Flat hierarchies - progressive organizational thinking or digital's 'flat earth' theory?

The current orthodoxy is that progressive employers, particularly in the digital start-up arena, are all moving towards creating corporate cultures based on flat hierarchies and collaborative networks of teams.

One aim is to empower individual workers to be creative and innovative in a way that traditional command-and-control management approaches never could. Another for many companies is to ensure cost-efficiencies by simply employing fewer managers.

But while such notions may seem appealing, there appears to have been a bit of an academic backlash against them lately. For example, research by the European School of Management and Technology in Berlin, which was published in Organization Science towards the end of last year, revealed the reason why many companies struggle to go down this route is that the concept of hierarchy is hard-wired into our brains.

Professor Gianluca Carnabuci explains that we all make implicit assumptions when interpreting the world around us, which are known as cognitive schemas. One such schema called ‘linear ordering’ means that we automatically look for leaders and followers, even in groups that are designed to be hierarchy-free. He says:

When it comes to leadership, people assume hierarchy, even when there is none and, given enough time, this causes hierarchies to emerge and solidify.

As a result of this dynamic, most employees experience non-hierarchical leadership structures as “inherently inconsistent” and are uncomfortable with them. An example of such a situation in action, Carnabuci says, was the now-infamous case of Zappos, which attempted to introduce holacracy:

Contrary to management’s expectations, these moves created a great deal of dismay and led huge numbers of employees to leave the company. This reaction is not surprising in light of our findings: Since hierarchy is deeply engrained in people’s cognitive representation of leadership, employees are likely to experience hierarchy-free organisations as thoroughly destabilising.

Flat hierarchy hype

Another academic who is sceptical of the flat hierarchy hype is Andre Spicer, a professor at the Cass Business School in London.  In an article written for The Guardian newspaper last year, he cited Stanford University’s Jeffrey Pfeffer who believes it is a “fantasy” when young employees in the tech industry think the company they work for has no hierarchy, their boss is their buddy, and work is fun:

The lack of formal rules and hierarchy masks a vicious informal power structure. But unlike good old-fashioned hierarchies, there are few checks and balances in place in flat firms. Powerful “barons” can pursue their caprices with few limitations.

As a result, Spicer believes:

Fantasies of no rules, no bosses and no hierarchies are seductive. Hierarchies can be repressive, rules can be absurd, and bosses can be toxic. But not having these things can be worse.

Another issue to consider, says Rob Morris, managing director and chief innovation officer at leadership consultancy YSC Consulting, is that not all organisations actually need to refocus themselves around an innovation agenda, particularly if their core business is operating efficiently and even if innovation would be beneficial in some areas. He explains:

Hierarchical structures are designed to execute with efficiency at scale, and so many companies don’t see a big need to change their structure. But those threatened by new business models or by being disintermediated by new technology often feel under pressure to innovate as part of future-proofing their strategy, and so they tend to be more open to trying a flat operational model.

As part of this process, most tend to explore three potential innovation models:

• green-housing, or splitting off part of the business and ring-fencing it.
• purchasing another company or setting up a joint venture or partnership.
• transforming the company culture and flattening its structure. This latter option, which is perceived to be the most radical of the three, tends to be the least frequently embarked upon.

A more common approach instead as part of the current “mantra of collaboration” is to go for a matrix organisational structure, Morris says, which involves employees working in fluid, cross-functional project or work teams.

A third way

Mark Williams, Director of Research at HR software provider People First also believes that this approach is becoming an increasingly common third way. He says:

There are the checks and balances of the hierarchical approach, but in day-to-day planning and project work, it’s a bit more fluid and autonomous. It’s a good middle way to learn some of the positives that can be gained from autonomy and trust, while still having the safety net of standard reporting structures. At the very least in leadership terms, you’re always going to need leaders who are legally responsible for what’s happening and that people can flag issues up to.

Indeed, Robert Ordever, Managing Director of culture consultancy OC Tanner Europe, is not convinced that an apparent desire to remove hierarchies from the business is actually about people wanting to eradicate leaders at all. Instead he believes it is more about a certain tiredness of what they have become. He explains:

Much about leadership has evolved to where it’s unhealthy, so control-and-command, lack of respect and transparency etc. Leadership has got itself a bad name and what people crave is a better form of it – and if they’re not happy with what they’ve got, it’s human nature to go to the extreme when thinking about alternatives.

For him, in both the workplace and the animal kingdom, there will always be natural leaders and followers. But a key aim across businesses of all stripes at the moment is to find expressions of leadership that are not based on title and privilege or on traditional characteristics, such as being ‘strong’, all-knowing and having to take tough decisions. Ordever explains:

The new style of leadership is about building a great team by bringing talent together, empowering them, enabling them, helping them grow and then getting out of the way. So it’s about involving people in decision-making, respecting the individual, enabling innovation and constantly learning. But even in a hierarchy-free organisation, there will always be strong leaders that come to the surface because without leaders, it’s difficult to keep people moving in the same direction.

The idea is that if employees understand the company’s visions and values, as defined by its leaders, they can be trusted to make day-to-day decisions based upon them. Such an approach does throw up its own challenges though, as Ordever acknowledges:

After many generations of command-and-control management, some of the workforce is used to it and so asking them to experiment and make decisions can feel daunting. Some leaders are also less comfortable with empowering others and being humble as they feel they have to know all the answers. Their careers grew up in a different time when different qualities were required and so it’s difficult. As a result, change will inevitably take a while to filter through.

My take

While the idea of flat hierarchies may be popular and trendy, it seems that organisations should definitely proceed with caution when moving down that particular route.