A flat organization structure has few levels of management between the executive level and the front-line employees. The premise behind a flat organization structure is to empower employees by making them a larger part of the decision-making process.
A flat organization structure is designed to minimize bureaucracy and make employees more productive by empowering them to make decisions. Communication occurs more easily between upper managers and baseline employees, allowing for more rapid change and problem resolution.
The traditional hierarchical organizational structure can be illustrated by using a pyramid, with baseline staff on the bottom and increasing levels of management leading up to the president or CEO of the company. A flat organizational structure also has a pyramid shape, but it's a much broader and flatter pyramid, with fewer levels between the top of the pyramid and the bottom base. The organizational pyramid also may consist of different departments, with a department head or manager leading each unit and the executive management staff forming the top of the pyramid.
In traditional organizational structures for larger companies, there are many levels of management between baseline staff and top-level management. Decision-making often has to go through a process at each level, leaving front-line employees to explain delays to customers and experience less productivity while they wait for answers. A flat organizational structure eliminates layers of middle management, allowing the entire organization to be more productive and speeding up the delivery and decision-making processes.
In addition to increased productivity, organizations using a flat structure can experience leaner budgets by eliminating costly middle-management salaries. Organizations that analyze the functions of middle managers often find that most of the necessary tasks can be allocated to other members of the organization by giving lower-level employees increased responsibility or assigning some duties to upper management. A large portion of the daily activities of some middle managers consists of serving as intermediaries between baseline staff and upper management, a process that often can be eliminated.
Flat organization structures work best with smaller companies, where it's possible to decentralize some decision-making while maintaining corporate integrity. Large companies spread out across multiple states may have a more difficult time using a flat structure, because it can result in upper managers having a loss of control of the functions of the business. Large companies can use a flat organization structure by setting up each division with a flat organizational structure while maintaining corporate controls and final approval on decisions at the executive level.