Advantages and Disadvantages

Do you run a small office? Do you manage a branch or regional office of a larger national or multinational company? What is the organisational structure within your office? And does it work?

Different businesses have different organisational structures, each of which have their own advantages and disadvantages. If you are starting up your own business, looking to change or reorganise your existing business structure, or trying to increase office productivity, here are a list of advantages and disadvantages of certain structures.

Hierarchical structures

Hierarchical structures describe and order the people within a business according to their status and position. These structures are pyramid-shaped, with those lower in the pyramid reporting to those above them, and the number of people at each level increasing as you move down the structure.

Large companies are generally hierarchical structures. For example, the CEO or managing director is at the top of the pyramid and gives orders to departmental directors or managers. The department managers might have a team of supervisors, who are in charge of a number of workers. These workers might also have their own assistants, secretaries or other support staff who report to them.

Hierarchical structures: advantages

There are clear reporting and accountability lines within the organisation.

When employees need to be disciplined, it is much easier in a hierarchical organisation, because workers have superiors who they are accountable to for their work and behaviour.
Allocation and delegation of work is often much better handled in a hierarchical structure than a flat structure, because everyone’s roles, responsibilities and status are much more clearly defined.

Hierarchical structures: disadvantages

Hierarchical structures can seem too formal, sometimes unnecessarily so, particularly in small businesses.
They are less friendly, less laid-back and there are generally less opportunities for socialising (apart from with those on the same level as you). There is less feeling that everyone is working together towards a common goal, and hierarchical structures can lead to resentment towards those higher up in the structure because of a lack of communication and cooperation.

Flat structures

Removing levels of hierarchy creates a flatter structure within an organisation. In many cases, there is one person at the top – ‘the boss’ – with everyone else reporting to him or her on an equal level.

Flat structures: advantages

People feel more involved in the organisation and its goals.

People can take on more responsibility.
There is generally better communication between colleagues.
There is more scope for colleagues to become friends, and better opportunities for socialising.
There is better team spirit and cooperation, and less bureaucracy.
Decision making is easier because more people have the capacity to make those decisions, rather than having to go to someone who is higher than them in the pyramid.

Flat structures: disadvantages

While decision making is generally easier and faster in a flat structure, there is also scope for decisions to get stuck as a result of consulting with too many people.

With no clear accountability lines, it is much more difficult to discipline employees; generally the boss is the only person who can handle this. If the boss is too busy running the business, as is often the case, discipline gets forgotten about, and problems with particular workers’ performance might continue to the detriment of the business.
Blurring of colleague/friend lines can become messy; issues or disagreements at work might spill over into a social setting and vice versa.
Generally flat structures can only work in small organisations, and would be chaotic for a larger company to manage.

Other structures

Sometimes companies adopt informal structures, which develop based on day-to-day interactions and on how certain processes and functions are run. No clear hierarchy is spelled out, but an implied, invi