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A flat organization eliminates as many middle management positions as possible to put executives in direct contact with employees on the ground. This approach can work well in a small business with a limited number of employees, where it is possible for executives to oversee operations. At larger companies, it may be necessary to include some middle management for functionality, but individual departments and task forces can operate with a horizontal management structure. Some businesses thrive when organized this way, because it can promote efficiency and accountability.
One advantage to flat organization is that it can streamline operations. At a store, for example, individual employees may be able to act with considerable autonomy to quickly resolve customer complaints. They can be accountable for their actions later in a meeting with an executive. This can encourage employees to take an active role in making decisions, and stand behind the decisions they make. For customers, it can result in increased satisfaction and the sense that the company is responsive to their needs.
Projects may move through more quickly, and with fewer disruptions, in a flat organization. Instead of having to pass decisions through a series of personnel, teams can act quickly to develop projects after receiving a go ahead from an executive. The same streamlining can also help companies address issues quickly. If a new product is defective, for example, teams can start immediate analysis and the development of proposals to address the problem.
Reducing hierarchy can be cost effective. Flat organizations tend to cost less to run because they include fewer administrative personnel who may not contribute directly to production and day to day work. In a smaller business, this could be an effective method for concentrating resources to help the business grow. As it expands, it might be necessary to consider another rank of personnel to handle management and delegation when they start to grow beyond the control of individual executives.
Employees can be happier in a flat organization in some cases. They may feel like they play a more direct and active role, and have a reason to get invested in the company’s future. Reducing layers of personnel can also encourage innovation and open discussion, as employees may feel more free to speak when they have a direct connection with executives. This can help companies identify flaws in products and services early by soliciting input from personnel who might be able to spot problems and feel comfortable talking about them in a flat organization where they have more power as individuals.