What is flat and hierarchical structure?

By Indeed Editorial Team

Published April 5, 2021

There is a lot involved in forming a business, including what the organizational structure of the business will be. The hierarchy of a business determines how you'll communicate, manage, disseminate information, delegate responsibilities and more. Business stakeholders either opt for a flattened or hierarchical structure, depending on how they want to organize different departments and individual employees. In this article, we define a flattened organizational structure, describe the benefits and provide tips for implementing a flattened organizational structure.

Related: Learn About Organizational Leadership

What is a flattened organizational structure?

A flattened, or horizontal, organizational structure is a business hierarchy that has few levels or foregoes having any levels at all. In a flat structure, there aren't as many steps between an entry-level employee and the CEO of the company, meaning that most staff members have a heightened level of responsibility and autonomy in their work and an increased ability to make important decisions without consultation. At a minimum, a flattened organizational structure involves the elimination of middle management roles.

Related: What Is Business Hierarchy and Does It Work?

Benefits of a flat organizational structure

There are several benefits to a flat organizational structure, including:

Increased responsibility

Because there isn't a middle management tier, most employees have more responsibility than they may have otherwise. This can help them feel motivated, valued and more invested in the company they work for, all of which comes with its own set of benefits, like higher job satisfaction and increased willingness to work as a team. More responsibility also means increased accountability, as employees are more able to hold themselves and their coworkers accountable.

Related: Improving Accountability in the Workplace

Easier dissemination of information

In a hierarchical organizational structure, any company news or other types of information, like procedural updates, usually have to go through many channels before certain employees learn about it. In a flattened organizational structure, this dissemination of information is much easier and faster, and introduces less of a chance that the employee will receive incorrect or incomplete information. When information sharing is simple, employees can use the information in their work, which can positively impact the whole organization.

Lowered operational costs

Because there are no middle management salaries to pay, an organization that adopts a flattened structure may also realize lower operational costs. This can help a business allocate those costs to things like expanding the company, developing new product lines, enhancing training for employees, offering bonuses and raises to staff or purchasing additional manufacturing equipment.

Better coordination

You may find that a flattened organizational structure allows for better coordination between teams who are co-managing a project together. With fewer levels of management to get approvals through, employees are commonly responsible for their own work and may develop more teamwork abilities and come to shared conclusions on procedures quicker than otherwise.

Higher productivity

Because of the autonomy, empowerment and coordination that comes with a flat organizational structure, employees are usually more productive as well. Project approvals are typically faster, allowing for employees to start work sooner, and therefore to finish tasks earlier too. High productivity can help a business succeed and employees feel motivated, which leads to higher job satisfaction, willingness to manage new responsibilities and loyalty to the organization.

Related: 15 Examples of How To Increase Productivity in the Workplace

Positive company culture

Without so many layers of management to work through, there's a greater likelihood that employees get to know each other. This, plus accountability, fairness in roles, autonomy and enhanced communication all contribute to positive company culture. Great company culture also attracts top talent and qualified candidates who want to come work for the organization.

Related: How To Create a Company Culture: Examples and Tips

Who should use a flat organizational structure

A flat organizational structure is most often found in smaller businesses where employees can have a lot of responsibility and direct access to executives without affecting the productivity of the business. If a larger corporation uses a flat organizational structure, it's also common that they have a set process in place that can operate well even without middle management involvement. Also, companies that value creativity and decision-making may want to use a flattened organizational structure.

Tips for implementing a flattened organizational structure

Examine these tips to implement a flattened organizational structure in the workplace:

• Decide how flat to go. A flattened organizational structure doesn't have to be completely flat. Instead, a business can opt for a more flat structure than you'd find in a hierarchical structure, with some levels of management as needed.

• Develop an open door policy. If there isn't already an open door policy, create one so employees know that they have direct access to executives for any questions, concerns or ideas they may have. It's important that employees feel comfortable approaching others in the business who're at the top of the hierarchy, so policies should be clear about their ability to do so.

• Provide access to resources. Because employees are given the opportunity to solve problems and work independently without the input of multiple layers of management, it's imperative that they have access to the resources they'll need. Consider developing a hub where all employees can access the information they need about policies, procedures, processes and more so they can make informed decisions and feel in charge of their own actions.

• Create ways for employees to grow within the company. If you adopt a flattened organizational structure, there may be less opportunity for employees to move up within the company, at least in the traditional way they may be used to. However, for many employees, it's important that they be able to continue to grow within the business, so create ways for them to accomplish that within your structure.

• Communicate expectations. Even though employees have autonomy and the power to make decisions they feel are necessary without many layers of managerial approval, they should still know what others in the organization expect of them. This will give the employee some direction and help them feel comfortable performing their day-to-day tasks.

• Develop training. In order to feel supported as an employee in the middle of a flattened organizational structure, proper and complete training is necessary. Think about the most important things to communicate to employees, from new hires to more seasoned staff members, and develop the training programs you need so they feel confident in their future success.