Hierarchy in organizations: when it helps, when it hurts

The animal kingdom is filled with hierarchies. The best known is perhaps the alpha male among gorillas and chimpanzees, suggesting a strong natural basis and hence evolutionary advantage for this phenomenon. At the same time, many people have serious problems with hierarchical arrangements, which they feel disrespect and diminish those at the bottom of the hierarchy, and argue for more egalitarian and participatory groups.

In one chapter of their 2015 book on competition and cooperation, Friend & Foe, the authors, Columbia Business School and Wharton School organizational behavior scholars Adam Galinsky and Maurice Schweitzer, argue that you can't say either hierarchical or participatory arrangements are always good or always bad. Instead, there are some organizational tasks for which hierarchy works best, and others where hierarchy creates problems.

How does hierarchy help? It helps groups of people coordinate their activities and gives people information about who does what. It reduces the need to bargain and argue over such decisions. The authors note that Google initially tried to work without managers, but found that "the lack of hierarchy created chaos and confusion. … As they learned, even Google needs hierarchy."

This is especially so as the interdependence among people in a group increases. Indeed, where the need for interdependence is strong, more super-talented hot shots can actually hurt an organization's performance compared with a situation where there are fewer superstars. The authors recount that this happened to the Miami Heat basketball team in 2010 when they landed both LeBron James and Chris Bosh to join Dwayne Wade. To the surprise of many, this actually hurt the performance of the dream team at first, because there was no natural pecking order and the stars fought among each other for control of setting direction. Coordination is more important in basketball than baseball, where play is more sequential and the need for coordination less; baseball teams rarely suffer from too many superstars.

How does participatory management help? It helps when the information the group needs to have to make good decisions is more complex and uncertain. The danger of hierarchy is that it tends not to generate a wide range of information. "The more complex the task, the more likely we are to make a mistake or miss something critical" in a hierarchical organization.

Hierarchy can also suppress dissent, because people don't want to take on those at the top. One study of Himalayan mountain climbers from 56 countries on over 5,000 expeditions found that expeditions with participants from more hierarchical countries "were more likely to die in the Himalayas." The reason is that lower-level people from hierarchical cultures were less likely to speak up about problems they saw and help avert disaster. (It has been suggested that the 2013 Asiana Airlines crash occurred when the co-pilot, in Korea's hierarchical culture, did not raise concerns with the pilot.)

The authors argue that different styles may be appropriate for different stages of organizational production. When decisions are being made, there may often be a need for a participatory structure to bring forth necessary information. But when attention turns to execution, the need for good coordination and direction may argue for more hierarchy.

Galinsky's and Schweitzer's advice is very practical. If I am a manager, I need to diagnose what kinds of situations my organization, or workgroups within my organization, most frequently confront.

Yet because, to a significant extent, hierarchical or participatory managerial styles derive from a manager's personality or the organization's general culture, it may be difficult for a manager to shift style just because one or the other is more appropriate in a kind of situation, with some subgroup in the organization, or at some stage in the production process. Thus, in real life there are surely lots of mismatches between the extent to which hierarchy is actually appropriate and the extent to which it is used. But diagnosing the principles for when hierarchy helps and when it hurts, as the authors do so effectively, is a necessary step to managers figuring out how their organization can do its job better.