When it comes to business management, there are several schools of thought on how a business should be organized, with the two most well-known being hierarchical and flat structures. The two systems work in very different ways depending on the type of company and what they want to achieve. Both can tap into an employee’s potential through motivation and clear expectations. With the world shifting from 9-5 workdays in the office to hybrid work models and full-time remote workers, it is important to set out a clear structure for workflow and expectations. But how do these models work, and how can they bring out the best in their employees? 

What is a flat structure in business?

Flat business structures remove the middleman from the decision-making abilities of the team and instead give the team their own abilities to make final decisions. There is usually direct communication between the team and the executive, which makes it faster for most decisions to be made. An example of a flat organization is Google, which has given its employees the power to make certain decisions and has therefore increased employee satisfaction. These are also referred to as self-management systems. 

What is a hierarchical structure in business?

A hierarchical business structure contains many departments that do specific things and are accountable to a set of executives who manage them. There are more layers of approvals when a decision is needed, and it usually takes longer in a hierarchy because any project will need to get through those layers. In a hierarchy, there are usually more positions that are specific niches for employees to specialize in. Businesses that are very large with many employees usually adopt this system. There are very clear roles that individuals play and it is clear to whom they report. Amazon is an example of a hierarchical system.

How to use each to tap into employees’ potential

These systems have their pros and cons, but they both tap into employee potential in different ways that are successful. 

Flat systems and employee engagement

  • More collaborative – Reducing the amount of management or removing it altogether helps a flat organization open up discussions and ideas to every employee, letting everyone’s juices flow and tapping into even the newest member’s creativity. This is very important in start-ups or newer companies where new business needs to happen quickly and innovation is what put them on the map. This can be very exciting for new employees as they feel a sense of ownership when they are helping to build an organization. 
  • Quicker decisions – Flat organizations don’t have to go through as many layers to get decisions made or a project approved. For employees, this allows them to run with new innovations quickly and start working on dynamic projects without having to wait for a thumbs up from the executive or the CEO. This is a great way for new employees to feel ownership of their company, especially for start-ups and companies that need to move quickly on new ideas.
  • Important decisions as a team – Everyone in the organization gets a say and all voices are heard when decisions need to be made. This encourages employees to share their creative thoughts with the group and be as innovative as possible.

Hierarchical systems and employees

Climb the corporate ladder – In a hierarchical system, there is a defined system for raises and promotions that gives employees motivation to learn skills to set them apart. When an employee is looking to climb the corporate ladder, they know exactly what it is they need to achieve the next level in their career. This can spur an employee to achieve their goals faster because they know the reward. Another excellent way to move up the corporate ladder is to get a Doctor of Business Administration (DBA) from a reputable institution such as Aston University. If you are already working, the company might even pay for your schooling because higher education in business will benefit it. The curriculum for the DBA is completely online, so you can cater your schedule to fit your work hours, or you may be able to get an accommodation to learn on the job.

Clear career path – According to the Harvard Business Review, hierarchies fulfill a deep need for security and order. This includes a detailed roadmap of what you need to do in order to move forward in your career. These systems will show the succession steps to getting to where you want to go in the organization. If you are set on becoming a team leader or manager, then a hierarchical business system will give you distinct steps and more opportunities to get there. 

Clear reporting relationships – There are clearly defined roles of CEO, VP, managers, and other positions in the hierarchy so that employees are never confused or uncertain about whom they report to. This eliminates any miscommunication and makes the employees feel much more secure. 

Niche departments – This type of environment has many specialized departments, and employees can grow within that department and develop specialties. Niche departments also encourage expertise in one area, leading to pay raises and more opportunities. 

Family atmosphere – A smaller, specialized department will foster strong relationships with the employees, and they will have pride in the job they do and will demonstrate this through hard work. These departments will also become more like a family unit than a work environment, which results in happier employees.

When it comes to exploring employees’ potential in the workplace, there are positive sides to both hierarchies and flat organizations. With some, the uniformity and organization of a hierarchy allow the employee to know exactly what needs to be done in order to move forward, while the collaborative nature of a flat organization allows for free thinking and rapid innovation. Both structures have their benefits and can bring out the best in their employees.