Hierarchy is a bit of a dirty word. It resonates with nasty connotations. Hierarchy is perceived as a synonym of organisational bloat. A structure of power, inequality or even oppression. Hierarchical organisation is perceived as stiff, bureaucratic and full of shady politics.

But quite to opposite is true. Hierarchy is a crucial element of a well-functioning organisation. If done well, it makes the organisation more efficient and stable and allows it to adapt quickly to changing environments. If done wrong, it can disrupt the entire organisation and bring it to its knees.

While hierarchy does evolve spontaneously, an organisation’s leaders should shape it proactively to avoid common pitfalls it can produce. To do this, they have to understand what a hierarchy is, how it affects the organisation and what mistakes they should avoid. So let’s dive!

Systems, systems everywhere

As Donella Meadows describes in her brilliant book Thinking in Systems, hierarchy, on its basic level, is a way for the system to organise itself. A system that grows in complexity has to evolve some kind of hierarchical structure. A set of self-contained subsystems that are at least partially independent to maintain its resiliency and stability.

It’s a bit of a mouthful, but this observation is very intuitive. Everything is made of smaller building blocks. Your organism is built of different systems (nervous system, digestive system) that are built from specialised organs that are built of cells. A structure. A hierarchy. The same law applies to all the other structures. Be it military, human settlements, the global economy or corporations.

The hierarchy of sub-systems is a way to simplify the organisation’s structure. It allows the organisation to assume that some elements of the system are self-contained and will handle their tasks reliably. On the organisation level, communication can be reduced to only cross-system communication, without the need to talk to every single element of the system independently.

Imagine your brain (specialised governance sub-system on itself!) would have to think about every metabolic process in your body consciously. Or, when moving your hand, you would have to think about shrinking every muscle cell separately. Instead, the internal hierarchy of your body deals with those details for you. Such optimisation is a reason why hierarchy is such a universal law, spanning not only through the natural environment but through every aspect of human life.

Purpose of the hierarchy

When you think about hierarchy in the organisation (be it a company or any other institution), the same rules apply. On a basic level, hierarchy simply means the structure of the organisation: departments, units, teams, tribes. Those structures are self-reliant within their domain and, at least to some extent, independent.

Focused harmony

A well-defined hierarchy (important distinction!) allows units to specialise their purpose and focus. Particular teams and departments focus on specific parts of the organisation’s work, like organs in your body. This allows them to aggregate talent and skillset that is best suited for their domain. They can define and maintain internal processes that support their goals.

They are self-reliant and have autonomy that allows them to make tactical decisions without engaging the entire organisation. They gather and process information from their niche and send it up the chain of command to provide management with feedback about the current situation.

Such a combination of autonomy and a functioning feedback loop allows high-level management to focus on making strategic decisions, trusting that teams will handle those autonomously, within their specialised niche.

The same idea applies to roles within the teams. Managers specialise in managing teams and processes, Product Managers focus on scope and roadmaps and engineers deal with architecture and technology. Clear scope, clear focus and clear accountability. A foundation of a healthy hierarchy.