Jobs delegation is simple at a new business: The founder does everything. Once the business hires employees, things get more complicated. To avoid confusion, a founder must establish job boundaries, responsibility and a chain of command. Traditionally, companies built vertical, triangular structures, with employees at the bottom answering to managers above who answer to a few more powerful managers, with a single boss at the top. Since the 1980s, companies have shed rows of middle management to flatten their organizations. In the right environment, this flattened horizontal structure has several advantages.

Horizontal Structure

With a strict, hierarchical chain of command and specialized, narrow jobs for employees, the traditional vertical structure features many rules and centralized authority. This makes it a mechanized, rigid structure and the least flexible and adaptable among organizational structures. The flattest organizations are the opposite. They function with few rules, adjusting practices and even the jobs themselves according to the challenges the company must meet. Removing management layers decentralizes authority. Decision making is often delegated to the employees themselves, assigned according to expertise. Communication doesn't follow a strict hierarchy, and collaboration occurs as needs -- not structure -- dictate.


When designing an organizational structure, jobs must be grouped in some way that makes oversight manageable. Traditionally, companies group by function, leading to whole departments devoted to one thing such as marketing, production or finances. Flat structures don't group according to function. Instead, employees belong to groups tasked with fulfilling some company objective. A team might combine marketing, production, and research specialists along with people whose expertise is finance. Groups receive the resources to accomplish their objectives, including more decision-making authority than they'd have in a traditional organizational setup.


Because flat organizations can quickly re-form groups of employees -- employees accustomed to taking ownership of a project or process -- the horizontal organizational structure is tailored for unstable conditions. Without a slow, bureaucratic chain of command, decisions can be made quickly, workers can communicate without fear of stepping on toes and employees can coordinate as needed. Such flexibility also lends itself to innovation, customer responsiveness and a company that can differentiate itself from the competition. Businesses trying to compete through distinctiveness and cutting-edge products should consider a flat organization, as should those doing business in an unpredictable environment.

Advantages and Disadvantages

Traditional structures create employee islands. Workers in different departments often remain strangers and departments can become competitors. Interdepartmental rivalry doesn't exist for flat organizations. The looseness of flat organizations tends to engender communication and compromise, leading to the responsiveness, flexibility and adaptability that characterize horizontal structures. Meanwhile, because management empowers employees, morale improves and workers become more committed and results-driven. Finally, shedding management layers lowers costs.

The main risk of a flat organization lies in the quality of its employees. An owner considering this structure must know that success is found in a commitment to employee training and development.