Typical Organizational Structure of a Small Business
Companies use an organizational structure to characterize their hierarchical constitutions and workflows. Companies decide on the organizational structure best suited to them based on factors such as their size, clientele, employees and the products they manufacture. Small companies essentially use a flat organizational structure.
Features
In a flat organizational structure, very few levels of command exist. The employees answer directly to business owners. The owners trust the judgment and assessment abilities of their employees and empower them to make decisions on their behalf.
Benefits
Small businesses benefit immensely by using a flat organizational structure, as the owners can motivate their employees effectively. Management is also able to directly observe and monitor employee performance. This organizational structure eliminates bureaucracy, and the company does not pay unrequited wages to intermediaries.
Limitation
As the scales of operations grow, companies find it impossible to use a flat organizational structure. Large companies must centralize decision-making and authority commands. Accordingly, the scope of the flat organizational structure is limited to small companies.
