A company uses an organizational structure to define the management layers among employees. A flat organizational structure has few managers between the chief executive officer or president and the lowest-level employees. Organizations with highly skilled workers typically use this structure. The purpose is to allow individuals more autonomy in their daily work activities. Small decisions require no management insight; major decisions either need a committee or management insight.
Many companies draw their organizational structures on charts. This presents the organizational structure in graph form. Executive management is in the top level, with each manager separated by boxes. Beneath each management box, lines connect the management position to other boxes of lower managers. This process continues until the company outlines all positions in the flat organizational structure.
The flat organizational graph tends to be wide rather than tall. This is how the structure gets its name because the graph looks flat on paper. When a company adds new positions, they must fall somewhere on the graph. Flat organizations typically do not add new management layers. They simply extend the width of the graph; this may involve a new manager or committee to oversee a different part of the company’s operations.
A decentralized decision-making process is an essential piece of the flat organizational structure. This places decision-making responsibilities with employees who are closest to the situation. Highly skilled employees typically have the technical and educational background to make good decisions. Decentralized systems allow for quicker decisions as employees waste little time waiting for approval from upper management. This also improves the fluidity of organizations as they may be able to take advantage of situations quicker than competitors.
Customer response can also be better in this type of organizational structure. As decision makers reside at lower organizational levels, customers can receive feedback and problem resolution quicker. Frequent customer interaction also creates more goodwill between the company and its customers. This creates a competitive advantage over competing firms.
For all its benefits, a flat organizational structure does have flaws. Little management oversight can result in workers wasting time throughout the day. Upper management may also be too far removed from daily decisions, creating difficulties for them to properly understand their business. A lack of highly skilled employees is another problem that weakens this organizational structure. Employees who cannot properly supervise themselves, set their schedules, or respond to department requests on time can create organizational problems.