Reinterpreting Hierarchy in the 21st Century – An imperative for sustainability and progress

In an era where people are dealing with a multi-generational workforce, where engagement is coming back to the forefront, when we are witnessing innovation, ideas and capabilities for strategic direction or competitive advantage increasingly come from incumbents from across various levels of the organisation, we would like to bring your focus on what we believe is a widely prevalent, long-held, yet under-evolved construct – Organisational Hierarchy; which needs to evolve to match the above mentioned and other requirements of these dynamic times.

Background

Origin of hierarchies

The origin of hierarchies can probably be traced back to the socio-politico-economic statuses where greater respect was ordained on people with greater experience, old age and greater strength. These leaders were respected for bringing order and security into societies and were rewarded through offerings (wealth). Others from the family and those in favour with the leaders were given key privileges as most people believed that the traits of wisdom, strength and of course wealth were bequeathed to them by their lineage. Monarchies and religions operated on the same principles.

Monarchies and subsequently governments operated on the premise that key people who could mobilise men and offer expertise that was valued by those in power, were rewarded and others who had less or nothing to offer were considered irrelevant common masses and were not necessarily favoured, taking their own place in society. Each person who was conferred power, position and wealth had his own coterie of people whom he relied on and favoured based on their value and closeness to the incumbent, thereby creating power structures which lead to the creation of a framework and later institutionalisation of hierarchies.

Hierarchy in the workplace

To understand Hierarchy in the workplace, two things need to be considered, firstly where the complexity of job tasks was low – mostly based on performing repetitive tasks involving simple especially physical processes, people with low levels of education and skill got hired. Since these people came from poor backgrounds, they were ready to work at low wages; and this is still prevalent. These classes usually formed the lowest rungs of the hierarchy.

Secondly, as people gained expertise and experience to retain them and meet their expectations, they were rewarded with higher salaries and supervisory or commanding positions. In earlier times these were also those musclemen who could keep people working and in order, often using unreasonable force in unreasonable working conditions. These positions served to also maintain a distance between senior coterie of the owners (noblemen) and others.

As we moved to somewhat modern times, every time people at lower levels of the hierarchy had to be rewarded for their experience, loyalty and/or to retain them, newer levels got introduced between the topmost and bottom levels hierarchy, each time attempting to create job differentiation in roles and accompanying rewards and benefits (salary and perquisites). Broadly speaking the system of wealthy owners and varying levels of workers underneath was sustained and accepted owing to the capitalistic structure of agrarian and manufacturing industry models which somewhat mirrored monarchy, religious and governance structures and was a pattern that people could understand and were used to accepting. The military was using the same principles to extend their own organisation, based on ability to mobilise men and with growing differentiation in skills and specialisations.

However, as during and post the industrial revolution manufacturing acquired scale, became competitive, evolved and various functions gained importance. For example, functions that allowed for greater sales (sales and marketing) or when the focus shifted to higher profits and as costs and productivity came into focus, related jobs became more important. With regulation becoming stringent, compliance jobs became more important. Furthermore, people had to be retained and perform functions far away from the watchful eye of the owner, this meant you needed people who could be supervisors and managers and had delegated authority to take decisions and ensure smooth functioning (further growth of general management).

Gradually people realised superior organisational performance was contingent upon performance of multiple functions in a coordinated manner.

Legitimacy and pervasion of Hierarchies

The legitimacy of hierarchy was based on the realm of specialisations and expertise, facilitating decision making so that people could make the best use of their respective expertise in relation to their skills, areas of interest and focus. Furthermore, incumbents at different levels could focus on and track different sets of variables in relation to organisational performance. This would allow people to link together various sets of expert opinions and weigh it with organisational priorities and related risks to choose the best course of action. While this system was supposed to serve to free workers/experts from the burdens of decision making so they could focus on their areas of expertise, others could build expertise on a different set of areas that allowed them to take a better decision in those realms such as marketing, management, strategy, etc.

In the workplace, the concept gained further legitimacy through concepts such as span of control, division of labour, unity of command, etc. Even though social scientists (Taylor, Ford, Sloan) saw it confer advantages, by using hierarchy, to optimise division of labour and scope focus, align work, encourage standardisation and reduce variance, simplify work structures and decision making, it ended up engendering a class system that is now seen in terms of superior-subordinate, an order of status levels or symbols, with power and accompanying reward differentials. In fact, in many places it is no different from that of dictators and their underlings.

While this was occurring people also were becoming better off and demanding better work conditions, this was based on their bargaining power, based on the skill-sets they had, similar opportunities in the market and their ability to unionise.

Also, with the advent of specialised education to directly leapfrog into these job positions rather than work their way up from the bottom, people got the choice to earn more wages and save themselves the ignominy of working in the lowest positions. Thus, the job and education status gained importance in the social realm outside of the workplace. People wanted to associate with and marry into similar classes, etc. Education, therefore, allowed people to make lateral entries across various levels of the hierarchy. The various collared workforce came to represent the classes. Parents aspire for class mobility for their children, so they send them to school and make sacrifices to give them the education to access opportunities they never had. At the heart of this was the discontent and humiliation that the so-called lower classes of workers faced during their lives. Everyone wanted to be up on the hierarchy rather than low, and their motivations increasingly became fixated on reward and status associated with higher levels in the hierarchy. So, labour worked hard to upgrade their knowledge and skills and still looked up to people higher up in the hierarchy who had the power to confer on them titles, rewards, and recognition. This allowed people in power to continuously wield power and make greater wealth based on the growing capabilities of the workforce and their competitive spirit for greater personal gain. People who wanted to break away from serving the interest of others turned to become entrepreneurs, working for themselves but in large numbers ended up creating the same structures.

Traditional ownership structures also perpetuate authoritarian power structures, and egalitarian practices in such structures will be fundamentally undermined. Of course, there are many systems which have evolved alongside such as that of shared ownership where people worked for themselves and their communities on a flatter hierarchical structure where decisions are taken more democratically. A great piece of the need for new ownership models though is the book by Marjorie Kelly, ‘Owning our future’ which talks about generative models for the new economy.

Without undermining the many that have successfully created, tried out and sustained alternative work cultures, but we for the moment concern ourselves with the widely prevalent ones.

Environmental context

The recent financial-economic crisis has thrown up massive data following the unrest among the masses about the economic status of various segments of society. This is most highlighted through public movements such as occupy wall street, the 1% versus the 99%ers and the poverty figures in developed countries; which is one of the reasons why this is most significant. While most of the third world and developing world countries are emulating practices followed in the west to extricate themselves from poverty and related ills, the shocking figures and practices in the west are now becoming common knowledge and is therefore causing people around the world to question almost every model followed by the west including governance models, business models, development models, education models, etc. which so far were the guiding models for our own working.

A large part of the great unrest and failure of the systems in the west are now being attributed to inequality and lack of egalitarian practices. Executive compensation at the highest levels of organisations has been criticised severely for disproportionate rewards and benefits. With the large numbers of organisations falling from grace based on lack of proper governance, strategic practices, integrity and ethics and their management proving incompetent therefore ushering in the crisis and failing to save themselves from the crises there is a strong case for questioning the kind of organisational culture and practices we have created.

 

 

Why isn’t it working?

Unfortunately, the hierarchies we have created, and the culture thereof has had an entire set of unintended consequences.

1. Top end decision making was considered more important than performing actual tasks that created value for the organisation and its stakeholders. Top end management was seen coming from a limited pool whereas people at lower levels were more in supply in the environment; therefore, this was justified based on demand-supply or experience and skills-sets. Even though this was partly owed to the cumulative effect of the way organisations function, create hierarchies, job roles, and responsibilities. In complexity terms, this is an example of downward causation (supervenience).
2. Usually, line managers (bosses) are also responsible for performance reviews and impact the micro-environment for down the line employees. This works from the bottom, right to the top. This means that gaining the line manager favour is almost as important as achieving your performance targets, in fact sometimes more important. Also, the biases and limitations of the line manager directly impacts performance and acceptability of ideas of employees down the line. Employees are afraid to express contrarian views and speak up, sometimes even when the bosses may be working unethically, not in the best interest of the organisation or sub-optimally. According to a survey in the USA, workers on an average spend 19.2 hours a week worrying about what bosses say or do.
3. It is also reasonably well known in a hierarchical system for line managers to frequently receive more credit for ideas and work put in by the subordinates, irrespective of whether they deserve such credit. Also, the premature discarding of ideas presented by people down the line merely on accord of lack of time or own biases also has been the reason for the loss of perhaps many innovative and valuable suggestions, thereby stifling creativity, loss of value creation and de-motivation of workers.
4. The performance targets are also set top down in most organisations, where employees have to commit to achieving those irrespective of the amount of stress it creates or however unrealistic these may be. There are of course target setting mechanisms like the bottom-up approach, and the negotiated approach, which is meant to offset these disadvantages, but inevitable in most cases top management prevails, due to explicit or implicit power implication and related pressure.
5. Employees who want to get more benefits and rewards feel compelled to move up to ‘higher’ jobs in the hierarchy even though it may be of less interest to them. They may be doing great at their current job and promotions may put them in positions of responsibility where they might not be able to perform as well.
6. People at higher levels in the hierarchy get more respect both internally and externally. They automatically are considered to be more important. This is irrespective of the value employees are creating across various levels of the organisation. The same goes for self-esteem, bottom/lower and top/higher have connotations in the mind of not only others but even the employees themselves. Lower accompanies the perception of lower self-worth and higher with greater self-worth.
7. Most development opportunities are linked to job roles, and people at lower levels of the hierarchy are usually provided limited (usually simplistic) opportunities to develop themselves holistically. Certain development opportunities are considered more appropriate for higher levels.
8. Incumbents at lower levels of the hierarchy usually have less participation and visibility in the organisational decision-making process, awareness of organisation performance and strategic direction. This limits their perspective and development, which almost puts them on a path of slow professional growth and thus puts them at a disadvantage with regards to accessing opportunities with greater rewards and benefits.
9. People higher up the hierarchy face their own challenges and pressures where they are held accountable for a number of targets which may not entirely be in their control. They often face acute stress owing to being held accountable and attempting to control a large set of dynamic variables. People lower down the hierarchy face even more stresses, though. According to research done by Harvard and Stanford researchers, higher level leaders in organisations experienced less stress than people in lower level posts.

Why does this need to change in the 21st century?

According to Edward Deming, hierarchies are destroying people and organisations would be better served with lower levels of hierarchy. We have chosen to live with the deleterious effects of these structures for too long, and its perceived benefits have failed to deliver and have pushed us to the brink of un-sustainability. At this time in the world, tumultuous changes are occurring, fundamental assumptions being challenged, and we are coming across new information and perspectives, we need to use these times and opportunity to bring about meaningful and substantial change to extricate ourselves from the precarious position and myriad crises we find ourselves in.

At the turn of the century these are views gaining ground:

1. There is greater recognition of the fact that value is created at all levels of the hierarchy. Performance at each level is critical in delivering business/organisational success.
2. Ideas and innovation that can create strategic or competitive advantages for organisations can come from any level in the organisation. There is greater acceptance of the fact today more than ever. Christopher Meyer talks of Centre Edge organisations, which are those that understand value creation is now occurring at the edge of organisations, with greater emphasis on limited decision making at the centre and relying more on transparency and engagement to sustain performance.
3. There is greater recognition that people higher up in the hierarchy do not exercise as much control and influence over the organisation as was believed earlier. The organisation is a complex entity, with a culture of its own, and with complex processes and decision-making systems. It is almost impossible to attribute its success and failure, especially in a dynamic environment to individuals, as it involves several variables that are beyond the control of individuals.
4. Decisions can be right or wrong and given variables involved, and people cannot always be held responsible for decisions going wrong; as much as they cannot get all credit for decisions going right. Humans work with the information they have (which is always partial) and try to make the best decisions they can, but in the end, there are no guarantees; in a world, with no absolutes, we have to consider uncertainty and give people the benefit of the doubt.
5. The way to get people to develop themselves and do what is best for themselves and society is to get them to secure their future to the extent possible and engage them in a higher worthy cause with which they identify and willingly give themselves to. When there is a significantly varied reward system which can confer skewed and cumulative advantages, this generally then focuses and allows people to manipulate the system for sustaining the advantages without a legitimate basis for it thereby undermining human performance and justice in organisations as much as in society.
6. Every employee deserves to be holistically developed, and society is better served if all workers do not have to wait for opportunities opening up at higher levels in the hierarchy to access these opportunities.
7. Hierarchies and work cultures are worsening health indicators by increasing stress and limiting self-expression. According to USA Today, 75% of adults say that dealing with their bosses is the most stressful part of their jobs. By a recent report in India, 85% of corporate employees are afflicted with health-related disorders (mostly chronic), with most of them attributed to stress. 75% of American health spending is on chronic conditions of lifestyle diseases owed to preventable causes.
8. Every human deserves equal respect, and this should not be graded on equivalences of organisations hierarchies. If organisational work cultures are contributing to a class system, we need to help remove that in the spirit of egalitarian values and practices.

What can we change and how?

While these solutions would ideally be crowdsourced, my initial views are these

1. From the lexicon of hierarchies, we need to eliminate and replace words like superior-subordinate, authority, line management, order, rank, higher-lower, etc. from the organisation structure and reference to it.
2. We need to ensure that incumbents are responsible for creating a performance portfolio that should be presented to an independent performance board which should be able to eliminate bias from the performance evaluation process. The line manager should not be in a position to greatly influence the review.
3. It is important to segregate the decision-making structure from the power and control structure. One of the things that sustains the power structure and lends to its abuse is that the decision-making structure is often aligned according to the hierarchy and serves as the legitimising factor for the hierarchy. Attempts such as in Google and in other companies which have tried to do away with hierarchies and encouraged decision making through the participatory approach have been criticised for the delays in decision making and inability to reconcile differences that usually in deliberation that precede those decisions. It is a mistake to think that consensus can be evolved on decisions and there will always be a need to create a decision making, decision support and impasse resolution system that takes care of that. All we need to ensure is that it is a transparent system and doesn’t mirror a power structure implicit or explicit.
4. The variance in benefits and rewards systems should be minimised across levels of hierarchy (perhaps eliminated in the long run). We should find a way to reward performance objectively without conferring undue, longer term, especially power advantages to high performers.
5. People should be allowed greater visibility of the business context, decision-making process and the decisions taken in an organisation. This is especially done with regards to decisions regarding them, conventionally that would seem to be an exception.
6. Apart from greater visibility, there should further be attempts to increase participation of incumbents across the organisation in decision-making processes.
7. The focus on holistic development of all needs to gain greater importance. People should have opportunities and the choice to opt for the same in line with their preferences, not necessarily being controlled by ‘superiors’ in the organisation.
8. People need to discourage usage and references of the hierarchy as power structure or superior-subordinate relationships. Organisational structures should be seen more in terms of specialisations and scope of decision making. It should not have horizontal or lateral references which indicate equivalences and differentials.
9. We need to provide platforms where people can express their interests, ideas, opinions, skills, and capabilities even if these were unrelated to their immediate areas of work. This would serve to discover talent and passion and draw upon these people to use their interest and further develop them in their desired areas of endeavour. While it is not quite what we mean but one related attempt is the ShipIt days at the Australian software firm Atlassian, which mandates employees to work for 24 hours on new ideas that they want to and produce new product features ideas. Google famously asked its employees to work on their pet projects for 20% of their work time.

Reality check

1. It is understood that given the prevailing work structures, culture, practices and incumbency, we cannot expect these structures to transform in a short duration of time. The intention here is to create possibilities of alternatives and to encourage early adopters to take initial steps in this direction.
2. The expression of these ideas is to encourage others to explore possibilities which when acted upon will open up further opportunities and present challenges, which will progressively need to be addressed to scaffold on the initial attempts. As most complex structures evolve, so will this, recognizing the importance of the missteps already taken as perhaps a necessary step in the evolution of working society. It is not to condemn creators, supporters and apologists of the extant system (such as in Jan 1990 HBR issue Elliot Jaques wrote an article defending hierarchy ‘In praise of Hierarchy’, which still asked for a reinterpretation of it though) but it is the commitment to the underlying values that we hope should serve as the driver for the conviction to act.
3. People higher up the hierarchies already are perhaps where we would envisage the most reluctance to change, and it is therefore important that that is where change starts, also since that is where the power centre resides. We look forward to visionaries and courageous people from within these segments to work to make this evolutionary transformation a reality.
4. We need further develop these ideas, find people who will promote the cause based on their convictions, mobilize opinion and seed next practices.
5. Sometimes it is easier to seed new ideas when there aren’t old structures that need to be torn down, so we believe entrepreneurs and new organisations may find it conducive to bring some of these ideas to life when they engage and collaborate with like-minded people with similar values.
6. The people who may decide to adopt changes may also commit to creating long-term value while accepting short-term turmoil, for often sacrifices are made for things of value. While attempting this, they are likely to find many supporters in today’s environment where people are seeking principle-based leadership in action and newer models to follow.
7. A lot of these are and may already be occurring in many organisations already, some of them may also have tried and given up or tried and built on it further, those people need to be more vocal about these practices and build understanding of this, so we can gain benefit of past experience without necessary being prejudiced by it.

 

For working with us on such ideas and exploring what we have to offer in terms of potential next practices, please do contact us.