Lateral Organizational Structures: Types, Benefits & Drawbacks

Introduction to Lateral Structural Arrangements

In the modern world, lateral relationships are continually being used by organizations as a viable means of communication and influence. These flows make up new structures within organizations. Lateral organizational structures differ greatly from vertical structures, which are designed around power dynamics and allow information to flow only from top managers downward to the lowest-ranking employee. Under such vertical arrangements, top leaders bear the responsibility of making key decisions that determine the fate of the firm.

However, this approach is not ideal, as there should be efficient and sufficient collaboration among workers in an organization. Workers strive to meet the same goals and fulfill the organization's vision, so communication channels among employees should always be open. This can only be achieved under lateral structures. This paper, therefore, discusses the lateral structures used in organizations, the history of such organizational designs, and their place in the contemporary organization.

Organizations as Information Processors

Gish (2014) argues that the reason for adopting lateral organizational structures is to achieve superior products and increase productivity through collaboration and information sharing between departments. This structure is founded on the sharing of information. It leads to better products as team members work closely together to develop ideas, unlike vertical arrangements where workers perform tasks independently. Lateral structures are designed so that employees can present their thoughts and ideas without facing bureaucratic obstacles. Members of the organization communicate openly, and the synergy of ideas leads to the development of superior products and services.

The collaboration between workers not only leads to better products but also helps the organization achieve greater clarity and realize its vision more quickly. Clarity is achieved when employees are made aware of the firm's goals and understand what role each department plays in achieving them. With such openness, employees are motivated to contribute to the organization's success. The synergy ensures that everyone in the organization is working toward the achievement of set objectives.

This is not the case under vertical structures, where top management decides the direction the company takes and determines its operations. Vertical structures are highly bureaucratic, and the flow of information may be hindered by power dynamics and ego conflicts. In a vertical system, communication channels restrict employees to communicating officially only with their immediate superior or subordinate. Most of the time, information flows only from top management downward. This does not encourage discussion, as subordinates are expected primarily to execute decisions made by their superiors. A lateral system, by contrast, encourages the sharing of ideas and insights among peers and between employees and managers. The foundation of a lateral system is that individuals from all areas of specialization and different departments are brought together on a project (Gish, 2014), allowing for the sharing of ideas drawn from many experienced contributors and thereby enhancing the organization's overall performance.

Mohrman posits that high-technology companies must consider several information inputs in order to manage the inherent risks in complex processes. In such settings involving complex coordination and goal-setting, rules and regulations must always be supplemented in other ways (Mohrman, Mohrman & Cohen, 1996, p. 2). The creation of lateral structures and semi-autonomous teams helps improve information flow. In such structures, information can come from any direction, and responses from the relevant authorities are more readily obtained. Performance is therefore greatly improved, as no information is lost in the communication chain — a common problem in vertical structures. Clarifications can be made easily because authorities are accessible and may themselves be part of the team. This is especially relevant in the contemporary world, where organizations recognize that information flow is crucial to achieving organizational goals.

Types of Lateral Organizational Structures

Jay Galbraith, a specialist in organizational design, identified several types of organizational structures (Galbraith, 1977). He believed that for an organization to be highly effective, lateral affiliations must exist across the firm. These relationships would form the basis through which members of the organization communicate. Such accessibility increases efficiency across departments. The types of lateral organizational structures Galbraith identified include: mutual adjustments, task force, liaison role, team decision, and managerial linking. Each has different uses and its own advantages and disadvantages.

Galbraith (1973) explains that managers at the same level in an organization make joint decisions and therefore do not need to refer upward. This means they hold similar authority and can make independent adjustments to their departments' operations, provided these are aligned with the organization's goals. This not only saves time but may also result in improved operations, since heads of departments are better positioned to know what will work under prevailing conditions. Compared to a situation where a departmental manager receives instructions from a superior, a lateral arrangement better serves the firm, as departmental heads are on the ground and understand what works best. Mutual agreements give managers a platform to drive the firm collectively toward its goals and objectives, and the interdependence between departments makes this kind of collaboration especially valuable.

The liaison role is another lateral structure, aimed at reducing the coordination burden between interdependent departments (Galbraith, 1973). Two departments working on one project need a reliable communication channel. The liaison model achieves this through the appointment of a liaison officer who promotes communication between the two departments. Since not every member of each department can communicate directly with the other, the liaison officer bridges this gap. He or she collects information from concerned parties and relays it to the intended recipients. The liaison officer must be an effective communicator so that no information is lost. Clear ground rules help ensure communication quality. However, a potential disadvantage is that the liaison officer may take advantage of their position to pursue personal interests, which could lead to conflict and decisions that do not advance the organization's mission.

The task force structure is applicable in any organizational environment. When two or more departments need to reach a decision, representatives from the various departments come together to inform that decision-making process. The decisions made are well-informed since people with diverse expertise bring their views to the table. Group decisions tend to be superior to individual decisions because they are less likely to be subjective or emotionally driven; groups typically prioritize the organization's aims before personal considerations.

The decisions made are grounded in rules set by participants and are therefore less likely to evoke conflict. Task force members also have the opportunity to consult key contributors in their departments, which leads to higher-quality decisions and, ultimately, improved organizational performance. The decisions made by task forces are adopted by all departments, which effectively reduces hierarchy within the organization. People across all departments can share views and ideas that help the firm tackle challenges and grow. This encourages knowledge sharing, which is especially critical in the contemporary environment where operational conditions are increasingly dynamic.

Task forces can also be used to develop organizational policies or investigate problems. Experts drawn from across the firm can examine an issue without bias and present a report. The decisions made by a task force are binding on all members of the organization, since the task force acts as a representative body for the whole firm.

The managerial linking role is another lateral structure. Galbraith proposes that financial controls are important if the organization seeks to integrate effectively. Financial control here refers to the way the firm manages its use of funds and the checks and balances in place to prevent misuse. All funds should be channeled toward the achievement of organizational goals rather than personal interests. Budget allocation should be structured so that "managerial linking pins" are responsible for purchasing goods or services on behalf of line managers (Galbraith, 1973). Line managers must communicate effectively with departmental heads, and because line managers are closest to operational realities, collaboration between these two groups is essential. Such collaboration also fosters a sense of belonging and mutual respect. An employee who is consulted and feels that their opinion influences decision-making will be more motivated to perform, since they feel valued and appreciated.

Conclusion

From the foregoing, we can conclude that an organization's effectiveness is heavily dependent on the structure it has adopted. Modern companies are increasingly adopting lateral structures. The argument is that modern companies process large volumes of information, and inefficient communication channels can paralyze operations. For a company to be highly productive in the information age, collaboration between different parties and departments must be enhanced. Since all employees contribute toward driving the organization toward its vision, it is important that they have a platform to voice their views, share opinions, and contribute to the decision-making process. Even considering the disadvantages discussed above, the advantages of a lateral structure still outweigh the drawbacks. Efficiency, effectiveness, and overall productivity can be greatly improved if an organization adopts a lateral organizational structure.

References

Galbraith, J. R. (1973). Seven lateral relationships. Retrieved from http://www.provenmodels.com/104/seven-lateral-relationships/jay-r.-galbraith

Gish, W. (2014). What are the lateral structure arrangements in use in organizations? Retrieved from

Grimsley, S. (2014). Horizontal communication: Definition, advantages, disadvantages & examples. Retrieved from http://education-portal.com/academy/lesson/horizontal-communication-definition-advantages-disadvantages-examples.html#lesson

Lacoma, T. (2014). Disadvantages of a flat organizational structure. Retrieved from

Mohrman, S. A., Mohrman, A. M., & Cohen, S. G. (1996). Human resources strategies for lateral integration in high technology settings. CEO Publication. University of Southern California. Retrieved from