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Madness as Usual

Hierarchy – On the usefulness of an unpopular coordination mechanism

  • Stefan Kühl
  • Thursday, 5. January 2023
Hierarchy

The principle of hierarchy was uncritically accepted as the central coordination mechanism in businesses, public administrations, the military, hospitals, and prisons, as well as in universities, schools, and political parties, for a long time. Leaving aside occasional attempts at democratization, when it came to linking up complex decision processes, hierarchy was the instrument of control par excellence.

In most organizations, however, hierarchy now has a terrible reputation. There are frequent complaints that too much hierarchy leads to a lack of information sharing. It is said that hierarchy causes ‘information osmosis’: a semi-permeable membrane lets information seep out slowly from places higher up the ladder but hardly ever lets critical information in from below.

The firm belief in many organizations is therefore: ‘Hierarchy as we know it must be abolished.’ New and more agile forms of organization sound the death knell for the classic notion of hierarchy. Hierarchy is spoken of as a ‘discontinued model’ that will increasingly be replaced with more modern organizational forms in which leadership roles can move around quickly, changing place depending on the matter in question.

While most organizations still involve some hierarchy, they are increasingly placing their trust in flatter hierarchies. To this end, whole levels are cut out of the hierarchical structure. At the same time, on particular levels, superiors are abolished and teams of equal members take their place. In short, there is still a basically hierarchical structure, but the hope is that, by reducing the number of levels within the structure, the negative effects of hierarchy can be mitigated.

The attempt to flatten hierarchies is motivated by one goal in particular: to create a capacity to make decisions more quickly and more effectively under ‘turbulent conditions’. But this goal is rarely achieved. Yes, the introduction of teams at various levels usually works well – as long as decisions can be taken calmly and teams are able to take plenty of time to carefully analyse the problem and come to a decision everyone can live with. But the project of dismantling hierarchical decision-making structures runs into trouble whenever there is a need to take rapid, time-critical decisions, that is, precisely in those situations in which flatter hierarchies are considered to be advantageous.

In critical situations, decisions can often not be taken quickly enough simply because a team cannot achieve a consensus. In the case of important matters, in particular, fierce and time-consuming power struggles may break out within teams. In the debates about new forms of organization, this effect is often overlooked, because these debates tend to conflate power and hierarchy. If the principle of hierarchy has been rejected, then – and this is the premature conclusion – power relations should also diminish in importance. In reality, the opposite is the case.

Why? Hierarchies bring an element of continuity to power relations. All members must prove, or at least must appear to prove, their allegiance to the hierarchical order, and in many cases line managers can resolve conflicts by simply taking a decision on the basis of their formally guaranteed authority to issue orders. Of course, power games are part of everyday life in all organizations, including hierarchical ones. They cannot be avoided, for the simple reason that individuals have different goals and tasks, and so the interests of an organization’s members necessarily differ. But hierarchy is a means of containing power games.

In critical situations, organizations made up of non-hierarchical, leaderless teams can only ever pass the decision up to the next higher level. However, critical situations are often contradictory and ambivalent, so the same decision-making problems are then simply replicated at the level of the organization’s leadership team. Indeed, these problems are sometimes even aggravated, because the members at the leadership level are used to dealing with far less standardized tasks and their criteria for responding to open questions are far less clear than those of members at the operative level.
In organizations that are committed to working through teams of equals across several hierarchical levels, the central function of hierarchy – to serve as an ‘emergency brake’ that puts an end to excessive discussions – is exclusively concentrated at the very top. Only the executive management team can afford not to provide a detailed rationale for the instructions given and instead to refer to the fact that the acceptance of hierarchically legitimized instructions is a condition of membership in the organization. Within a hierarchy, the senior management does not depend for its legitimacy on the personal respect of employees. It is therefore in a position to take decisions, including unpopular ones, quickly.

For these reasons, the currently popular reorganizations that aim to reduce hierarchy have paradoxical effects. The radical flattening of hierarchies often leads to a centralization of decision-making. And in moments of crisis, when redundancies, wage cuts, or longer working hours are on the cards, the fundamentally hierarchical structure of organizations becomes clear to all: the decisions on such matters are not taken by consensus; all of a sudden, it becomes a strictly top-down affair again. And these decisions are now taken at a level even further removed from the people they affect than they would have been had the organization resisted the temptation to flatten its hierarchy.[1]

[1] For a more detailed discussion, including empirical examples, see Stefan Kühl, Sisyphus in Management: The Futile Search for the Optimal Organizational Structure, Princeton a. o.: Organizational Dialogue Press, 2020, pp. 99ff.

Author

Prof. Stefan Kühl

links in his observations the latest results from research with the current challenges of the corporate world.

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