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A vertical organizational structure is a strict hierarchy that creates layers of officials within an organization. This can apply to a company as a whole entity or to a specific project, team, or sector within a company that may be organized overall by other means. A number of considerations go into the design of organizational structure, and must be integrated into company planning. It can be difficult to change a structure once it is in place and thus it is important to think carefully during the planning phase.
With a vertical organizational structure, the emphasis is on the hierarchy. Each layer has progressively fewer people and more power, all the way up to the top. Decisions move up and down through the power structure, and people at the bottom may not have very much autonomy. For example, a clerk at a bookstore cannot decide to donate a case of books to a high school classroom. Instead, a request for donation must be passed through the appropriate company officials for someone to approve or deny.
Benefits of a vertical organizational structure can include tight control and consistency within a company. When only a limited number of people can make decisions, those decisions tend to be consistent in nature and can sometimes be made very quickly because they do not require consultation and consensus. Company personnel may be less likely to conflict with each other in their decisions and public statements. Staff members also have clear guidance when it comes to seeking permission for activities, requesting assistance, and performing other tasks.
This approach can also be limiting. Lower-ranking employees without autonomy may be less creative, and less likely to share creative proposals with supervisors, when they work within a vertical organizational structure. The inability to make some decisions on a lower level can create lag when it comes to implementing decisions, which can be a problem if a company needs to respond quickly to a problem. A situation that could have been defused by a low-level employee might escalate, creating problems for the company, as when someone complains about service at a restaurant and doesn't get a quick, satisfactory outcome.
The vertical organizational structure can also tend to trap a company in outdated techniques and practices because it may take longer to implement changes. In contrast, horizontal structures can be more flexible, and may encourage creativity and rapid problem solving. The drawback to such approaches, however, is that they can contribute to inconsistency and problems like not knowing who to turn to when an authority figure is needed.