Flat Organization Styles
Organizational structure is one of the most important decisions faced by a company's management. The decision of organizational structure permeates throughout the organization and forms the company culture for better or worse. In a flat organization, there are fewer layers of management, allowing for quicker communication and decisions at the top. In contrast, vertical organizations have more layers of management and are quite often associated with large corporations.
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Corporate Hierarchy
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A corporation's hierarchy refers to the arrangement of individuals according to authority, status and responsibilities. Corporate hierarchy varies per organization. Generally, the president or chief executive officer sits atop the corporate hierarchy and those that report to him sit below all the way down to the first-line employees. An organizational chart is a visual depiction of the corporate hierarchy, displaying the organization structure. For example, corporate executives appear below the chief executive officer and corporate executives sit above division managers in charge of departments or groups of employees.
Flat Organization
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An organizational chart offers a quick snapshot of whether the company is a flat or vertical organization. A flat organization has few rungs along the hierarchical ladder as opposed to a vertical organization. This means a flat organization has few layers of management who report to the top executive or decision maker. Typically, small companies or growing companies adopt a flat organizational structure. Such a setup allows the company to respond quickly to market changes by removing the number of individuals involved in the decision-making process. In contrast, vertical organizations have many layers of management and are often bureaucratic in nature. Decisions follow a chain of command. Vertical organizational structures are typically associated with large multinational corporations.
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Organization Style
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Companies that adopt a flat management style distribute decision-making power across the organization, flattening out the decision-making process. Thus, the span of control is greater. Flat organization delegates more authority, concentrating more power in the hands of managers to make decisions that have an impact on the entire organization. Communication funnels directly to the top of the organization. This allows the company to make decisions quicker. Flat organizations tend to follow a decentralized power structure where decision-making flows to lower levels of the company. In contrast, centralized organizations follow a military style where the concentration of decision-making remains at the top.
Corporate Culture
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The size of the organization often dictates whether it adopts a flat or vertical operating structure. A small company because of its size has no choice but to utilize a flat management style. However, as an organization grows, the company may find a vertical structure best suited for its needs. Even still, a large organization may use a hybrid organizational structure to adopt the best features of flat and vertical management styles. It is up to management to decide how it wants to delegate authority across the organization in order to maximize its operating efficiency. Organizational structure decisions permeate the entire organization forming the basis of the corporate culture or identity. A flat organization allows for greater individual creativity and innovation.
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