What Is a Flat Structure in an Organization? - Definition, Advantages & Disadvantages

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  • 0:01 Organizational Structure
  • 0:40 Advantages,…
  • 3:47 Lesson Summary
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Lesson Transcript
Instructor: Carol Woods

Carol has taught college Finance, Accounting, Management and Business courses and has a MBA in Finance.

In this lesson, we'll define what organizational structure is, and explain some terms used to describe it. Then we'll cover the characteristics of the flat organizational structure, and discuss its advantages and disadvantages.

Organizational Structure

Structure in an organization refers to the reporting relationships between employees. These relationships can be shown in graphic form via an organizational chart, such as this one:

Organizational Chart
org chart example

The organizational chart displays the reporting relationships between different staff members.

In this chart, the span of control of the CEO is three - this is the number of people reporting directly to him. Also, this chart has three layers - this is the number of different positions in the reporting structure from the bottom row to the top position.

Advantages, Disadvantages and Impact

Flat organization structure refers to having a relatively small number of layers in your company's organizational chart. The specific number will vary with the complexity of the business. A very small company with a flat organizational structure may have all staffers reporting directly to the president, whereas a multinational corporation might have a large number of levels of management - but still be flatter than its peers.

In a flat organization structure, each manager has a relatively higher number of direct reports, as compared to similar companies. This can have advantages:

  • Fewer layers of management means fewer approvals in decision-making, which can mean faster decisions, and the organization can respond more quickly to new opportunities or threats.
  • Fewer layers of management also means that decisions reach the ultimate decision-maker sooner in the process, which gives the ability for faster decision-making, and therefore, a faster response to new business issues.
  • Fewer layers of management can lead to better and more frequent communication between higher-level managers and staffers, resulting in better understanding of company goals for the staffers and a better understanding of daily operational issues by the managers.

A flat organization structure also has some disadvantages:

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