period. With salary costs reduced, the organization can offer better pay and benefits or route the saved money toward research and development.
2. Decisions are made quickly.
A flat organizational structure reduces the number of meetings that must occur to ensure that everyone is on the same page. This structure makes it possible to create a rapid response to issues as they occur, resulting in better movement with less downtime.
3. It improves the accuracy of communication.
When there are fewer people from top-to-bottom, then there are not as many opportunities to have the content of a message changed as it passes from person to person. That means you have fewer instances of miscommunication to worry about each day.
List of the Cons of a Flat Organizational Structure
1. This structure can lead to micromanagement.
Because the executive team is directly overseeing the work being completed each day, entry-level staff can feel like their work is micromanaged using a flat organization structure. There can be reduced levels of creativity if the ownership demands compliance with certain structures.
2. Management can lose control quickly.
A flat organizational structure often works with a severely high ratio of managers to staff. Because there are fewer people with the authority to initiate disciplinary action procedures, it can be challenging to ensure that everyone is putting forth their best effort.
3. There can be power vacuums that may occur.
When there are no middle managers available to ensure compliance with corporate policy, the lack of presence from an owner or executive team can result in a power vacuum that someone on the staff attempts to fill. This issue can create confusion, resentment, and other ill feelings if it occurs frequently.
The flat organizational structure pros and cons show us that this method is cost-effective by design, but it can also create personnel issues that may be challenging to resolve.