Companies can vary in terms of how they are organizationally structured. Structure is important for coordinating tasks properly and ensuring effective channels of communication. Depending on the nature of your business, employees and managers can be structured in different ways to achieve maximum productivity, manage individual work needs and ultimately reach corporate goals and objectives. Two common types of organizational structures include "flat" structures and "hierarchical," or "tall," structures.
Hierarchical structures are tiered arrangements that generally include many layers of management between top executives and employees; they have low manager-to-employee ratios. This translates to high manager involvement with employees since each worker doesn't have to "share" a manager with many other employees. This allows managers to closely oversee and manage employee performance. Hierarchical structures within companies also tend to encourage employees to fulfill overall corporate objectives over individual ones.
Unlike hierarchical structures, flat structures are much less tiered and pyramid-like in terms of how they are organized. In flat structures, many employees report to few managers, leading to a high manager-to-employee ratio. Flat structures lack the multiple levels of managers between employees and top-level executives that characterize hierarchical structures. Instead, employees may work directly with top-level management in a flat-structured company. This results in employees who may be expected to make individual business decisions to reach separate business goals that feed into overall corporate objectives without the aid of midlevel managers.
Employees in this structure tend to work under close monitoring and tight controls by midlevel managers, which can lead to a stifling of creativity since bureaucracy and control can reign supreme in lieu of variability. This can translate to a high specialization of skill sets among employees, according to the book "Business Policy and Strategic Management."
Since flat structures provide for minimal supervision over projects and tasks, employees usually experience more freedom, which can translate to more independent thinking and higher levels of creativity. "Flat organizations provide greater need satisfaction for employees and greater levels of self-actualization," the book "Principles of Management" asserts, and employees in flat structures can also feel more "role ambiguity" within their organizations as workers can be uncertain of job expectations. At the same time, employees may sense more upward mobility chances in a flat structure since fewer managers are ranked above them.