The design of your organizational structure can have a big impact on your company’s performance as it will enable or disable communication and action. You should contemplate your personal leadership style and key company challenges when deciding on your design in order to optimize the match of needs and outputs.
Hierarchical designs work best for a directive style.
If you want to control your company from the center, a hierarchical design wherein specific accountabilities and authorities can be clearly articulated is the way to go. It’s clear, easy to communicate and you can decide how much or how little you want to empower others to decide. The downside is that it’s harder to delegate, can be slower to implement changes and your better employees may not like it. But hey, you’re the boss so it’s up to you.
Go with a Flat design if Speed is your goal.
Managerial review cycles take time and with a flat organization, you really don’t have a built-in, 1 over 1 type of process. So you get the speed in decision making but without someone to double check, you may incur a higher risk. Empowerment is easier and employee engagement should also trend up. But coordination can be difficult and you will need to create forums for collaboration to make sure that everyone is pulling in the same direction. In other words, if you go flat, make sure everyone talks to each other.
Loosely defined organizations can enable innovation.
It’s always smart to have your best people work on your biggest problems. If you don’t set clear organizational boundaries, then people will migrate easily and quickly to the problem areas, develop ideas and feel free to quickly implement them. Sounds perfect. There is a drawback to this design, however; and the drawback is especially risky if you are surrounded by a bunch of type “A” players. They will all migrate to the problem and then fight about who’s in charge. There will be blood. If that’s the case, make sure that there is a designated apex predator in the group to keep order.