Question

write 500 words on compare the vertical and horizontal organizational structure

Answer 1

Answer:

Comparison between Tall and Flat Organization Structure

The term organizing refers to division of total activities of the organization into distinct group and assign authority and responsibility to different persons according to their specialization. In order to achieve the organizational goals, it is important for an organization to have a proper organizational structure. In order to achieve maximum performance organizational structure has to be appropriate and matched with the rate of change in the environment (Burns and Stalker, 1961). Organizational structure is defined as “the establishment of authority relationships with provision for coordination between them, both vertically and horizontally in the enterprise structure” (Koontz, 1994). Modern organization relies on more flexibility, employee involvement, assigning duties based on skills and fewer boundaries and controls.

The formal framework of organization consists of responsibility, authority and accountability. It is a hierarchy of people and positions starting from the top to bottom. The structure defines each person’s role in an organization, his authority and to whom he has responsible to report, moreover if any issues arise who will be accountable or obliged to give clarification.

Although the organization follows a particular structure, there can be departments and teams following some other organizational structure in exceptional cases(Rajesh,2014). Sometimes, some organizations may follow a combination of different structures. Different organizational structures that companies follow are reliant on number of factors such as:

• Size of business,

• Nature of business,

• Geographical regions,

• Work flow,

• Leadership style and

• Hierarchy etc.

Depending on the organizational values, size, type and the nature of the business, organizations may adopt any or combination of some of the following structures for management purposes.

Tall and Flat Organizational Structure:

The structure of business organizations can be described as either tall or flat, which refers to the levels of management in the organization's hierarchy and the corresponding distance between front-line or entry-level employees and top management. Whether a business has a tall or a flat structure can have important impacts on a variety of elements within the organizational culture. The difference between tall and flat organizational structures is the layers of management. In a flat organizational structure, there may be just one top manager who is an owner or CEO of the company, overseeing a handful of other employees, all with equal levels of authority. In a tall organizational structure, by contrast, there are multiple layers of authority between the CEO and low level employees. For example, an entry-level employee may report to a supervisor, who reports to a manager, who reports to a director, who reports to a vice president, who, finally, reports to top management.

FLAT ORGANISATIONS:

Flat organisations relatively have few layers or just one layer of management. This means that the “Chain of Command” from top to bottom is short and the “span of control is wide”. Span of control refers to the number of employees that each manager is responsible for.

If a manager has lots of employees reporting to them, their span of control is said to be wide. A manager with a small number of direct reports has a narrow span of control. Due to the small number of management layers, flat organisations are often small organisations and have following characteristics:

• Decentralized Management Approach

• Few levels of Management

• Horizontal career path that cross functions

• Broadly defined jobs

• General job descriptions

• Flexible boundaries between jobs and units

SIGNIFICANCE OF FLATTER ORGANIZATIONAL STRUCTURE

In large organizations, tall or traditional organizational structure is usually followed but due to many levels of management between top-level and baseline staff, decision making have to go through many processes, it will take time. While in the flat organizational structure as the levels are few, they can take quick decisions. This increase the productivity of organization as well as using a flat structure can decrease the budget by cutting the middles men cost and decrease the communication barriers (Borkar, 2010).

MAJOR ADVANTAGEOUS OF FLAT ORGANIZATIONS

.Flat organizational structures feature less layers of management. In flat organizational structures, employees are empowered and expected to take responsibility for a range of traditionally managerial decisions in their daily routines. The management structure of an organization affects how individuals within a company make decisions and how quickly the company reacts to various challenges and opportunities. A flat organizational structure, in which the number of managers at various levels is few from top to bottom, is regularly seen in smaller companies. Larger companies with larger employee populations face additional challenges not faced by small businesses. As they grow, small companies face the question of whether to retain a flat management structure or add levels of management as they add employees. In flat organizational structure, vertical boundaries are removed to flatten the hierarchy, and horizontal boundaries are removed in order both to replace functional departments with cross-functional teams and to organize activities around processes. When fully operational, boundary-less organizations remove the barrier of geographic distance from external constituencies. Such organizations are thus characterized by:

Employee motivation is a key factor in any organizational structure. While employees in a flat organization may feel as though they have more direct influence on the company, they may also feel as though they have no room for advancement. On the other hand, employees at a tall organization have many layers through which to advance their careers, but may become frustrated at their relative lack of influence at lower levels within the company. Organizational Complexity Generally, the more complex an organization becomes, the taller the organization must be. An employee in a small organization may be able to handle all the company's marketing duties; however, as the organization grows, that employee may need subordinates to whom he can delegate certain tasks. Additionally, top managers can generally be much more effective if they have a handful of upper-level managers reporting to them, as opposed to dozens or more of lower-level employees. Organizational Flexibility Organizations with fewer levels between managers and employees can more easily implement strategic management plans, take action steps for short-term goals and take action on policy and procedural changes. By acting on a level closer to front-line employees, managers can monitor progress toward goals and objectives as well as receive more immediate feedback regarding the feasibility of a specific action plan. One advantage a flat organizational structure has over a tall one is the level of flexibility. Decisions can often be made and carried out more quickly in flat structures because there are few layers of communication between the employees doing the work and those making the decisions. Therefore, directives and feedback can be communicated more quickly to allow for necessary changes. Influence over Power By far one of the key difference between two styles of running organization is how not to dictate decisions but influence decisions in the right directions with involvement from everyone, adjusting direction for better based on the views from all stakeholders. In most flat organizations, you will find roles and people as influencers as oppose to powerhouses and corner offices. Discussions before decisions Decisions are usually not taken in some corner office. There are lots of discussions happening all around on various topics before reaching to decisions. Approachability over Unreachability Leaders are usually very approachable in flat organizations. If physical presence is not feasible all the time, there are leaders available over emails, chats, town hall meetings and other such mechanisms to ensure approachability. Collective Ownership over Autocracy Not making decisions is not a choice but usually, decisions are made collectively where everyone gets a chance to express their views and opinions. Collective ownership does not mean democracy. Accountability towards a Team than an Individual or a Role Even though reporting structure might be fuzzy at best, ownership driven teams find themselves accountable to entire team and not to an individual or to a particular role. Better Communication Smaller companies with flat organizational structures can more easily communicate with employees at all levels. By sheer volume, larger companies face challenges in communicating consistent and accurate information. Flat organizational structures remove barriers between top-level managers and front-line employees. Communications flow across the organization instead of from the top down. Another aspect of this management structure is that Informal communications and honest critiques occur betwee peers more easily than from managers to subordinates. Growing organizations that maintain or adopt a flat organizational structure can better

maintain formal as well as informal communications and receive more immediate feedback. Organizational Response Large organizations with many management levels may not cede responsibility to lower-level managers to make strategic decisions or even decisions directly affecting customer service at lower levels. Flat management structures allow lower-level managers more latitude to make strategic decisions, implement action plans and communicate these changes to front-line employees. This empowerment can decrease the time it takes to react to new opportunities or business threats. Shared Organizational Goals Large organizations may be able to effectively communicate organizational goals, but due to lack of communication between top level management and lower level employees, the shared benefit of reaching those goals may not be understood. Flat organizational structures include lower-level managers in the goal-setting process and empower them to help the company reach those goals. This shared process can foster community and create shared organizational goals (Tim Burris). Adaptability Employees and work groups in flat organizations tend to be more adaptable in changing or unique circumstances, due to their smaller hierarchies and lack of bureaucracy. When front-line employees are empowered to handle customer complaints without management approval, for example, complaint resolution can progress more efficiently, boosting customer satisfaction. Work groups assigned to unique projects, for example, can often craft their own unique operational processes in flat organizations, without seeking the approval of upper management. Collaboration Open communication and collaboration are encouraged in companies with flat organizational structures. Since more employees are on a level playing field, more responsibility is placed upon each individual, creating a situation where innovative, collaborative self-starters excel and passive followers lag behind. As an added bonus, organizations with a flat structure can attract the type of employees who are encouraged by a work structure that requires self-motivation and teamwork. Innovation and Creativity Ideas come from a wider range of sources in a flat organizational structure than in companies with many layers of management. By giving everyone in a company an equal voice in submitting new ideas and feedback on operational processes, products, services, business models and company policies, companies can discover new ideas that may lead to competitive success. Communication Since the chain of command in a flat organization is small or even only one layer, communication is often faster and more effective.

TRADITIONAL OR TALL ORGANIZATIONAL STRUCTURES

Hierarchical organizational structure is common in private and public sector organizations, both large and small. Department heads and business unit managers report to vice presidents and general managers, who report to the president. Small businesses usually have fewer management layers than large organizations. Although a hierarchical structure can coordinate the actions of thousands of employees, it has certain weaknesses. Inflexibility Hierarchical structures are often inflexible. In a May 2011 "Harvard Business Review" article, Harvard Business School professor John Kotter suggests that hierarchical organizations inhibit timely transformations, which are essential if a business is to survive in a rapidly changing environment. He suggests that hierarchies work for standardized processes but they are not useful in dynamic environments. They are slow to react to new opportunities, which often require transformative change. Slow Decision-making Decision-making is usually slower in hierarchical structures because responsibility and authority are concentrated in a few people at the top. The top-down decision-making structure means that business units are unable to respond rapidly to competitive threats.

PROCESS OF CONVERSION OF VERTICAL ORGANISATIONAL STRUCTURE INTO FLAT ORGANISATIONAL STRUCTURE

Conversion of vertical organisational structure into a flat structure presents various challenges to managers and business owners which can be overcome by proper planning and guidance. Following steps can be taken for effective implementation of flat organizational structure: Preparing Employees Gaining buy-in from employees at all levels of your organization is crucial to success in a transition as overarching as a change in organizational structure. Seek input from employees through formal feedback systems and informal conversations before beginning the planning process. Take employees' ideas seriously, and invite innovative idea-generators to participate in planning meetings. Clearly explain the need for the change in structure to all employees. Explain the need in terms that relate to each employee’s individual roles, as well as how the change will benefit the organization as a whole. Also explain how the change will positively affect each employee and enhance their positions in the company. Send regular updates on the planning process to all employees via email, company newsletters, company meetings and informal conversations. Always be open to feedback when sending updates. Planning and Implementation Take the time to create thorough, formal plans to implement the transition from your old organizational structure to your new structure. Map out how physical workspaces and work groups will be moved or reorganized. Create plans to transition managerial information and duties among employees. Implement the transition one step at a time rather than throwing the entire package into the works all at once. As an example, consider that you wish to transition from a tall organizational structure to a flatter structure where front-line employees are empowered to make managerial decisions. It would be a good idea to make the transition in one department at a time, first putting employees through training sessions to give them the information and skills required in their new roles, then formally moving line managers into other positions in the company. Monitoring Keep feedback mechanisms in place after implementing the transition. Rather than viewing the transition as a finished project, consider it a work in progress; use feedback from employees to fine-tune or alter specific aspects of the new structure. Allowing employees a voice after the transition can add uniqueness to the structure, bringing it closer to a structure that is best suited to maximize the efficiency and effectiveness of your operations while keeping employees satisfied.

References:

Dr. Rishipal, India Analytical Comparison of Flat and Vertical Organizational Structures, European Journal of Business and Management, Vol.6, No.36, 2014.

Burns, T. And Stalkee, G.M.(1961), The Management of Innovation, Tavistock.

Koontz, H (1994), Management, Mc Graw Hills International Edition.

Borkar, R. (2010), Flat Organizational Structure.