On an organizational chart, traditional company structures look taller than they are wide. Hierarchical layers of a management bureaucracy build these vertically oriented companies. This organizational structure has advantages, such as a clear chain of command, but disadvantages, too, including a rigid culture. Companies wanting to mitigate disadvantages may adjust the organizational structure toward a horizontal orientation, flattening the hierarchy. This occurs through cutting middle management positions, thus eliminating bureaucratic layers.


Flattening a company's hierarchy has implications for the way an organization operates. Chain of command is especially affected. In a traditional structure, the command chain is clear: Power increases the higher a manager climbs in a company. The management structure holds authority over the employees below and wields the decision-making power. Removing management creates gaps in the chain that require a redistribution of power and responsibility. Leadership functions must be distributed among employees, changing the workplace dynamics. Remaining managers supervise more employees, which requires employees to behave more autonomously.


The bureaucratic nature of tall structures resists change. Heavy management oversight obstructs innovation because ideas must successfully pass through a layered approval process. A flattening of hierarchy removes management barriers, freeing employees to make independent decisions, which spurs action and innovation. Employee engagement heightens morale and a sense of responsibility. Workers tend to become active rather than passive participants in company agendas.


Flattening a company’s hierarchy can have negative consequences for a business seeking quality control, consistency and standardization. Vertical structures achieve such objectives because jobs are strictly defined and specialized. Specialization allows a company to mass produce, which, in turn, benefits a company through economies of scale. The machine-like ability to pump out cookie-cutter results is a casualty of flattened organizations. Flat organizations organically adapt to conditions.


When outside conditions are dynamic and change rapidly, insisting on a mechanized business approach can leave a company vulnerable. Competition employing a flat structure can harness employee creativity to find ways to adapt rapidly to a changing environment. New methods, products and services can be introduced quickly. Employees can shift efforts to match sudden shifts in the market. Innovation becomes a competitive tool that the traditional tall structure just doesn’t possess. When industry conditions become unpredictable, unstable or the pace of change begins accelerating, tall structures may find it imperative to flatten the company’s hierarchy.