The weakness of hierarchies

by Isabel Wu

The linear hierarchical structure has, almost without exception, become the only type of structure used in organisations. The entrenchment of line-based management in modern organisations reflects the conviction that productivity is an outcome of time-and-motion efficiency.  Enterprises invest heavily in increasing motion, compressing time and utilising tools such as fish-bone diagrams, decision trees, organisation charts, pedigree charts, tree charts and flow charts to manage most of their activities in pursuit of their desired productivity increases.

10th_Airborne_Command_and_Control_Squadron

10th Airborne Command and Control Squadron Emblem

De-layering in organisations has been a focus ever since those running organisations recognised the downsides of command and control structures include the cost of the structure itself. Those who sit in the middle and top of the chain of command cost more than those who do the work to deliver on production or service requirements.  To activate each line of production or service, the work needs to be broken down for each work group pushed down the line to each set of tasks to be completed, and then re-aggregated up the line to, hopefully, create a cohesive piece of work that meets all its separate requirements including financial, service, safety, quality and efficiency. Other costs are the time that organisational hierarchies take for decisions to be implemented and the degree to which they slow down the organisation’s ability to respond to the market. Concentration of power has also been a much-documented source of poor decisions with too much authority invested in the thoughts of too few. Two popular practices have been widely used to offset these drawbacks: downsizing (to cut costs); and promoting leadership as the quality that subsidises the reduction of management control.

Extensive research shows that what has appeared to be cause-and-effect or linear is often in fact small-world network behaviour.  Social network analysis on the relationships between individuals, groups and organisations, shows that performance is more influenced by our relationships and location within our network, than it is from our position in the chain of command.

Organisations that continue with the paradigm that performance must be ‘managed’ (i.e. top-down) must be very determined to ignore the social networks that occur naturally, and as the office grapevine proves time and again, operate far more efficiently than any corporate dictate.

Outdated management thinking assumes that given half a chance people will prefer to seek out friends and little formal attention is paid to their ability to build effective functional relationships.  It also wrongly assumes that even if people do prioritise social relationships, this is anti-productive.  ‘Outdated’ because it is thinking that fails to recognise the role of culture in the organisation.  When there is a culture of supporting co-worker relationships, the hierarchy becomes even less effective.  Gallup, the global consulting firm that has been studying employee engagement for decades has found that co-worker friendships increase employees’ satisfaction by 50 per cent, and employees who have a best friend where they work are seven times more likely to be fully engaged in their jobs.  This level of engagement has been correlated with company bottom line performance including earnings per share.

When the objective is command and control, the top-down hierarchy should be the organisation structure of choice.  However those that believe that the sort of productivity that comes from engagement is available from this structure are wasting their time and their money.

Hierarchical structures give us an illusion of effective control.  Sociological and organisational studies tell us people react and respond to millions of cues exchanged between people through all five senses at an estimated rate of 11 million pieces of information per second – and only a fraction of which occurs consciously.  Based on this information we decide what is important, what and who we can trust and how we will respond to different messages.  Nothing in the hierarchy acknowledges that any information we receive through the hierarchy is tested, and may be overridden by our responses to those in our network.

The increasingly technical and sophisticated approaches for managing performance and behaviour in the workplace convince us that people can be effectively influenced by the hierarchy.  This helps explain why despite the concerted effort to improve employee engagement, it continues to be persistently low costing businesses billions of dollars.

By depending on lines of authority or chains of command the enterprise all but guarantees that its organisation will have pockets of non-performance.

Many organisations dabbled in self-managing and autonomous teams at some point but few were actually game to understand and allow the social network to operate.  It would not only mean a wholesale dismantling of systems, and more importantly mindsets, on which we currently rely but it would seem that we would be risking control for chaos.  Here too, they would be wrong.  Hard evidence has emerged that networks are actually not random at all.  The activity that connects individuals, invariably follows a mathematical formula that leads the the formation of hubs (key connections) and hubs can then be used to manage everything from innovation to communication.

Even better, social networks are able to naturally produce many of the outcomes organisations have always desired and spent enormous energy and resources trying to achieve. For example, networks have been proven to:

  • Facilitate the creation of social capital for individuals and organisations
  • Allow authority to form where it is required
  • Operate in organisations effectively in place of hierarchies
  • Promote innovation
  • Assist in the development of trust and tolerance
  • Synchronise thoughts and actions
  • Diffuse organisational practices effectively across groups
  • Shape the way individual tastes and preferences develop

Author Nassim Nicolas Taleb in his book, Antifragile: Things that Gain from Disorder, argues that by managing a rigid structure we are actually creating the weakness we intend to avoid.  Anything organic is better allowed to develop and grow. “We humans, the more intellectual we are…the more we build things that are fragile because they depend so much on our projection of the future…they depend on theories, whereas robustness does not need theories…. When you are designing a system, it has more downside than upside…there is empirical evidence showing that anything top-down is fragile; anything that is bottom-up that takes place organically is [robust].

For organisations this means develop the strategy then support the network to deliver.