Can reducing hierarchy improve results?

Executive Summary

Flat management techniques, spurred by the growth of technology companies, are becoming more popular, but it's an approach that can offer advantages to other types and sizes of businesses, too. Although it isn't applicable to all situations, flat management will likely keep gaining ground as the economy continues to evolve and businesses are forced to adapt. The increasing use of technology and social media, coupled with the need for businesses to make quick decisions to remain competitive, ensures flat structures will remain a viable option. Some companies take a dual approach by implementing a flat structure for certain elements of the business while maintaining a more traditional management hierarchy overall.

Resources

Bibliography

Books

Murray, Alan, “The Wall Street Journal Essential Guide to Management: Lasting Lessons from the Best Leadership Minds of Our Time,” HarperBusiness, 2010. Management guide by a Wall Street Journal managing editor provides business strategies for being a successful manager and historical context on current management techniques.

Pontefract, Dan, “Flat Army: Creating a Connected and Engaged Organization,” Wiley, 2013. A Canadian telecommunications executive and business speaker offers a guide for creating a culture of collaboration, engagement and employee empowerment by replacing command-and-control management techniques with collaborative methods.

Tapscott, Don, “Wikinomics: How Mass Collaboration Changes Everything,” Portfolio Trade, 2010. A business consultant explains that the use of collaborative processes by employees is spreading to traditional companies.

Articles

Birkinshaw, Julian, “Beware the Next Big Thing,” Harvard Business Review, May 2014, http://tinyurl.com/kexgvy8. A business scholar advises companies on how to evaluate new management theories before implementing them.

Finley, Klint, “Why Workers Can Suffer in Bossless Companies Like GitHub,” Wired, March 20, 2014, http://tinyurl.com/obu4gv6. A technology journalist examines some of the problems experienced by workers in companies using flat management techniques.

Foss, Nicolai J., and Peter G. Klein “Why Managers Still Matter,” MIT Sloan Management Review, Fall 2014, http://tinyurl.com/pzm64b4. Two business scholars make the case that managers continue to be essential components of business success.

Garvin, David A., “How Google Sold Its Engineers on Management,” Harvard Business Review, December 2013, http://tinyurl.com/pe638nl. A Harvard business professor describes how Google examined the role of its managers and their contributions to the business.

Hamel, Gary, “First, Let's Fire All the Managers,” Harvard Business Review, December 2011, http://tinyurl.com/77swj3x. Management hierarchies have become inefficient, says a management consultant who has written frequently about innovation.

Hamel, Gary, “Moon Shots for Management,” Harvard Business Review, February 2009, http://tinyurl.com/o9r89pk. A leading management consultant lays out a road map for developing new management techniques, saying current structures can no longer be improved.

Kastelle, Tim, “Hierarchy Is Overrated,” Harvard Business Review Blog Network, Nov. 20, 2013, http://tinyurl.com/ksaur6h. A business scholar makes the case that flat organizational structures can work for any business.

Reports and Studies

Courtright, Stephen, G.L. Stewart and M.R. Barrick “Peer-Based Control in Self-Managing Teams: Linking Rational and Normative Influence With Individual and Group Performance,” Journal of Applied Psychology, March 2012, http://tinyurl.com/p3u5e58. University researchers find that groups that manage themselves can be more productive.

Friesen, Justin P., Aaron C. Kay, Richard P. Eibach and Adam D. Galinsky “Seeking structure in social organization: Compensatory control and the psychological advantages of hierarchy,” Journal of Personality and Social Psychology, April 2014, http://tinyurl.com/px5cgxx. Researchers argue hierarchies offer structure and satisfy core motivational needs for order and control.

Ronay, Richard, Katharine Greenaway, Eric M. Anicich and Adam D. Galinsky “The Path to Glory Is Paved With Hierarchy: When Hierarchical Differentiation Increases Group Effectiveness,” Psychological Science, June 2012, http://tinyurl.com/p46x6vz. Hierarchy helps teams work effectively on collaborative tasks, university researchers say.

Seibert, S.E., G. Wang and S.H. Courtright “Antecedents and consequences of psychological and team empowerment in organizations: a meta-analytic review,” Journal of Applied Psychology, September 2011, http://tinyurl.com/pu7edyx. University researchers find that workers who felt psychologically empowered performed better.

The Next Step

Leadership

Hu, Elise, “Inside The ‘Bossless’ Office, Where The Team Takes Charge,” National Public Radio, Aug. 26, 2013, http://tinyurl.com/ocyeqah. More companies, such as software company Menlo Innovations in Ann Arbor, Mich., are adopting “bossless” office environments to more quickly serve customers and compete for the best employees.

Vasagar, Jeevan, “Experiment with a bit of anarchy,” The Financial Times, Jan. 28, 2014, http://tinyurl.com/pwkyzsu. Berlin-based technology start-up 6Wunderkinder eliminated middle-management positions after beginning to grow; it then introduced “ground rules” for self-managed project teams to follow that align with the company's business goals.

Military Hierarchies

Boss, Jeff, “Why Hierarchy Is Outdated: The (Long Overdue) Need For Organizational Adaptability,” Forbes, June 6, 2014, http://tinyurl.com/ozvgloc. A former U.S. Navy SEAL says businesses should apply combat mission lessons such as removing deference to “rank” and changing decision-making routines to become more adaptable.

McCauley, James, “Quality Over Quantity: A New PLA Modernization Methodology?” The Jamestown Foundation, July 17, 2014, http://tinyurl.com/pvsa8qq. A Chinese People's Liberation Army's colonel argued in a paper published in November 2013 that one of the military branch's top priorities should be flattening command structures to better integrate joint operations.

Sanborn, James, “Cyber steps up its role on the battlefield,” Air Force Times, Aug. 25, 2014, http://tinyurl.com/nks56hn. The U.S. Marine Corps gave cyberspace advisers more authority over tactical operations, rather than requiring them to gain approval from commanders.

Profitability

Brown, Jonathan, “Workers' co-operatives: One for all, all for one,” The Independent (U.K.), Jan. 9, 2014, http://tinyurl.com/q7gxl2z. The co-op food distributor Suma Wholefoods in West Yorkshire, United Kingdom, generates millions in profit and provides employees bonuses thanks to its flat structure and employee-based decision-making process.

Long, Yun, “Reno's Saint Mary's hospital in the black one year after turning for-profit,” Reno (Nev.) Gazette-Journal, June 30, 2013, http://tinyurl.com/q4wq28o. St. Mary's Regional Medical Center in Reno, Nev., became profitable immediately after being acquired in July 2012 by hospital chain Prime Healthcare Services, which introduced a flat structure that requires approval only from the CEO to implement decisions.

Sangani, Priyanka, “Harvard legend John Kotter advocates ‘dual operating system’ for winning in a turbulent world,” The Economic Times (India), May 16, 2014, http://tinyurl.com/qx239d5. Harvard professor and management consultant John Kotter believes large companies need to introduce flatter, more parallel management structures within existing hierarchies to remain efficient and successful.

Restructuring

Groth, Aimee, “Zappos is going holacratic: no job titles, no managers, no hierarchy,” Quartz, Dec. 30, 2013, http://tinyurl.com/ppxhwc5. Zappos CEO Tony Hsieh restructured the online shoe and clothing retailer by replacing top-down hierarchy with “holacracy,” which distributes power among circles of employees with changing roles.

Hutson, Matthew, “Espousing Equality, but Embracing a Hierarchy,” The New York Times, June 21, 2014, http://tinyurl.com/pbqyqu3. Companies such as Internet search firm Google and design firm IDEO have retained some degree of structural hierarchy while adopting flatter management structures.

Jargon, Julie, “McDonald's Plans to Change U.S. Structure,” The Wall Street Journal, Oct. 30, 2014, http://tinyurl.com/q4f3gm4. Fast-food giant McDonald's plans to eliminate layers of management and create more autonomous consumer “zones” to adapt to local tastes after reporting declining quarterly profits.

For More Information

HolacracyOne
1741 Hilltop Rd., Suite 200, Spring City, PA 19475
484-359-8922
holacracy.org
The company that developed the management theory of holacracy.

Morning Star Self-Management Institute
500 Capitol Mall, Suite 2050, Sacramento, CA 95816
916-925-6500
self-managementinstitute.org
Research and education company that advocates a management model based on the principles developed at the Morning Star Co.

WorldBlu
316 E. Court St., Iowa City, IA 52240
202-251-8099
worldblu.com
A company that advocates the management theory of organizational democracy.

DOI: 10.1177/2374556814565099