Reference no: EM133389018

Case Study: In terms of an organizational structure, a company has many options. When considering an organizational structure, a company may want to look at its communication style, workflow, and employee outlook. By knowing these necessary factors, a company can choose the style that best aligns with their mission and goals and can allow their strategic plan to be implemented in the best way possible.

A conventional organizational structure allows the top management and chief officers to decide on the company's strategic plan. While allowing them to make these decisions, employees are left to do their job assignments and become experts in their roles. This allows for departmentalization, in which employees understand each other and their roles within the company. When allowing employees to focus on their job assignments instead of the company's direction, they can become experts in their roles. This ability allows for the company to improve efficiency and effectiveness because employees do not need direction on daily tasks. When employees become experts at their jobs, the company can focus on its mission and improve on its strategic plan rather than on employee understanding and knowledge.

The emergence of a flat organizational structure has also set off a different management method for the industry. The management method of a flat organizational structure is different, and its decision-making is decentralized. Employees have more initiative and decision-making power and do not need to go through special instructions from their superiors. In this way, the inefficiency of the traditional management hierarchy structure is eliminated, and employees can communicate and discuss more. The flat organizational structure can not only improve efficiency but also allow employees to work more actively for the company because employees are valued and respected by the company. Respect. In addition, the parallel building can also enhance the creativity and innovation of employees, as it can be implemented through more efficient discussions and sharing. Nevertheless, implementing a flat structure requires a strong culture of trust, internal transparency, and accountability. Without these critical elements, employees can struggle with choices in terms of work and decision-making, leading to potential productivity gains and conflict.

Four main reasons against a flat organization include tougher adjustment, longer induction, accountability challenges, and growth issues. Tougher adjustment refers to the ability for an employee or organization to adopt a flat organization. Due to the prevalence of the hierarchical structure, the talent pool's previous work experience will conflict with a flat organization's cultural practices. The adoption proves to be even harder when it scales to an organization-wide shift in its focus. To accommodate the flat structure, the organization must shift its strategic focus from cost leadership, efficiency, and stability to differentiation, innovation, and flexibility. Furthermore, the country's culture may also influence the adoption rate of flat organizations. For example, South Korea has a high power distance index score, which reflects how ingrained rank is inside its culture.

The tougher adjustment correlates to a longer induction time. For example, a new associate at Morning Star may take a year or more to integrate into the culture. 50% of new hires still leave within two years due to the inability to adopt the culture. Thus, a flat organization will incur higher HR spend to find and train qualified candidates. Training would need to be highly focused on flexibility and thinking entrepreneurially, as employees need the knowledge and skills to make decisive decisions and adapt effectively to take on more responsibility and think in terms of the entire organization instead of just a singular department.

A flat organization also lends itself vulnerable to fostering mediocrity if peers do not hold others accountable for mistakes or deviations from strategic goals. Due to the lack of formal reporting, a flat organization may require more organization and coordination time for projects that are complex in nature or involve numerous stakeholders.

While a flat organization is viable in smaller businesses, the structure will experience growth issues. Operationally, the opportunity cost of executives may outweigh the benefit of a flat organization if they are restrained to internal operations and coordination instead of focusing on an external strategy to achieve the company's vision. Due to its novel structure, a flat organization may not be able to successfully merge or acquire other companies due to the clash of cultures. Additionally, workers may experience dissatisfaction due to the unclear indicator of progress in comparison to industry peers. Career-oriented high achievers may become disruptive and isolated due to the pressure to conform to a teamwork-focused culture.

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