Many businesses are organized like a pyramid: decisions are made by those at the top and executed by lower-level employees. But is this the best way to encourage innovation and productivity?

A horizontal organization also has a pyramid shape, but it's much broader and flatter. This type of structure is characterised by a short chain of command and decentralized decision making.

Adopting a flat organizational structure could help you:

  • Become more flexible and adaptable to change
  • Streamline the decision making process
  • Create opportunities for employees to develop new skills
  • Encourage collaboration and group problem solving
  • Spend less money on managers' salaries

Instead of promoting your most talented employees to management roles — which takes them away from the job they excel at — you can reward them for making use of their specialized skills.

However, horizontal structures are not right for every business and can come with challenges:

  • May not be suitable for complex strategic decision making (deciding the future direction of your business, for example)
  • Employees may want to move up the ladder and assume managerial roles
  • Lack of hierarchy can lead to confusion over responsibilities

For a horizontal structure to be successful, it's important that information and knowledge is shared openly with team members. Leaders will need strong leadership skills and must be able to nurture employee development. Make sure your employees have access to the right training and make sure they have the essential skills needed to do the job.

Identifying goals and setting benchmarks can help your employees work towards a common goal and can help you measure performance.

Visit our organizational design section to learn more about choosing a business structure.