The structure is the significant component of the system, which varies from the structure by the existence of a target orientation, which gives the system the appropriate focus. The organizational structure of the management system has a skeleton-forming value, being the backbone of the organization.
To put it simply, the organizational structure is a kind of model for the organization of a company with the enumeration of all divisions and the obligatory indication of the accountability of each of them. This model is designed to provide an understanding of the logic of the organization's activities and how its components interact with each other. Definitely, it can also be said that it defines all formal relationships within any company and, in fact, records the belonging of a particular area of tasks to the competence of a particular unit.
The organizational structure specifies the method of organization of the communication line, policy, authority, and responsibility of the company. It defines how management is dispersed throughout the organization. Often, companies usually use either a flat or hierarchical structure. What about flat organizational structure vs hierarchical?
What is Flat Structure?
So, let's figure out what is a flat organizational structure? It is used in small firms when solving complex problems in conditions of considerable uncertainty. In such structures there are relatively few levels of management, therefore, each leader is subordinated to a greater number of employees than the optimal number adopted for hierarchical structures.
A flat organizational structure has spread to small companies or not very large divisions of large companies. Actually, with the proper implementation, there are a lot of benefits: a happy staff, satisfied customers, and a fast decision making. The incorrect implementation of such an organizational structure can lead to chaos in the company.
Benefits in a Flat Structure
A flat organizational structure is designed to be more responsive to the needs of management. There is a maximum return due to the reduction of management levels. Since all subordinates are submitted to one manager and this gives a short chain of commands and extends the range of control. There is a high level of communication among manager and employees. Moreover, communication is more effective, faster and more reliable, unlike other structures. Also, there is the best change management for flat structure because of the more flexibility and quickly adapt.
According to some researchers, the main benefit of a flat structure is its capability to react rapidly and adapt to changes in the external environment, innovation and the accumulation of unique competencies.
Advantages and Disadvantages of a Flat Structure
The main advantages are:
- Simple communications;
- Decentralization in management;
- Less formal bonds between leaders and subordinates;
- Easier establishment of horizontal links necessary to coordinate the implementation of vaguely defined tasks;
- The lesser manifestation of parochialism and egoism of units;
- Managers have more opportunities to prove themselves.
- Savings on the payment of wages to middle-level employees
Disadvantages:
- Overloading of managers;
- Difficult control over the activities of workers;
- A complicated overall process of coordinating the activities of the units.
- Limitation of long-term growth of the firm
- Inflexibility and non-adaptability to changing situations;
- Different criteria of efficiency and quality of work;
What is Hierarchical Structure?
Just like a flat organizational structure, small businesses implement a hierarchical organizational structure. After all, what is good for the one company cannot always be good for another.
Hierarchical organizational structures are considered by an inflexible hierarchy of power in the organization, the formalization of the directions and procedures, centralized decision-making, a narrowly defined responsibility in the activity. Such an organizational system follows the pyramid scheme. In other words, each employee obeys a certain boss (this does not apply only to the CEO) which of these best describes a corporation with a hierarchical structure.
The process of dividing organizations into separate parts and distributing certain functions over them is called departmentalization (functional specialization). The combination of the ideas of hierarchy and the concept of decentralization formed the basis of the main type of organization - the hierarchical organizational structure.
Advantages and Disadvantages of Hierarchical Structure
Here you can see the advantages:
- Levels of duty and authority are clearly visible.
- Employees do not work in the multitasking mode, which allows them to become narrow-profile specialists and perform their duties at a high level.
- Motivating employees with the career growth
- The loyalty of employees and commitment to the department.
Disadvantages of the hierarchical structure:
- In contradiction of flat structures, communications are less fast and efficient.
- Each department performs work in its own interests and decides separately, which affects the relationship between departments and does not benefit the interests of the company.
- Bureaucracy does not allow the rapid change in the organization.
- Wage costs for several levels of management.
- Increase the time of feedback between superiors and subordinates.
It is vital to understand that if one organizational structure has brought success to the one company, not the fact that it’ll bring the success of another company. It is significant to recognize the goals and position of the company so that the inculcation of the organizational structure is efficient.