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 is a hierarchy, 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, 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 as well.

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.

Improvise, adapt, overcome

Organisations with well-functioning hierarchies are more resilient as their structures can dynamically react to changing situations in their environment. Teams make quick tactical decisions and the feedback loop transfers information up the hierarchy layers. If some problem occurs in one of the teams, it has limited impact on other parts of the organisation as teams are self-reliant.

Hierarchy, understood as internal organisation structure and layers, is a result of the natural evolution of every system that increases in size and complexity. There are however countless ways in which hierarchy can evolve or be applied. And none of those is perfect. Some are even harmful and can impair the organisation. And hierarchy, as every aspect of human civilisation, is as strong as its weakest link: the human itself.

When hierarchy goes wrong

Greedy power grab

Sometimes people in the organisation forget the purpose of the hierarchy and their position. Top levels of hierarchy forget that their goal is to help their organisation. To remove obstacles and make the work smoother, not to rule and enforce. Keeping their position in the hierarchy or grabbing even more power becomes the goal itself. Painfully familiar isn’t it?

Since the goal is now personal power, not the common good, the organisation quickly deteriorates into a tangled web of politics and fraction wars. The well-being of the organisation does not matter (the well-being of lower levels of the hierarchy matters even less), personal gains take precedence over everything.

As a result, people on the lower levels of the hierarchy, where the work happens, become distrustful of their management. They consider them incompetent, disconnected maybe even abusive. They start to avoid and hide from the organisation structure further deepening the crisis. The system usually reacts with even more control and enforcement. This leads to mutual lack of trust and low-trust organisations are extremely inefficient and stiff. They have to assume everyone has bad intentions and try to break the system. Every action needs to be enforced, monitored and guarded by strict process. Only people who enjoy cutthroat politics and power plays thrive in such an environment.

Rigid formalism

Hierarchy that is too stiff and too focused on itself may reduce the ability of the system to change. Hierarchies, in general, stabilise the system. That’s their purpose. But in situations when an organisation has to change rapidly, adapt to new market conditions, catch new opportunities or fight new competitors, a rigid hierarchy can slow this response down.

The more complex the hierarchy is, the more layers and processes within it, the slower the organisation becomes. A feedback loop from the lower levels needs more time to reach decisive people. Complex structure hinders communication and multiplies the number of variables and contradicting goals the organisation has to deal with when making decisions. Processes designed to sustain the status quo and keep the hierarchy stable are naturally acting against any major changes in how the organisation functions.

A classic example of such a situation is a startup that disrupts the market owned by a much bigger corporation. The startup is unstable, but it’s small and can react and pivot quickly. The corporation is stable but is much slower and therefore vulnerable to such disruption. Even though it’s much more powerful, it’s not able to keep up with a fast-moving competitor.

Another interesting example is the US military which, contrary to traditional militaries, is famous for giving wide autonomy to the troops operating on the front line. It drastically shortens the chain of command and allows troops to react quickly on an ever-changing and chaotic battlefield.

A sweet spot is needed. A hierarchy that provides stability and at the same time gives enough space for the subsystems to make autonomous decisions. An effective feedback loop from the bottom up the hierarchy tree is a critical element of a well-functioning organisation structure. It makes sure that information flows effectively not only from the top but also the other way which keeps top management aware of what is happening on the organisation’s battlefield.

Respect my authoritah!

It can happen that hierarchy is not accepted by the organisation. People working there do not agree with how the structure is defined, which people are handling important positions and how the structure matches the actual needs.

Such a situation can occur when the wrong people are promoted to leadership positions. When their goals and priorities do not reflect the needs of other levels of the organisation. When the structure of the organisation does not properly reflect and support how the organisation works. When people in charge are considered not capable or not competent and are not respected.

This is a subtle situation but can have dire consequences. People in the organisation start to avoid the official hierarchy. Can actively or passively sabotage internal processes and impair communication and feedback loops. Often parallel, unofficial hierarchy is created to bypass the inefficient official one. Ownership and accountability get blurred and the system stops working effectively. It can even lead to some form of revolt where people explicitly reject the hierarchy, leading to a system collapse (and possibly allowing for a new hierarchy to be created).

All animals are equal

Poorly functioning hierarchies have led some organisations to adopt a radical approach. Abandon all the hierarchy! No more levels, no more managers, everyone is equal. So-called flat organisation. Sounds like a dream! Only it is not.

As already mentioned, hierarchy is a law of nature. You cannot avoid it. The system will always evolve into some kind of hierarchical structure. A flat organisation simply means that there is no official hierarchy.

On the outside, everyone is equal. No managers, no governors, but under the surface, there are unofficial hierarchies, growing out of personal relationships and dynamics within the organisation.

It’s human nature to structure our societies into hierarchical structures. The work environment is no different. Spontaneously created hierarchy may even sound natural, but this lack of clarity makes it very hard to navigate such a structure. Especially if you’re a person from the outside. It’s like navigating a difficult family topic at a family Christmas diner. You may be accidentally fighting against the hierarchy with your actions. You may even create conflicts or antagonise people without even knowing it.

The lack of an official structure blurs responsibilities, making it very easy to avoid ownership and accountability. After all, if everyone is responsible, no one is. Such a setup also makes the system vulnerable to being dominated by the most loud and assertive people in the room. They will be on top of this “hidden” hierarchy. But they are not necessarily the most competent people for this job.

“Flat” organisation can work well provided it is small. It will also grow an unofficial hierarchy of course, but since it’s small, it will be fairly easy to navigate, so the drawbacks of such an approach will not be too painful. With a bit of care, such an unofficial hierarchy can be observed and fostered, to serve as a basis for an official one, once the organisation grows.

Don’t fight it, embrace it

Hierarchy is a fascinating topic. It combines a natural tendency of every system to self-organise and the wonderfully chaotic dynamics of human behaviour and relationships.

Some of its bad reputations is deserved, as malfunctioning hierarchies can bring a lot of harm to the organisation and make people’s lives miserable.

However, we should accept the fact that hierarchy cannot be avoided and that it’s an inherent part of our reality. As such we should shape it consciously, being aware of its impact on our surroundings.

Smart leaders don’t fight with the law of nature, they embrace it and leverage it for the benefit of their organisation and their people.

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