Why Managers Matter summary

When you think of hierarchy, what do you picture? Feudal overlords making life miserable for peasants? Overpaid CEOs? Layers of middle management that slow down all communications in a company?

These are examples of hierarchy, to be sure. But they’re extreme examples of ineffective implementation of hierarchy.

According to Foss and Klein, hierarchy is a response to the difficulties of building a complex organization that involves many people. Hierarchy is needed to effectively manage relationships and cooperation among workers and to keep people’s varied motives and interests aligned.

Hierarchy isn’t as simple as giving certain people command and control over others. Although it is giving power over others to some people, the purpose and extent of that power must be carefully defined.

Hierarchy establishes procedures and policies. It gives people a blueprint for managing the complexities of working together and solving problems or disputes. A satisfactorily arranged hierarchy involves not just power distribution but also provides structural support for a company’s operations.

So if that’s what a standard hierarchy model looks like, then what are the key aspects of a bossless company? This organizational style is also known as a flat structure or a leaderless company. Taking away layers of management within a company is known as decentralizing, and it’s a key aspect of a flat organizational structure.

At its most basic, this structure sets every employee equal to every other employee. Decisions are made using consensus or a vote. No one has any authority over anyone but themselves, and everyone works together equally to both set and achieve the company’s goals.

At its most extreme, a flat organization might not even have any job titles or specific responsibilities attached to any one person. Everyone is equally responsible for completing tasks as they see fit in order to achieve the company’s goals, which would, theoretically, also be set by everyone in agreement with everyone else.

Proponents of the bossless structure argue the bad outweighs the good when considering hierarchy’s effects. But is that really true? In the next section, we’ll explore the benefits and drawbacks of a hierarchical business structure.