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Flat vs. Tall: What's The Best Organizational Structure For Your Small Business?

FLAT VS. TALL: WHAT'S THE BEST ORGANIZATIONAL STRUCTURE FOR YOUR SMALL BUSINESS?
 November 29, 2022 |  Franchise, Business Tips |  small business, business tips, hiring

By Michael Trimble, NPI, Inc.'s Content Marketing Coordinator

As your small business grows into a not-so-small business, you will have to make new decisions as a business owner. You have hired great people who are helping your business reach new heights, but as your team expands, so do your responsibilities as owner, manager, HR representative, you name it! Before drowning in your expanded duties, consider how you can organize your business to run as effectively as possible.

In the business world, the two most popular forms of organizational structures are the Flat structure and the Tall structure. Both have their strengths and their weaknesses, and determining which style is best for you can depend on a number of factors. From your personality and leadership style, to your industry and company size, here we will break down the differences to help you determine what structure is best for you!

Flat
Flat organization structures might also be called a “Short” organization structure. This style consists of employees all working at (more or less) an equivalent level in regards to decision-making, idea-sharing, and total investment in the company, all reporting to the owner. You could imagine this sort of structure as two-tiered, with the top-tier made up of only one or two people (likely the owner(s)), and the second tier containing all of the remaining employees.

This organizational style might seem to be more like the absence of a structure, but it is something that can work well with clarity. Believed to be a stronger model for smaller companies, flat organizational structures tend to lead to increased communication between employees and more collaboration.

There are a number of benefits to this style, potentially increasing overall buy-in from employees since equivalent responsibility and accountability usually leads to an equal amount of investment for the company’s overall success. These employees also tend to show more initiative since they have fewer channels that they need to move through before having decisions “approved.” When this structure is implemented well, team morale is higher, and connections between employees and business owners tend to be stronger.

With the advantages, there are also some common disadvantages. Particularly when there is a lack of clarity, or there are disagreements on decisions, flat structures normally don’t have a defined hierarchy that dictates which person is ultimately responsible for a decision. When this structure doesn’t work, all decisions might be escalated to the top of the structure, leaving the business owners with more work that could have been delegated in other structures. Without an efficient “management” hierarchy, the owner becomes the only manager, creating an inefficient bottleneck for decisions, and increased frustration among employees.

Tall
Moving to the other extreme, tall organization structures consist of many tiers, with managers and employees divided into specific hierarchies. There is still a small number of (or just one) central decision-makers at the very top of the organization, but increased managerial control is delegated to trusted employees. This sort of structure is usually defined by clear, centralized leadership, and communication is relayed to the officers that are directly responsible for the information, rather than shared throughout the organization. More common in larger businesses, the Tall business structure is also prevalent in small businesses that prioritize effectiveness and efficiency.

Some of the natural advantages that come with utilizing taller business structures relate to communication. In tall business structures, communication might not be as “open” as in a flat business structure, but it is efficient and effective. With clear hierarchies, employees always know exactly who to speak to regarding an issue or a specific subject. Whether it is their direct manager, or an individual designated as the “leader” of a particular project, channels of communication are always clear and finite.

In addition, benefits to tall organization structures include strong managerial control and a clear sense of job growth. As employees grow to become points of contact and take on more duties, their progressing position in the “hierarchy” of your business is easy for them to identify, and can lead to increased job satisfaction.

The disadvantages to Tall organization structures can be easy to identify as well. While points of communication are clearer, ease of communication beyond direct managers (or the specific few people employees actively work with) lessens. Naturally, the familiarity between coworkers enjoyed by employees of Flat businesses is lost, and those that are at the “bottom” of the structure are less likely to attempt to innovate and share their ideas.

Additionally, when Tall organization structures are not operating well, decision-making can seem slow as new ideas must flow through the proper chains before approval, leadership can lack clarity and feel distant, and the lack of familiarity between coworkers can also lead to a lack of trust.

Conclusion
As your own small business grows, consider your ideal managerial style to determine how you can incorporate these different organizational structures to best fit your needs. No business is completely “Flat” or completely “Tall,” but as you trend towards one style, be aware of its inherent disadvantages before you become restricted by those drawbacks. Capitalize on your structure’s benefits, and grow with a plan!

With your NPI franchise, you are a part of a network full of experienced business owners that have already made the tough choices (and the mistakes). Request a free info packet if you're interested in starting your franchise today!

 

About the Author
Michael Trimble, Content Marketing Coordinator
A graduate of the University of South Dakota, Michael has a B.A. in International Studies and English. With a background in research and writing, Michael contributes to NPI’s corporate marketing team as a copywriter and content strategist.


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