Horizontal Organizational Structure 

What is a horizontal organizational structure?

A horizontal organizational structure, also known as a flat organizational structure, is a type of business structure with few or no middle management levels between staff and executives. Its simplified management structure typically includes a business owner and one level of managers or leaders, far less than vertical or matrix structures. A horizontal structure gives employees more autonomy, increased responsibility, and decision-making authority.

Some leading examples of companies with horizontal organizational structures include:

• Valve: The gaming company is known for its horizontal structure, where employees have no formal bosses and can choose which projects they want to work on.
• Morning Star: The food processing company operates without traditional managers; its employees are responsible for their own areas and collaborate directly with colleagues.
• Buffer: The social media management company adopted a flat or horizontal structure to empower employees with autonomy and encourage open communication and transparency.

Characteristics of a horizontal organizational structure

Here are some common characteristics of a horizontal organizational structure:

• Horizontal structures have fewer management levels, with responsibilities and decision-making shared among teams and employees
• Emphasis is placed on collaboration and teamwork, with employees encouraged to work across various functions and departments
• The focus is on skills, expertise, and performance, with roles based on competencies rather than hierarchical positions
• Communication is more direct and open, fostering a transparent environment that encourages the sharing of ideas and innovation
• The decision-making process is streamlined, leading to faster and more efficient approvals and allowing the organization to respond quickly to changes and opportunities.

Horizontal organizational structure example

Green Innovate Inc. is a company specializing in developing innovative renewable energy technologies. It prides itself on its collaborative and non-hierarchical work environment.

Its horizontal organizational structure looks like this:

Vertical vs. horizontal organizational structure

Horizontal organizational structure advantages and disadvantages

 The advantages

• Employee autonomy and engagement: Employees in a horizontal organization often have more independence and are empowered to make decisions. This often results in increased job satisfaction and motivation, as employees feel more involved and valued.
• Reduced costs: With fewer managers, the organization can reduce costs associated with higher salaries and benefits that are typical at management levels.
• Organizational agility: Horizontal organizational structures tend to be more flexible and adaptable compared to traditional hierarchical structures. This flexibility allows organizations to respond to market shifts or change strategies quickly.
• Enhanced creativity & innovation: When employees have more autonomy and freedom, it can drive innovation and creative ideas. This is especially true when diverse, cross-functional teams come together.

The disadvantages

• Lack of clarity & focus: Without clear hierarchies, employees may be uncertain about decision-making authority and their own responsibilities, leading to potential conflicts or inefficiencies.
• Limited leadership opportunities: With fewer opportunities for management positions, top talent who desire top leadership roles may not be attracted or want to stay for long in horizontal structures.
• Risk of overload: Employees might feel overwhelmed by the increased responsibilities and decision-making demands, potentially leading to burnout.
• Increased HR workload: Because there are fewer managers, HR teams in horizontal structures may need to take on additional responsibilities like conflict resolution, performance management, and coaching.

4 other types of organizational structures

1. Functional organizational structure

A functional organizational structure is a form of business organization that is made up of several departments based on specific skills and areas of expertise.

• Benefits: High level of expertise in specific areas by grouping employees based on their function; Clear reporting lines
• Limitations: Slow response times due to centralized decision making; Limited view of organizational goals due to departments being focused on their own objectives.

Companies that use this structure: Amazon, Apple

2. Divisional or regional structure

In a divisional structure, an organization is divided into semi-autonomous units, each responsible for a product, service, or geographic area. This structure is common in large corporations with diverse product lines or different markets.

• Benefits: Strong focus on localization of requirements to market; Allows for more flexibility in execution and faster decentralized decision-making.
• Limitations: Can result in duplication; Difficult to drive standardization.

Companies with a divisional structure: Samsung, Nestlé

3. Matrix structure

A matrix structure combines elements of functional organizational structure with elements of divisional structure. Employees report to two bosses: one for their functional area (like marketing or finance) and one for their product or project.

• Benefits: Drives cross-disciplinary collaboration; Shares expertise across the organization and, if managed well, drives innovation.
• Limitations: Often internally focused and requires clear governance to work; Internal tensions in terms of conflicting priorities and accountability.

Companies that use this structure: Nike, Phillips

4. Team-based or agile structure

This structure organizes the business into project teams. These teams often function autonomously, working towards specific goals.

• Benefits: Leverages cross-functional capacity; More flexible in allocating resources.
• Limitations: Decision-making and allocation of resources is not always clear; Can result in fragmented work practices and lack of consistency.

Companies that use this structure: Spotify, Airbnb

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