Career Development

Horizontal vs. Vertical Organizational Structure: What's the Difference?

April 8, 2021

Companies use organizational structures to determine relationships in the workplace. A structure defines who within a company has control, makes decisions and takes accountability. There are a variety of organizational structures to choose from, and it's important to choose one that best fits your company's needs. In this article, we discuss what a horizontal organizational structure is, what a vertical organizational structure is, the differences between these structures and tips for how to choose between the horizontal vs. vertical organizational structure.

Related: Creating Organizational Charts of Employees

What is horizontal organizational structure?

Horizontal organizational structure is a flat management structure. Organizations with these structures often have few managers with many employees, and they allow employees to make decisions without needing manager approval. Providing employees with autonomy often helps employees feel empowered and motivated, increasing their connection to the company and its goals. The relaxed structure of horizontal organizational structures also often naturally encourages collaboration.

Related: 10 Different Types of Organizational Structures

What is vertical organizational structure?

Vertical organizational structure is a pyramid-like top-down management structure. These organizations have clearly defined roles with the highest level of leadership at the top, followed by middle management then regular employees. Decision making often works from top to bottom, but work approval will work from bottom to top.

Vertical organizational structures define a clear chain of command. The highest levels of managers make decisions about sales, marketing, customer service and other standards and communicate them to middle managers. Middle managers assign work to employees and communicate processes and goals. Employees complete the work, and the work goes through middle management and upper management for approval.

Related: A Guide To Top-Down and Bottom-Up Management Styles

Differences between horizontal vs. vertical organizational structure

Here are some differences between horizontal and vertical structure:

Who makes decisions

Decision makers vary in each company and organizational structure. However, in vertical organizational structures, it's often only the highest level of managers who have the authority to make decisions. Conversely, horizontal organizational structures often empower employees to make decisions about certain things, and they may rarely require manager approval.

Number of managers

Different organizational structures may have different levels and types of employees. Vertical structures often have many managers. These structures include middle-level managers and upper-level managers. Horizontal structures, however, often have a few managers with many autonomous employees.

Level of employee input

Different organizational structures embrace different levels of employee input. Horizontal organizational structures encourage employees to share their ideas or suggest ways to improve processes. Some organizations allow employees to implement changes without authorization from managers. However, vertical organizational structures rarely ask for input from employees, expecting employees to follow orders from their managers without objecting to them.

Flow of communication

Communication in vertical structures is often slow and only between department leaders or managers. The layers of middle management may slow communication or lead to miscommunication, which may slow progress on projects. Communication in horizontal structures is often more free-flowing as employees can talk to each other as much as they want. This may help improve productivity and efficiency.

Related: 7 Common Communication Problems and How To Address Them

Level of efficiency

Vertical organizational structures often have complex approval processes which can be slow and inefficient. Employees usually complete work which their direct managers must approve before upper managers approve them. However, horizontal organizational structures often empower employees. Companies with these structures are often more efficient because there are few approval processes or none at all.

Level of creativity

Horizontal structures often allow employees more freedom. They can be creative and try new things. Vertical structures, however, offer employees little to no autonomy and focus on strict processes. However, some companies now use a waterfall methodology within vertical structures, meaning they encourage employees to be innovative or creative within their own departments.

Amount of collaboration

Different organizational structures have different levels and types of collaboration. Horizontal organizational structures often encourage collaboration and allow it to happen organically. These structures allow employees to try different things and collaborate with different departments. Vertical organizational structures, however, often only have formal collaboration or meetings, and employees often only collaborate with those in their own department.

Willingness to take risks

Horizontal structures are often more willing to take risks than vertical structures. Vertical organizational structures may be more risk averse because of departments leaders or managers with defensive stances to prevent potential failure. Conversely, horizontal structures encourage brainstorming and alternative ways of thinking. These structures may see the potential benefits of the risks rather than the potential failures.

Job satisfaction

Horizontal organizational structures often allow and empower employees to try new things. This often helps increase employee engagement, leading to high job satisfaction rates. However, employees who enjoy rules and process may prefer vertical organizational structures.

Related: Defining Job Satisfaction

Amount of structure

Vertical organizational structures often have more structure than horizontal organizational structures. Vertical structures have clearly defined roles with specific responsibilities for each person, reducing the level of employee autonomy. Horizontal structures have less structure, often providing employees with equal opportunities. However, this may result in a lack of guidance or lead to internal conflict.

Tips for choosing between vertical vs. horizontal organizational structure

Here are some tips to help you choose between vertical and horizontal organizational structure:

1. Review your company's strategy

Consider your company's strategy. Your strategy, objectives and goals are often the most important factor in determining the right organizational structure for your company. Think about what your company does, the industry you work in and what's required to ensure your company stays competitive.

2. Consider the size and age of your organization

Think about the size and age of your organization. Vertical organizational structures may be a better choice for larger organizations as they provide structure. Vertical organizational structures may also be good for new companies because it can help them navigate how to be successful and is able to be scaled as the company grows.

3. Think about your clients

Think about which organizational structure may better benefit your clients. Vertical organizational structures involve stricter approval processes, possibly making them better suited for businesses with particular clients. Conversely, horizontal organizational structures may have a wider variety of employees and provides them with more freedom to be creative. This may make these organizational structures better suited for companies who assist a variety of clients.

4. Think about growth opportunities

Consider the potential growth opportunities for employees. While vertical organizational structures may provide clear paths for advancement, horizontal organizational structures may provide more opportunities for employees to grow. Horizontal structures often provide all employees with the same opportunities to succeed and levels of responsibility, allowing them to develop new skills.

5. Consider implementing a hybrid strategy

Consider developing a hybrid strategy that incorporates elements of both vertical and horizontal organizational structures that would benefit your business. For example, consider a matrix organizational structure. The matrix organizational structure establishes clear departments related to specific topics with individual vertical structures. However, the business may bring leaders together from each department to collaborate on new projects. Each employee has vertical accountability to their specific department and horizontal accountability to their teammates.

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