The End of the Hierarchy Is Not the End of the Manager, Part 2


The End of the Hierarchy Is Not the End of the Manager, Part 2


As the second post in my three-part series, I’m sharing some thoughts on flat organizations that are getting rid of the hierarchy and even reinventing the role of the manager.

In Part 1, we looked at why some companies wish to get rid of the hierarchy. This is a deep change, and despite its benefits is not without its own difficulties.

In Part 2, we are going to look at the risks of changing, the new needs that emerge and the necessary framework within these organizations for it to succeed.

Armed with this knowledge we will see in our final article why it could be premature to conclude that this means the end of the manager.

  • The end of the hierarchy is not the end of the manager (1/3): The end of the hierarchy
  • The end of the hierarchy is not the end of the manager (2/3): The new needs of flat organizations
  • The end of the hierarchy is not the end of the manager (3/3): The new role of the manager

To read a summary of this article, scroll down to the bottom of the page.

With No Hierarchy, What Are the Consequences for the Company?

1. “E pur si muove!” (and yet it moves)

Four little words that Galileo supposedly mumbled when under constraint from the inquisition in 1633, he recanted his theory on heliocentrism. Four little words that show that truth doesn’t care about our beliefs.

Changing and dismantling hierarchical organizations can seem dangerous and yet, if there’s a risk in giving more autonomy, there’s maybe even more risks in not doing anything.

The Santa Fe Institute has specialized in the study of complexity. Through a multidisciplinary approach, it looks for order in this complexity of changing worlds (you can discover some of its history in Mitchel M. Waldrop’s book: "Complexity the Emerging Science at the Edge of Order and Chaos").

Geoffrey West is a theoretical physicist in this institute. He explains why cities keep growing, corporations and people always die, and life gets faster; when organizations grow, they lose in innovation whereas when cities grow, they give birth to more creativity.

This amplifying phenomenon is a known mechanism in economics. This is the theory of increasing returns that the economist W. Brian Arthur formalized in “Increasing Returns and the New World of Business”.

The analysis from Geoffrey West is thrilling. According to him, the problem is that if companies want to keep growing, they have to innovate faster and faster. And to do that they should rethink their hierarchical organizational model. Not doing so is taking the risk of disappearing.


Image: Refusing to review the hierarchical organization model is taking the risk of disappearing. Illustration by N. Lochet.

For companies, it can be a serious dilemma. Despite its disadvantages, the hierarchy allows for clarity and visibility of the organization. When the company grows, it allows it to avoid collapsing into chaos.

As the Cynefin framework from Dave Snowden shows, the hierarchy and its induced control has this virtue of making complicated and therefore predictable a complex system.

Of course, the multiplication of communication means all along the 20th Century has only contributed to increasing complexity within our environment. However, if we managed so far to prevent ourselves from this complexity through control, banishing hierarchy makes complexity inevitable within the organization.

L. David Marquet reminds us that we shouldn’t believe that we only need to remove the hierarchy so that people are autonomous (6 Myths about empowering employees). Indeed, individual tasks get more complex, the area of action is blurry, and expectations are fuzzier. In a word, the future is unclear.

This chaos that hierarchy removal can create can be avoided when along the removal of the hierarchy, you also remove all barriers to communication. Flat or “liberated” organizations do not satisfy themselves by removing chiefs, they also make sure that they set the information free and build upon a culture of transparency.

When the flow of information isn’t hindered by any barrier, individual work and objectives can be pretty clear. Transparency allows for a high level of social auto-regulation.

When everything is known, it facilitates pair control both used to help your colleagues and to make sure there are no excesses from a minority who would try to abuse the system.

Although being transparent can help you have access to all necessary information so that you perform your work diligently, it is not without its own perils.

It’s a double-edged sword. Indeed with this new transparency, it is easier to have access to the wisdom of the crowds. Indeed, this is a way to invite serendipity within the heart of the organization. Indeed, we can thus drink to this stunning source of innovation that gave birth to Post-It, created PTFE or allowed discovery of the penicillin.

But beyond these benefits, the absence of a hierarchy means that our work stands fully exposed. We don’t have a manager to hide our mistakes behind anymore. As a consequence, there’s no room for mediocrity left. We are only respected for the quality of our work, our reliability and our loyalty to our colleagues.

Titles lose their strength. Removing hierarchy asks us to put aside our ego. Even though this ego can sometimes be destructive, this is not a change that happens without difficulties.

Contemplating Man
Image: Ego, or not ego, that is the question. Illustration by N. Lochet.

2. In the absence of a hierarchy, what are the new needs?

As we’ve seen, the removal of the hierarchy has a non-negligible human impact. That’s a real jump into the unknown. Once decision-making has been decentralized, we cannot predict in which direction the company will go.

For the one who is going to quit his/her hierarchical power, that’s a leap of faith, which requires a profound transformation. That’s an evolution of the conscience level often neglected and yet absolutely necessary to move towards flat organizations. The change is steep.

Various theories of human development exist. According to the theory of Spiral Dynamics, born out of the work of Professor Clare W. Graves, human beings develop by going through different stages of consciousness. Those stages represent different worldviews (sometimes called Memes).

It is not easy for a person to go from one stage to the above since the upper levels are obscure for those who have not yet reached them. Development is a personal journey we go through that cannot be taught. We can’t jump across the different stages to directly go to the more advanced worldviews. We will have to find out by ourselves and will have to move through all the steps.

Whether we trust Graves’ work, or we relate to other theories of human development (Tribal Leadership from Dave Logan, John King and Halee Fischer-Wright, Jean Piaget’s theory of cognitive development or even Lawrence Kohlberg’s stages of moral development), this inability to jump across stages of consciousness or be educated about stages we haven’t yet reached remains a constant.

At best, we can only be put into contexts that will make it more likely that we walk the path, but the journey remains ours. This can prove quite an issue when living without hierarchy requires holistic worldviews and genuine care for others that generally are not expressed until we’ve reached the latter stages of consciousness.

Facing the difficulties we encounter in living without a hierarchy, it is essential that the company sustain an approach that will create the necessary environment for our personal development, and answers three new needs that the removal of the hierarchy gives birth to:

  • Alignment needs, with the implementation of a vision that can define the mission to accomplish. A vision is compulsory if you want to get the alignment of a group of autonomous individuals. In a complex system favorable to emergence, that’s what enables you not to yield to chaos. Without precise rules or guidelines, the vision is indeed a way to help us make decisions that make sense with the whole of the organization.
  • Safety needs, with the development of a culture of management by trust. Thanks to that, everyone can evolve at his/her own pace in a universe where he/she knows that we are not going to use his/her mistakes at his/her harm. When you remove the hierarchy, you empower employees to take their own decisions. You ask them to act autonomously in the way they think is best for the company while they only had to follow orders previously. But without this feeling of security, people won’t act autonomously by fear of being punished for mistakes they could make and for which they could previously blame the chief and his or her orders. Either it would lead to sclerosis of the organization (nobody willing to commit to any decision and people spending too much time waiting for all answers before acting and resulting in a loss of opportunities), or everyone would be looking for his/her own cover strategy (and we would spend more time trying to cover ourselves than to do what we must).
  • Sense of identity and proximity needs, with the creation of tribes and guilds. In the absence of a hierarchical structure, it provides a true social network. For the individual, it creates a feeling of belonging within an environment otherwise difficult to read. It allows those to keep landmarks, to know where to find the information, to see one’s work acknowledged by his peers. When creating a network of proximity, we answer the need for a sense of identity of the individual (who am I, what group do I belong to and how do I fit in this?).

Video Game Illustration
Image: Without a common vision, alignment is hopeless. Illustration by N. Lochet.

3. The removal of the hierarchy hides a more profound transformation

What emerges from these new needs is that banishing hierarchy creates a profound transformation of the organization. As Brian J. Robertson says in his book “Holacracy: The New Management System for a Rapidly Changing World,” there are three types of organizations: explicit, implicit and necessary.

  1. The explicit organization is the one you can see by looking at organizational charts. It’s the one we get rid of when removing the hierarchy.
  2. The implicit organization is the one that is really at work within companies. It’s the officious way things are done, often in contradiction to the flagged organization. It’s also the one you use when you ask a good colleague for a favor to get faster something that would otherwise take weeks if you were to go through the official asking process.
  3. Lastly, the necessary organization is the one the company would need for it to operate efficiently.

Through its governance meetings, Holacracy offers a system that allows companies to align the explicit with the implicit and to get it to aim towards the necessary.

That’s, however, a way to organize that is a bit rigid, although it can be useful to initiate change. Indeed like all processes, it is a recipe and thus by essence it cannot claim to answer the unique contexts of each and every organization.

Nevertheless when suppressing the hierarchy, the company is indeed faced with the challenge of switching to an informal organization. An organization where it can be more difficult to evolve, because its way of working is less visible (and understandable).

There’s a real challenge in making that explicit, and the answer does not lie in one unique element but rather in a set of practices.

If it can be hazardous to determine what these practices are and to try to make an exhaustive list of them, the company can, however, try to define the necessary elements for its expression through the formalization of values, a thinking over its legal framework and a special care towards all elements that foster social relationships

4. The flat organization, a company laden with values

To make the informal organization explicit, it is very useful (if not obligatory) to define values that are going to act as landmarks.

If there isn’t any explicit rule, these values can always be used as a reference for the individual who wants to measure the relevance of his/her actions. In the absence of a chief, they place a framework within which he or she can act.

To create this cultural framework, John Mackey and Rajendra Sisodia authors of Conscious Capitalism, consider that the company should become T.A.C.T.I.L.E., which means it should convey the following values:

Trust
That’s the ability to trust, without which autonomy cannot develop. Trust does not limit itself to the sole company, but also involves all stakeholders. Volkswagen and its scandal of the rigged engines emissions failed the consumer’s trust. That’s what happens when we do not take into account the whole organization ecosystem. Without trust, it is illusive to want to develop healthy relationships.

Accountability
This word is hard to translate for us French people, but it seems that even English people are debating the difference between accountability and responsibility. It isn’t as much ownership than the fact that we should be able to report and be held for our actions. It is not about blaming responsibility on others. Being autonomous doesn’t mean we can do anything independently and without warning. We constantly must ask ourselves if we would be at ease with defending our acts in front of the group whether on an ethical, economic or social standpoint. In the absence of a chief, everyone can be held accountable, even though sometimes upon a limited area. Being “accountable” means to take a commitment towards our colleagues. Doing that, we develop a culture where we know we can rely upon others. Control isn’t necessary anymore.

Care
A company also needs to be able to act out of compassion. We must stop seeing the organization as a machine with a sole purpose to make money. It’s first and foremost a bunch of people that make for a living organism. We have to let go of the mechanic metaphor—inherited from the old factories—and embrace the allegory of the company as a living organism, where individuals are cells, culture the antibodies and vision the translation of the leading thought. When machines cannot evolve, living beings keep changing, when machines do not express emotions, we are nothing but feelings.

If companies were to treat people as individuals or partners and not as employees or commercial relationships, a lot of issues would be solved. Companies who know how to express caring are the ones that are the most appreciated in return (and those who make the news, as this touching Lego story shows).

However, even though they can benefit from the improved brand image that showing care can create, companies truly believing in liberating people’s energies never do it as part of a manipulating strategy. The act is not done within the framework of a good communication campaign, but really out of a genuine concern for the individual. Anyways, it is never a very good idea for a company to communicate upon values that it doesn’t really convey.

Transparency
Transparency is evidently the basis of everything. Without it, people do not get the right information and knowledge to make the best decisions. In return, not being transparent upon one’s own actions are betraying the trust from his/her colleagues.

This transparency is surely the most difficult to get, because it goes against traditional hierarchical structures, which rely upon the power of (withholding) information.

It isn’t natural also. Revealing salaries, making accounting books accessible, opening one’s own projects to the exterior is totally counterintuitive in a world where competition is based upon the secrecy of the information.

Nevertheless, this transparency is also a source of innovation. Speaking of one’s idea with total transparency is indeed the first advice we give to startup founders.

It is by sharing that we get feedback and that we can improve ourselves. Refusing transparency means that you cannot benefit from the help of others to progress.

It also means you’ll never be able to tap into the power of collective intelligence. If you want to benefit from the fact that the group can be smarter than the individual, you need to be sure there is total transparency.

This will make decentralization possible, which is one of the necessary conditions (along with diversity and independence) for the collective intelligence, which James Surowiecki speaks about in The Wisdom of Crowds, to express itself!

Integrity
Integrity is a value that’s often overlooked in the world of business. The Volkswagen affair or the Panama papers’ scandal are but recent examples. Yet doing things with integrity is not only a question of ethics, it also enables the development of people’s engagement for a company that is acting nobly and therefore feels just.

Integrity at all levels is also a means to get rid of controls linked to the hierarchy with full confidence. Of course, that doesn’t mean the company can be blind; there will always be slips and breaches of trust.

Yet as Jean-François Zobrist, former CEO of FAVI says, we need to stop managing for the 1 percent. Cost of control far outweighs the costs of slips. If slips are noticed, they will be punished with the utmost severity. However they do not usually deserve the effort that we traditionally devote to them.

Loyalty
Loyalty is important because it allows for the creation of a safe feeling. It allows for long-term strategy and mutual aid in difficult times. Developing loyalty within the company brings benefits on several levels. It allows for a deeper commitment from employees, and thus the development of the organization’s overall level of competency as people are building experience.

It also allows for the diminishment of hiring costs, whether it is through a lower turnover or because the employee becomes the best salesperson for his/her company.

Extended to the whole stakeholders, this loyalty often allows us to “go the extra-mile,” in other words, to surpass oneself in the most extreme situations.

In the history of Whole Foods, loyalty was the difference between life and death. While in their first years, they had to face a flood, which destroyed all their belongings. It was through the dedication of all employees, partners and even customers that they were able to rebuild.

Egalitarianism
Equality is a fight of all moments for which there’s probably no winning recipe.

Equality is a source of alignment. Everyone can feel him or herself recognized with equity. Traditionally, those on top get the bulk of the company’s richness. But with egalitarianism, you cannot justify that a few wealthy get all the privileges. When work being done is recognized and rewarded for with equality, you leave less room for politics and more room for action.

In a fairer world, it is easier to invest oneself without remorse and to act rather than to discuss the relevance of the rewards of a few.

5. No more hierarchy, but new legal frameworks to invent

The removal of the hierarchy gives birth to a whole set of legal issues. Without a precise job description, there is no reference framework anymore to define if the individual is doing his/her job correctly.

If this doesn’t raise any issue when all is well, it can get tough when in conflict.

Today, companies without hierarchy can sometimes have behaviors that would be questionable in front of a court. While he tries to enhance the welfare of his employees, a boss can sometimes be a potential social offender.

Unlimited vacations, for instance, are not planned for under most labor laws and raise questions both in terms of insurance, taxation and accountability. Full autonomy also means you probably won’t be able to have the control required by laws such as the Sarbanes-Oxley act. Although willing to do good, you could still be convicted!

In the long run, we could imagine a big change of the labor laws. A rework that can offer a sane legal framework for these new organizations.

But that’s not going to happen tomorrow!

In the United States, the thinking regarding incorporation models is more advanced than in France. Within recent years, some new organizational models such as the B Corps have appeared.

B Corps are companies certified by an independent organization that commits to reaching high social and environmental standards. Pursuit of profit is not their sole commitment anymore.

This certification, which allows for clarification of the company’s objectives, is important because it enables transparency towards shareholders. Whereas shareholder have no control over the company commitments and are paid last, it seems indeed necessary that they fully know what the company’s priorities are.

Other ways yet exist but are maybe less legally binding. A greater number of organizations are now presenting in their balance sheets a part dedicated to corporate social responsibility (CSR). It is still an add-on and some go further with the notion of Triple Bottom Line, which aims to make the search for profit equal to the search for social and environmental development (People, Planet and Profit).

Despite these initiatives, things remain fragile. Today, a company that believes that its mission does not stop at making a profit, but also encompass the pursuit of a grand purpose along with the self-realization of its employees could see its efforts turned to ashes for lack of a good legal protection.

Actually, some that went this way had to go back the old way under pressure from stockholders.

All in all, the labor laws and incorporation model that would legally protect a company that wants to get rid of the hierarchy probably remains to be created.

People Planet Profit
Image: The quest for profit is not the sole objective anymore. Illustration by N. Lochet.

6. Enriching relationships at work to rebuild foundations

Another way of giving back unity to a flat organization would be to work for the development of the tribe. When the chief disappears, when departments are no more, when titles are obsolete, the human being lacks social marks.

In this framework, it is essential that the company allow for the development of small autonomous units. Indeed within a group, the individual finds back a tribe to which he can identify himself. A story is being written, made out of anecdotes, implicit references that play a strong cohesive role for the group.

This is important so that men and women feel engaged in their work. And by the way, that’s precisely the result from a Google study (What Google learned from its quest to build the perfect team), which shows that contrary to what one might think, the most efficient teams are not the ones with the most skilled people, but those whose members show the more respect to one other.

Even further, if we are to believe the longest study ever on happiness (What makes a good life, lessons from the longest study on happiness), being able to work in a trusting environment and with multiple connections creates the conditions of a well-lived life.

As Robert Waldinger explains, social relationships and their quality are not only good for us, but also good for our brain and health.

As we’ve seen, declaring the end of the hierarchy is but a first step. With no supplementary action, it would certainly create more difficulties than it would solve: lack of alignment leading to chaos, inaction by lack of responsibility or out of fear of engagement and even loss of social marks.

We need help to ensure that we don’t succumb to these pitfalls. And while we don’t need the manager for his or her hierarchical responsibilities, he or she can still help us avoid these difficulties.

That new role of the manager will be the topic of our third and last article on the new role of the manager.

Summary

The more companies grow, the more they need to innovate to survive. For that, they need to unleash employees’ true potential by removing the barriers preventing initiative.

Removing hierarchy and control is opening the door to chaos. The company needs more transparency to enable better social regulation and provide alignment. This is not done without consequences to people’s ego. We have to accept that power is not due to rank but comes from the respect of our colleagues.

Former managers go through a lengthy personal journey to progress into this new worldview.

The lack of hierarchy creates three new needs the company has to answer. “Alignment” through a strong vision, “safety” with a culture of trust and “belonging” with the creation of small teams to which one can identify.

Removing hierarchy has profound changes on the organization, which becomes less explicit, more informal and based upon networks. To provide for guides in such a fuzzy environment, it is essential that the company work upon a set of shared values.

For people to invest themselves in the company, goals evolve from a pure quest for profit to something more global including development of employees and higher inspiring goals such as protecting the planet. Those new mission statements still lack a strong legal framework to protect the company.

Despite the challenges, the goal remains desirable, since the new organization in small autonomous teams provides additional benefits. In such organizations, people are more productive, but also more happy and thanks to qualitative social relationships remains in a better health.

Ensuring such benefits can be reached while avoiding the traps will be the new mission of the former manager.

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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