We currently live in the golden era of startups. The rise of incubators, accelerators and venture capital firms is a representation of the modern economic world, dominated by startups. You’ve probably seen up and coming businesses getting recognized for their contributions. But have you ever paid attention to the team behind it? What’s interesting is that startups have a small team (usually less than 10 employees) who lead the organization. They also rely on a flat organizational structure.

Read on to explore the meaning of a flat organization, what it entails and whether it’s good for your business.

  1. Understanding The Flatarchy Organizational Structure

  2. Flat Organization: Good or Bad?

  3. Advantages Of A Flat Organizational Structure

  4. Disadvantages Of A Flat Organizational Structure

Understanding The Flatarchy Organizational Structure

A flatarchy or a flat organizational structure refers to the system of organizing employees in a way that there is a direct communication between senior management and junior management. A flat organization eliminates various levels of management, encouraging an increased involvement in decision-making and problem-solving with less involvement. The removal of management layers improves coordination and communication, increasing an organization’s efficiency. It also utilizes resources in the best possible manner, reducing costs.

Let’s look at the defining characteristics of a flat structure. It will explain how fewer managerial layers in an organization can effectively drive business operations:

  • Decentralization Of Management 

Individuals have greater autonomy to go above and beyond their job requirements and make decisions that are crucial for business efficiency. Individuals are more accountable in this type of organizational structure.

  • Little To No Levels Of Management 

There are hardly any management layers between senior and junior employees. In fact, junior employees often enjoy the perks of working directly with the Chief Executive Officer (CEO) or the head of the organization.

  • Broadly Defined Job Descriptions 

As we have already established, a flat structure is common among startups. Such organizations are at the initial stages of venturing out and testing their product or service in the market. The team heads are also the employees, leading different functions in the organization. 

  • Flexible Boundaries Between Departments 

There are no hard and fast rules when it comes to splitting up departments. While there may be different functional units, people engage in cross-functional teamwork.

  • Strong Focus On The Customer Or Clients 

Small organizations that primarily rely on customers and/or clients have a flat structure. It helps them focus on the needs and expectations of their customer base and make necessary changes accordingly.

Flat Organization: Good Or Bad?

Like other organizational structures, a flat organization has its share of benefits and limitations. If you’re thinking about starting your own business or revising your current organizational structure, you should consider these pros and cons. 

Advantages Of A Flat Organizational Structure

  1. Cost-Efficiency

Fewer levels of management mean lesser salary-related expenses. A smaller team makes it more cost-efficient, allowing you to provide your current employees a better pay.

  1. Better Decisions

You’ve probably heard the phrase ‘too many cooks spoil the broth’. In a flat organization, fewer employees mean fewer people have to be consulted for making decisions. It allows people to respond to emergencies more efficiently and quickly than other structures.

  1. Clear Communication

When there are too many management levels, information takes more time to travel across all levels of an organization. Whether it’s asking for inputs or feedback, it’s a time-consuming process as too many managers are involved. Flat structures prevent this by enabling direct communication between executives and junior employees.

Disadvantages Of A Flat Organizational Structure

  1. Loss Of Control

A flat structure is ideal for small businesses and startups. In larger organizations, it’s easy to lose control where one manager is responsible for many employees at the same time. It’s impossible to guide and/or supervise so many people simultaneously.

  1. Lack Of Growth

There is little to no room for growth in a flat organizational structure. Typically, employees want promotions, in the hope of climbing the corporate ladder. This setup does not provide many opportunities, affecting long-term growth and professional development. Individuals are likely to leave, making employee retention difficult.

  1. Role Confusion

There are no strict boundaries among various departments. People often find themselves shouldering responsibilities that go beyond their job description. They struggle to focus on their tasks and specialize in their fields. It also leads to a lack of accountability, affecting overall efficiency and productivity.

Understand how your organization functions in order to implement changes in the structure. Harappa Education’s Navigating Workplaces course will teach you everything about the various ways in which you can interpret your workplace setting. The Stakeholder Map will guide you in understanding the various ways in which responsibilities are distributed. The Power Structures framework will help you identify the different power holders and decision-makers at your workplace. Navigate your workplace to optimize efficiency and make the most of your organizational structure.

Explore topics such as What is an Organizational StructureTypes of Organizational StructureMatrix Organizational Structure, The Difference Between Functional and Divisional Structure & Example of a Divisional Structure from Harappa Diaries and understand how your workplace functions.