The Advantages of Horizontal Organization

The Advantages of Horizontal Organization

 A horizontal organizational chart usually has two or three levels, and the business owner typically holds the top position on the chart. The second level includes managers or team leaders, and the third level includes teams overseen by a corresponding manager or team leader. Teams are cross-functional or process-oriented and may govern themselves. A horizontal organization has very few, if any, other managers, and employees enjoy more contact with a business owner because only one layer separates them on the chart.

WASTE ELIMINATION

 One advantage of a horizontal structure concerns how work is organized. A horizontal structure assigns work to teams based on a cross-functional design, not on a shared task or business function. A business owner must map all processes in the company and create teams of workers, with one team for each process. The team is the fundamental unit of design, and employees are evaluated based on their team's performance. This design eliminates waste, especially by doing away with unnecessary positions that might have existed in a functional design. A very small business may only have one large team with the business owner at the top.

INCREASED FLEXIBILITY

 When teams work independently, they are not in direct competition. They have different business goals and challenges. A horizontal structure eliminates silos that stem from competing departments. Teams are flexible, enabling a business owner to shift them to different priorities based on changes in the business model. This is possible especially because team members have cross-functional knowledge, not just skills in one task or functional area.

CUSTOMER FOCUS

 A horizontal structure enables an owner "to mix and match both horizontal and vertical elements so as to customize a solution for a particular situation," according to Frank Ostroff, author of "The Horizontal Organization." A small business sells retail electronics -- TVs, stereos, and microwaves. It has three departments -- sales, customer service and administration. When the owner decides to sell cell phones and service plans for cell phones, he redesigns the structure to include three teams: electronics, cell phones and service plans. Once employees are given additional training, they become a team of experts serving a product or service line.

MARKET RESPONSIVENESS

 A horizontal structure ensures teams are closely connected to market conditions. Each team delivers a product or service efficiently to a customer audience and has specialized knowledge of suppliers, which are good conditions for responsive decision-making. An employee on the cell phone team knows how to help customers, order cell phones from suppliers, provide customer service to existing cell phone buyers and manage administrative tasks. When employees on the team see sales are bottoming out, they recommend that the owner finds new suppliers or switches to another product or service line. They work together to look at the whole picture of the retail cell phone market.