A flatter organizational structure reduces hierarchical levels and promotes greater autonomy for employees. The primary benefit is cost reduction due to fewer management layers and streamlined decision-making.
Fewer Management Layers – Reduces the number of mid-level managers, decreasing salary expenses.
Increased Operational Efficiency – Less bureaucracy leads to faster decision-making, lowering administrative costs.
Encourages Employee Autonomy – Reduces dependence on supervision, improving productivity.
B. Slower decision-making at the senior executive level – Incorrect because flatter structures lead to faster decision-making due to fewer approval levels.
C. Limited creative freedom in lower-level managers – Incorrect because flatter structures provide more autonomy and innovation opportunities.
D. Senior-level executives more focused on short-term, routine decision-making – Incorrect because executives in a flatter structure focus on strategic, high-level decisions, delegating routine tasks.
IIA’s GTAG on Governance and Risk Management – Discusses the financial and operational impacts of different organizational structures.
COSO’s Enterprise Risk Management (ERM) Framework – Emphasizes how flatter structures reduce operational inefficiencies and costs.
COBIT 2019 (Governance Framework) – Highlights the impact of organizational structure on financial performance.
Why Lower Costs is the Correct Answer?Why Not the Other Options?IIA References:
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