The Difference Between Flat vs. Hierarchical Organizational Structure

Flat and Hierarchical Organizational Structures refer to the typeof order a business or corporate’s managers, subordinates and staff are positioned for reporting, supervision and communication purpose. Organizational structure varies in each company.

However, the structure of a business is important in accomplishing corporate goals and objectives, achieving greater productivity level and managing employee work needs. Some of the objectives that an organization structure fulfils include;

  • To establish and delineate lines of communication between managers and subordinates, responsibilities, company policies and authority line.
  • To determine the nature and extent of how leadership is scattered within the organization.
  • To ensure effectiveness in work management and work ethics, productivity level and planning and coordination.
  • To ensure smooth communication network.
  • To bestow planning and controlling power.
  • To ensure smooth functioning between departments and project teams.

Preference of Most Corporates

Companies usually adapt toone of the two types of organizational structures – Hierarchical or Flat Structure. The type is determined by several factors, both external and internal including organization size, employees’ skill, number of staffs, business goals, technology used, stake holders, shareholders etc.

Hierarchical Organization Structure – Is a tall structure that looks similar to a pyramid. It has several levels – the top most level is meant for the CEO, MD or Chairman and descends down to its base level where the staffs with lower designation occupy the pyramid. In such organizations every employee except in the top level is a subordinate to someone else in the organization. Hierarchical structure is usually adopted by large organizations.

Flat Organization Structure–It is also known as horizontal organization structure in which businesses have fewer or no levels of middle managers. There may be one or two layers between the top management and lower levels of employees. The structure is short and wide and is usually adapted by small scale businesses.

The Difference Between Flat vs. Hierarchical Organizational Structure


Difference Between Flat and Hierarchical Business Organizations

Hierarchical Organizational Structure Flat Organizational Structure
Suitable for Large Sized Corporates with too many overheads. Suitable for Small Sized Business with limited number of staffs
Communication flows from top to bottom Communication flows in all direction
Multiple levels of authority and responsibility One or two levels of authority and responsibility
Communication is directly or indirectly to one’s immediate superior Communication is directly to the top management and is rather casual
Example: Business development executive reports to team lead, who reports to a supervisor, who reports to a manager, who reports to a director and who finally reports to the CEO or VP. Example: CEO or Chairman directly talks to the entry level manager, product manager, supervisor and clerk with no barrier in communication
Employees feel less motivated due to stringent communication structure and lack of influence in lower levels of the company. Employees are highly motivated as they have the responsibility to directly influence the company’s growth.
Level of complexity in coordination and controlling is less as each level of managers has only fewer subordinate to manage and direct. Level of complexity increases as too many people get involved in defining and deciding objectives and strategies.
Less flexible. As directives and feed backs have to flow through various levels to reach the actual department. More flexible. Decisions can often be made quickly and carried out smoothly.
More systematic as employees know whom to talk to and be inspired from when time asks for it. Employees often lack specific boss or leader to look forward to for reporting and seeking help.
Produces more skilled specialists. Produces more generalists.
Augment long term organizational structure growth as it is meticulous and achievable. Limit longterm organization growth and opportunities.
Produces opportunities for promotion and leadership No such opportunities in flat structure.
Promotes development of employees by narrowing their field of focus and expertise. Does not promote development of employees.
Salaries for multiple layer increases cost. Organizational cost incurred is less.
Employees are loyal to their department. Employees are loyal to the entire company.


Of all things a business has to worry about, structuring is not one of them. It is just like building blocks. As you initiate a business, you start with one block – the owner or you. At some point when your business grows your start to hire and bring in more skilled people for management. That’s when you increase the number of blocks. So at the beginning a business is always a flat structure but it is your choice to make it hierarchical or flatter than the existing one.

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