The concept of organization is born when two or more people work together in order to achieve a common goal. Purpose of an organisation is to create responsibilities and positions by which an organisation can carry out the work. Organisation may be formed in different sizes. All people working in the same organisation have their own functions, attitudes and techniques to apply for achieving their common goal. In order to manage and control the resources, an organisation needs to be structured. Organization structure is formal system that makes the organisation to run smoothly and helps to focus the common goals and objectives. It gives a clear idea about the chain of command that need to be prioritized when a problem arise. It also defines what people are responsible in the organisation for different reasons. A solid structure provides the framework to deliver on business strategy. The structure of an organisation can be done by function, by product, by environment, by customers, by process. This structure can be tall/flat, formal/informal, centralized/decentralized, organic/mechanistic etc. So the structure of an organisation is the formal representation of how the organisation is managed and it is very important. Therefore the importance can be immeasurable for any organisation attempting to function towards a single goal.
Flat Organizational Structure
Flat organisational structure is a structure where there are no levels or very few levels between managers and staff. In this structure the most trained employees get involved with decision making process. Employees are not supervised by many levels of management. It is designed to minimize bureaucracy. Flat structure is also known as horizontal structure.
This structure generally occurs in a small organization or in a small part within a large organization. Communication between employees and managers are held on regular that allows rapid change and problem resolution. Every feedback and opinions of employees are considered. There is an understanding bonding that takes place in this structure.
Characteristics of Flat Organizational Structure
A flat organisational structure is basically a hierarchical structure that can be pointed by a pyramid shape. But the base of the pyramid is much wider with few layers between the top management and bottom line employees. The command chain in this structure is short but the span of control is wide. The leading position in this structure is president or chief executive officer.
Advantages of Flat Organizational Structure
Flat organisation structure has many advantages. Some of the advantages are mentioned below:
- As there are minimum management levels, flat structure is cost effective as the company is paying fewer people to get the work done.
- Improved communication between managers and employees.
- Having fewer levels, employees can directly report to managers and share new ideas which helps the managers to make decision quickly.
- All employees along the manager have full control of every task that is required to be completed.
- Managers and employees stay close to customers and therefore can respond quickly to changes of customer demands and changes.
Disadvantages of Flat Organizational Structure
Besides the advantages, flat organisational structure has some disadvantages as well. Some of the disadvantages are stated below:
- Flat structure may hold back the growth of an organisation to a certain level.
- Employees may have more than two bosses which can confuse them during the time of reporting. They may be confused thinking of which of the bosses will be the best to report.
- In situation where there is more than one boss, there could be a power struggle of having maximum control on employees.
- Flat organisational structure is mainly for small organisation e.g. Partnerships, some private limited companies, cooperatives.
Tall Organizational Structure
Tall organisational structure consists of many management levels and supervision. The chain of command is long. Employees are only related to the department managers. All managers and employees are supervised by their senior managers. Because of many numbers of levels in this structure, it cause problems with communication and therefore takes long time for decision making. The top of all the management level is usually called chief executive officer.
Characteristics of Tall Organizational Structure
A tall organisational structure is a hierarchical representation with many levels. However, tall organisational structures not often cross more than eight levels of management. In this structure the command chain is long but span is narrow relatively to flat structure. Top level management holds most power and as a result employees are more controlled.
Advantages of Tall Organizational Structure
There are many advantages of tall organisational structure. Some of the advantages are noted below:
- All employees are closely supervised as the span of control is narrow. Each manager manages small number of employees.
- Management structure is clear.
- The responsibilities of each level manager are clear and different.
- The success of every employee including managers is clear and therefore, tall organisational structure has clear promotional ladder.
Disadvantages of Tall Organizational Structure
Besides advantages tall organisational structures have many disadvantages as well. Some of the disadvantages are given below:
- As the employees are closely supervised by their managers, so the employees have less freedom and responsibilities.
- Decision making process could be slow as approval may be required from various levels of managers.
- Every communication needs to take place through different levels of management.
- As there are many management levels, tall structure is expensive as the organisation need to pay more money to managers than subordinates.
- Any changes are responded slowly as employees are the only person who stays closer to customers and therefore to report any changes employees have to go through different levels of management.
Tall vs Flat Organisational Structure
Tall organisational structures are mostly adopted by mature companies as roles, tasks, accountability, responsibilities and even governance are clear. A company needs to be concerned of what the employees are doing and why they are doing it. Tall structure has two purposes: transparency of roles and objectives, and controlling cost. All managers in every level manage small number of employees. As a result employees have clear concept of their works. Different management level has different works to do. Most big companies like Tesco, Sony, and Apple are the examples who have adopted tall structure. This has helped the company to gain success. Tesco PLC is such one of the successful companies. It is a retail chain which was founded in 1919. They have more than 2484 stores in UK. In order to manage and run smoothly Tesco is following tall organisational structure. With an interview with one of the store managers of Tesco it has known that they have six management levels in their structure from checkout assistant to chief executive officer. After the chairman, the top position is CEO. All managers in every level have small number of employees. As a result the duties of every staff are clear and focused. Any major decision in Tesco is announced by the top management. By adopting tall organisational structure Tesco is able to focus their goals more effectively and gain enormous success.
On the other side, flat organisational structure is mostly adopted by small organisations. Many big organisations may also have flat structure at the beginning end of their life cycle. In a flat structure normally there are well focused employees who know who their boss is. They also have mindset of cooperation, flexibility, working over boundaries, problem sharing opportunities. Flat organisational structure helps the companies to save cost and stay close to customers. Small organisations like the local street shops are the examples that have flatter structure.
Organisations can also have flat structure within their tall structure Starbucks is one of examples. The largest coffee shop “Starbucks” was first established in Seattle, Washington. Starbucks effectively entered within the European Union including UK in May 1998. Starbucks specializes in selling coffee, whole coffee beans, hot and cold drinks. They are one of the successful companies in coffee industry. With an interview with a manager it has been known that within the whole organization, Starbucks operates both tall and flat structure. In stores Starbucks maintains flat functional structure where as in corporate sector they operate tall structure. Starbucks have only two levels in their flat structure which they operate in stores. The manager is the top person and baristas (Sales assistant) are the staffs. The baristas and managers both work together inside a store and stay very close to customers. Any problems, changes and feedbacks from baristas or customers are taken into consideration by the managers and dealt very quickly. Generally senior baristas are promoted to managers when a manager resigns. By adopting a flat structure within a store has saved cost of the company. The company is paying less money as there are few managers. Baristas and managers have a good understanding which helps to get all the jobs done in the store. All baristas have clear concept of what to do and where to report anything as there are only one manager. On the contrary Starbucks have tall organisational structure in corporate sector. There are foul levels of management above store management. The top position is the chief executive officer. By adopting the tall structure in corporate sector has enabled Starbucks to manage all sectors of the company smoothly and therefore gain success.
To conclude, both organisational structures have some something good and bad sides. If a company wants the employees to be cooperative, better alignment and engagement across the structure, then flat structure is better. Employees have strong voice and any changes are easily adapted in this structure. This encourages the employee’s independent thinking and teamwork. Flat structured companies much need to transform to tall structures when it begin to grow larger. For organisations that are big in size a tall structure can be good. It helps the company to manage all division in same pace. But if a tall structure is handled badly it could be unpleasant and authoritarian. Well handled tall structure is disciplined and liberate.