The End of the Hierarchy Is Not the End of the Manager, Part 1


The End of the Hierarchy Is Not the End of the Manager, Part 1


There’s a new phenomenon happening at some companies: flat organizations, some call them “liberated” companies, which tout “happiness at work” and are getting rid of hierarchy and even reinventing the role of the manager.

In this three-part series (Part 2 and 3 coming over the next couple days), I’d like to start by talking about the reasons that bring some companies to this willingness to get rid of the hierarchy (Part 1).

I will then explore the new needs that emerge within these organizations without “chiefs” in Part 2. And to conclude, I’ll show you why it could still be premature to determine that this means the end of the manager. To sum up:

To read the summary of this post, scroll down to the summary section at the end of the article.

The Emergence of Flat Organizations

At the start of the 20th century, Frederick Winslow Taylor, reckons that the worker is not here to think, but to execute movements that were scientifically designed for him. In his book, the “Principles of Scientific Management” published in 1911, he even writes:

It is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and enforcing this cooperation rests with management alone. 

This highly hierarchical vision of the organization, which negates the worker’s autonomy, limits his field of work and forbids him to innovate in any way, will be the model of management that will prevail all along the 20th century.

 


Image: According to Frederick Winslow Taylor, the worker was not here to think, but to execute movements that were scientifically designed for him. Illustration by N. Lochet.

Although adapted to its time in a complicated but predictable universe, this view is deeply challenged in a world that is more and more complex and therefore unpredictable.

It is only recently that, in an answer to this evolution of society, flat organizations have appeared where sociocracy or Holacracy® are examples.

It is these structures and their variations that are at work within these so-called liberated companies, which we hear a lot about recently (on this topic, the books from Isaac Getz: “Freedom, Inc.” and Frédéric Laloux: “Reinventing Organizations” are viewed as references).

Common ground within these organizations is the end of the hierarchy, or at least, its reduction to the minimum.

“It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”

-Steve Jobs, Former Co-Founder and CEO, Apple

Why Remove Hierarchy?

1. The hierarchy is a source of slowness and costs

Indeed it can sound rather strange to hire the best possible people and just tell them what to do as in Taylor’s times. The world of work has mutated. We left the world of repetitive and manual work and have fully stepped into an intellectual world in constant innovation.

In this context, continuing to use management methods that prevailed within previous organizational models might not be the smartest thing to do.

With the increase in communications, we now more than ever live in a complex world. A world that expresses emergence. A world that according to complex theory is unpredictable. Surviving is not about planning anymore but about adapting

“It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.”

 -Leon C. Megginson, paraphrasing Darwin’s “On the Origin of Species” in “Lessons from Europe for American Business”

If we want to remain competitive, we need to adapt fast and at a minimum cost. We need to adapt as soon as change occurs. The problem is that in this struggle to survive, hierarchy can be seen as a source of slowness and costs.

It can be seen as a source of slowness due to the uphill race of information through the different layers of the hierarchy, the time it takes for analysis and the return of the decision that follows.

It can be seen as a lengthy process due to the inaction of the worker during the whole treatment of the information.

This is the reason why in the army, they say that when asked something by both your superior and inferior in the hierarchy, you should prioritize answering your subordinate’s needs.

If within the command center, the time to action is about 8 hours, it is a mere matter of seconds when on the battleground.

This slowness can be amplified by the multiplication of the chains of decisions. You may need to talk to your chief to validate your holidays, to accounting to verify an expense, to legal to check a contract. The more numerous these chains of decisions are, the more complex the worker’s task of dispatching the information to the right decision-maker (with the risk of taking even more time, if the wrong decision-maker is consulted).

That’s exactly the issue that Jean-François Zobrist, former CEO of FAVI (one of the most famous “liberated” French companies) describes when he is telling the story of the lawnmower in the book: “La belle histoire de Favi.”

One day when he was mowing his grass, he realized that his lawnmower’s engine was misfiring. On instinct, he believes that the spark plugs need to be changed. He starts to think about how this issue would be managed within his firm.

He lists all actions to be done for this simple exchange to happen, and is stunned by their sheer number and the wait time involved. Acting on that, he proceeds to review the whole company hierarchy.

Although a bit different, that’s also what the actor Benoît Poelvoorde is speaking about in this video when he talks about the differences between French and Belgium cinema.

He explains how a simple issue of an unwanted object in the frame can be solved easily or become a very complicated story whether you use the hierarchy command chain or not.

On top of being a source of slowness, the hierarchy can also be a cost burden. The more the company grows, the more the levels of hierarchy multiply.

The necessity of using more managers is a non-linear increase in costs (a manager being paid more than a simple employee). This is one of the problems put forward by Gary Hamel in his debated article: “First, let’s fire all the managers.”

If in a small company, you need one manager for 10 employees, or 10 percent of your workforce. In a large company of 100,000 people, you would need 11.111 of them or 11.11 percent of the workforce (because you need managers of managers).

2. The distance from ground realities causes the loss of competency

As the German general Helmuth Von Moltcke, author of many books on strategy said, “No battle plan ever survives contact with the enemy.” Von Moltcke is one of the first to realize the importance of decentralizing decision, something that has become necessary with the increasing size of the armies.

If it is important to plan, it is more important to tell about one’s global purpose than about precise orders. Doing so before the battle has started makes it possible for soldiers to react to context changes with the utmost speed in the most appropriate way.

Indeed the more you move away from the field, the more difficult it is to get a good understanding of it. With the hierarchy, we take the risk of having decisions taken by people who only have an imperfect view of the situation.

Despite the best good will, the hierarchy cannot take the full view of the realities of the field. As Joseph Bower points out in “From Resource Allocation to Strategy,” the best part of innovation proposals come from the belly of the organization and not from the top.

Soccer Game
Image: Deciding at the level closest to the action. Illustration by N. Lochet.

This distance from the ground that the hierarchy experiments is emphasized by the generation gap. With the speed of change nowadays, the leader doesn’t always know the reality of the situation.

This creates strong misunderstandings, as Emmanuelle Duez points out at the Positive Economy Forum of the Havre 2015 with her talk on the Millennial generation. Indeed this generation along with Generation Z (sometimes referred to as “generation zapping”) has totally different aspirations compared to Generation X who constitutes the core of today’s hierarchy.

This generation of misunderstoods dreams of entrepreneurship as a way of being its own chief. They want a feeling of fulfillment and they are totally misaligned with the prevalent hierarchical organization within companies today, which is good at giving orders but not as good at giving meaning.

The issue of a lack of listening and understanding at the management level can also create the phenomenon known as the Peter principle, which can lead to incompetence of the hierarchy.

The Peter principle, described by Laurence J. Peter and Raymond Hull, explains that we are promoted to the degree of our incompetence. Indeed the more competent at our job we are, the more likely we will be promoted to higher responsibilities.

On the day we find ourselves at a level for which we are not competent anymore, we will stop being promoted—we will also not be downgraded. That’s what leads Peter and Hull to the following statements:

  • “Within a hierarchy, every employee has a tendency to rise to its level of incompetence.”
  • “In time, every post tends to be occupied by an employee who is incompetent to carry out its duties.”

 It’s all the more a pity since according to the principles of motivation described by Daniel H. Pink in “Drive: The Surprising Truth About What Motivates Us” being able to develop mastery in one’s work is one of the core elements of intrinsic motivation (along with purpose and autonomy).

 This is nicely summed up in the following video from RSA Animate:

 

 3. The hierarchy is source of demotivation

Strangely, the management of motivation in companies despite its importance belongs to these elements that have not changed much with the times.

The research on intrinsic and extrinsic motivation reported by Daniel H. Pink in his book dates back to the 60s. The negative effects of extrinsic motivation on efficiency and productivity have been known for decades. Nevertheless, extrinsic motivational systems based on the carrot and the stick, remain the most prevalent systems in companies!

That’s why the results from Gallup’s studies on employees’ engagement in their State of the global workplace report isn’t surprising. With only 13 percent of engaged workers for the 2011 to 2012 period, we clearly understand the current need for liberated companies and their promise of happiness at work.

Within this global context of demotivation, hierarchy plays an important part. In a French Study from 2014: “Diagnotisc de la motivation des entreprises françaises,” 38 percent of respondents quote bad managers as one of the first causes for demotivation (while on the contrary a good manager is a strong source of satisfaction).

We could wonder why managers are not doing better but it’s not surprising when we look at the discrepancy between managers and workers when it comes to how they view working relationships. According to a BVA survey on manager-worker relationships from 2012, 24 percent of workers are dissatisfied with the relationship with their managers, versus only 4 percent of the managers being dissatisfied with their relationship with workers.

For the most part, managers are simply not aware of the potential demotivation effect they can have!

More surprisingly maybe, this same BVA survey also shows that only a third of the workers would like to be in their manager’s position.

This is ironic when we’ve built the hierarchy both as a mean to scale organizations and as a reward in an individual’s career! Nevertheless, the fact that we refuse to become chiefs (“Chef, je ne veux pas être chef!”) is becoming more of a reality as explains Sylvaine Pascual (“Quand les cadres ne veulent plus manager“).

Among the reasons for this disaffection, Sylvaine cites many difficulties that managers have to face. They are not offered training in human relationships, they are under stress induced by the discrepancy in their objectives and their means, they suffer a never-ending workday (something being emphasized by the new technologies making it possible to reach them anywhere, anytime). And they have to cope with all of this sometimes with a lack of purpose and even recognition!

Apart from the fact that we no longer blossom in a chief role, the chief with its power of hierarchical control and validation is a true demotivation factor for the coworker.

If intrinsic motivation needs autonomy, purpose and mastery to develop, the manager can have a strong castrating role on these three elements.

By being the source of decision, he or she withdraws autonomy from the worker. By imposing and not giving meaning, he or she deprives from purpose. By controlling (the “stick”) and defining the career and the training path (the “carrot”), she prevents the creation of a framework that enables learning by mistake and developing one’s mastery.

It has become all too clear that hierarchy is still too often a reflection of the Theory X from Douglas McGregor. A theory that supposes that the average employee has no ambition, is lazy and only works for his own goals.

It is because we think that man is prone to avoid work that we developed this “command and control” approach within companies.

If today, flat organizations are blossoming, this is truly because, contrary to that, they rely on Theory Y from Douglas McGregor. A theory that’s just the opposite of Theory X and that Jean-François Zobrist summarizes by this postulate that “man is good” (“La belle histoire de Favi: L’entreprise qui croît que l’homme est bon”).

Stop Sign

Image: The hierarchy all too often is used as a simple mean of control. Illustration by N. Lochet.

4. The hierarchy reduces the capacity for innovation

Within a complex world, where companies need more and more reactivity, the “command and control” approach of the hierarchy is a true barrier to innovation.

Indeed, one of the first sources of hierarchical power is the control of information, which is precisely the thing that we need to see moving more freely.

By controlling the spread of information, the hierarchy prevents the development of what is called the knowledge economy (on this topic the French hearing of Idriss Aberkane who talks about biomimetic and the knowledge economy is thrilling).

A pity since the knowledge economy, as Idriss explains, presents several very interesting characteristics in a complex world.

First of all, knowledge has this magical quality that it can be shared without getting poorer (I can give you an idea without having to depart from it). When you know how important it is to have the right information to be able to act on a given context (and if you ever experienced being stuck in the Parisian subway you know what I’m talking about), it would be a shame not to use that.

A second useful characteristic of knowledge that is of interest for companies is that sharing it always rebounds and creates something new. The information that I give you and that you receive is going to echo on what you already know.

Thus, if only by association of ideas, it is going to give life to a new idea in you. Indeed, this idea can sometimes be trivial, but this could also lead to a new knowledge and maybe even be the source of an important innovation.

As Bernard de Chartres said (translated from French):

“We are dwarfs standing on the shoulders of giants, if we see more and farther than our predecessors, it is not because we have keener vision or greater height, but because we are lifted up and borne aloft on their gigantic stature.”

Apart from the negative aspect of a restrictive control of information, hierarchy by its decision role is also going to limit the initiative. Taken to its logical extreme, the fact that all decisions have to be validated by the hierarchy can bring to a kind of dangerous irresponsibility.

This is exactly what the famous Milgram experiment showed. This 1962 experiment proves that, under authority, we are prone to a suspension of judgment. Under orders, we could do things that are reprehensible to morale such has administrating a high voltage shock to a person not answering a questionnaire correctly. Though not willing to reach the Godwin point that says that as online discussion grows longer it will inevitably lead to a comparison to Nazism, the fact that hierarchy was precisely quoted by some Nazi as an excuse for their atrocious acts is something quite worrying.

Hierarchy in companies is also often translated into a culture of processes. We determine the way information should be shared. The decisions’ processes are codified. The various validation steps are predefined. We go so far as to limit people’s powers through the financial amounts that a manager can commit to according to his rank.

If processes can sometimes be helpful, as aviation or operating room checklists can be, they can also be a limit. In “Petite Poucette,” the French philosopher and academician, Michel Serres, talks about the beginnings of the Bon Marché (a department store in Paris).

Everything was well organized within the store, but sales were stagnating. One morning, Boucicaut (the founder of Bon Marché) has an idea: to break the organization within the store. That way, the housewife who came to buy leeks would have to go through the lingerie shelves to get there. Sales soar. This type of organization leaves room to serendipity.

Serres has this to say:

The disparate has virtues that rationale doesn’t know. Practical and quick, order can nonetheless confine; it fosters movement but eventually freezes it. Essential to action, the checklist can sterilize discovery. On the contrary, air can enter disorder as within an apparel that may be loose and offer space. Space that leads to invention.

As Clayton M.Christensen expresses in “The Innovator’s Dilemma,” a culture of processes, contrary to a culture of people, has yet one more drawback when it is necessary for us to adapt to confront innovation.

The disadvantage is this: though you can teach people to help them grow, you cannot teach processes to evolve. People can learn, processes cannot. You need people to evolve for them to change the processes. If your culture respects people, then it is easy for you to change if something doesn’t make sense. If your culture puts processes first, you’ll have to follow them even if they don’t make common sense. All cultural change is a difficult matter, but it is made even more complicated if it has to cope with unsuitable processes.

Thus, if we want to develop the initiative from where innovations arise, management has to be dissociated from authority, to be as less prescriptive as possible and not be coercive.

Without that, we don’t allow individuals to develop enough confidence to try new things. If mistakes are scolded, if they are seen as a kind of failure and not as a source of learning, we don’t create the necessary culture for innovation.

As we’ve seen, the hierarchy is loosing much of its grandeur. A source of slowness or costs, myopic, demotivating or even with a castrating effect on innovation, it is simply not adapted to our complex world anymore.

Nevertheless, rethinking our hierarchical structures can seem to be a towering task. In fact, it requires a true paradigm shift. It is about stopping the view of the company as a machine to make money, and starting to look at it as a living organism.

Peter Senge in “The Fifth Discipline” writes:

We know that in sane living systems such as the human body or a humid environment, control is distributed. But we are so used to the idea that “somebody must be in control” – what Hock calls the “Newtonian hidden” within ourselves –that we cannot think of any real alternatives.

Abstract Art
Image: Distributing control within the organization. Illustration by N. Lochet.

Today, these alternatives are emerging. They include Semco, Favi, Poult, Chronoflex, Morning Star, Whole Foods, HCL Technologies, Harley Davidson, AES, Burrtzorg, The Richards Group, Patagonia, Gore, Menlo, Valve and Holacracy, to name a few.

This idea of a flat organization is appealing, and there are more and more companies studying ways to manage by using distributed control. This is a new way of doing not without its challenges.

And those challenges are exactly what I’m going to tackle in a future article.

Summary

For most of the 20th century, companies considered that the employee was not here to think, but to execute. Hierarchy was here to provide a guide for them to know what they should do. Nowadays, this model is more and more disputed by organizations that are getting rid of the hierarchy and empowering people.

They are many reasons why the traditional hierarchical structure is being challenged:

  • In a world that is in constant change, the slowness in communication and the cost in high salaries that the layers of hierarchy can induce has become a nuisance.
  • The multiplication of hierarchical layers creates a distorted view of reality, which means that most decisions are taken by people who have inaccurate information.
  • The "stick" and "carrot" policies used by managers has been proven to be demotivating for employees who need purpose, autonomy and mastery to feel intrinsically motivated. According to some surveys, only about 13 percent of employees feel engaged in their work.
  • Generally, the manager is unconscious of his or her negative influence. The role is difficult and many among the younger generations are even not interested in the position anymore.
  • Information control upon which hierarchy built its power is also limiting the development of a knowledge economy and ultimately the company’s potential of innovation.
  • Hierarchy is limiting our free will, and having us answer to orders tends to make us less responsible, which is not without risks.
  • A strong hierarchy is also often supported by a culture of process, which does not leave room for serendipity, and changes more slowly and arduously than a culture that puts people first.

Challenging the traditional hierarchical model implies a complete change of paradigm. Flat organizations are built upon the idea that people are good and want to perform, when old models viewed them as being lazy and in need of control.

This is a new representation of the company that leaves aside the mechanic metaphor and embraces an organic view of the organization as a living organism.

This is not without creating new challenges and needs that companies will have to tackle, and that are the topic of Part 2 in this three-part series.

What do you think? Let me know in the comments below!



 

Nicolas Lochet is an agile coach at Xebia where he helps companies in their transition to agile.

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