This is an excerpt from my upcoming book, Organizational Psychology for Managers.
While I was writing this, I was asked the question, “How important is hierarchy on a team? I’ve been told it’s a problem. I’m responsible for 160 people, and I don’t know what I’d do without a hierarchy.”
Hierarchy is a tool. Whether it works for you or against you depends on how well you understand your tool and the situation in which you are using it. For my friend who has to manage 160 people, some sort of hierarchy is essential: without it, he’d swiftly be overwhelmed.
Hierarchy is a way of organizing and structuring a system. In a typical martial arts school, the hierarchy of belts provides each student a quick visual assessment of who knows what. This can make it easier for students to ask questions or know whom to imitate: learning is enhanced when we can imitate someone we see as similar to us. That person who is one belt ahead is easier to see as “like me” than the person who is many years and belts advanced. The hierarchy also provides visual feedback of the student’s progress, a key component of maintaining motivation.
One of the key roles of the military ranking system is providing a method of coordinating precision operations. It does this by, amongst other things, providing clear rules for whom to listen to and under what circumstances and managing transitions of power should a leader be abruptly removed or cut off from the team. Like the belt system in martial arts, it also provides visual feedback of progress.
In a large organization, hierarchy provides a structured way to know where you are in your career, an easy way to identify nominal skill levels, and a means of coordinating different business activities.
However, when hierarchies become inflexible or bureaucratic, they can easily turn into obstacles. Small companies that attempt to impose rigid, large company hierarchies are asking for trouble: they don’t need the overhead and lack of flexibility that hierarchies can create. A small business’s biggest strength is that it can shift course quickly. A large company, on the other hand, is slower to change but has more resources. It is silly and counterproductive for a small business to impose large company hierarchy and thereby give up its flexibility when it doesn’t have the resources to take advantage of that hierarchy.
Even in larger organizations, the structure needs to be flexible enough to permit good information flow up and down the hierarchy. Too rigid an adherence to hierarchy will reduce productivity and motivation and stifle innovation.
Hierarchy needs to be built out carefully, in accordance with the narrative, goals, and needs of the organization. Make sure you clearly identify what each level of the hierarchy means and how people move up. Periodically review your hierarchical structure and make sure it is still serving you, and not the other way around.