Organizational Structures

As businesses grow, they have to make many decisions on how to manage that growth and how to structure it. One of the decisions that they face as they increase hiring is how to manage their workforce. One of the dividing lines is what type of organizational chart to adopt or whether to alter their existing one.

For example, one big picture consideration is whether to use a flat structure or a hierarchical one. Each has its advantages and depending on the type of organization one may be more appropriate than the other.

A flat structure is one which has few, and in some cases no, middle management. This means that there are no levels of management between the executives of the business and the staff level employees. The flat organizational model rests on the principal that employees who are well qualified, trained, and motivated will be more productive if they are more directly involved in the decision-making process – meaning that they are more directly involved with the executives of a company. In this manner, theoretically, the company has more invested employees on the one hand, and presumably, is able to have better, faster and more frequent input from the ground up, increasing growth and responsiveness.

The flat structure traditionally has been used in small businesses, by necessity, where there is a lack of middle managers due to the limited number of employees and resources. Increasingly, however, businesses have attempted to maintain this flat structure as they grow to varying degrees of success.

At the same time, as your business grows, a flat structure may make less sense. It will likely make sense to have more of a hierarchical structure.

There are a number of factors to consider when designing and implementing an organizational structure. To begin with, there has to be a review of the business, its current needs, the direction in which it is headed, including its short and long-term goals. Depending on the business and its needs, Khorrami Consulting can help design a structure that assures maximum efficiency, proper balance between supervision and autonomy, and improved retention. At the same time, structures have to be designed to match the organization’s desired rate of growth, and the level of control that management or owners wish to maintain.