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Your Employees Like Hierarchy (No, Really)

Maybe it's not such a good idea to banish the org chart: A recent study reveals employees secretly like it.
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If you've ever been part of a bureaucratic organization, you know how frustrating it can be to deal with several chains of command, which makes getting things done quickly all but impossible. That's why start-ups often champion "flat" organizations and do away with unnecessary levels of management as a way to stay fast and nimble.

But you might not be doing your employees (or your company) a favor by eliminating chains of command altogether. According to new research, there are real benefits to hierarchy.

People Prefer a Pecking Order

It turns out employees sometimes prefer hierarchical relationships over equal ones, according to a study conducted by Stanford Graduate School of Business professor Larissa Tiedens and Emily Zitek, an assistant professor at Cornell University's Industrial and Labor Relations School.

The study involved several experiments in which participants were asked to do things such as remember org charts and memorize connections among people. They were also asked to comment on how well they thought fictitious companies were doing on the basis of these materials.

Some of the charts reflected little or no hierarchy, and others revealed a more stratified structure. The participants studied the charts for 30 minutes, then answered questions. Get this: Those who had studied a more hierarchical company found the task easier and expressed a more favorable view of the firm.

It turns out, people like hierarchies because of the clarity they provide: They're easier to memorize and more predictable. The charts that reflected more egalitarian structures confused the participants. "Some even complained that these relationships did not make sense," the researchers wrote in their paper, which was recently published in the Journal of Personality and Social Psychology.

In a hierarchy, it quickly becomes apparent who gets access to whom, which positions are coveted because they come with better pay and status, and so forth. Take away all the levels, and things get more interesting, albeit more confusing. As Tiedens puts it, equality "can be messy, and hierarchy is conceptually cleaner."

That's not to say hierarchy is always better than equality in the workplace. In fact, plenty of companies use an egalitarian structure to foster unique environments in which workers are more free to innovate.

A Prime Example

Valve Software--the Bellevue, Washington, company behind blockbuster video games such as Half-Life, Counter-Strike, and Portal--received a lot of attention after somebody posted its employee handbook online. Like lots of other tech companies, its 300 employees enjoy awesome perks such as free food and massages, but its organizational structure is unique: There are no managers or bosses whatsoever.

Valve CEO Gabe Newell told Bloomberg Businessweek:

"When we started Valve [in 1996], we thought about what the company needed to be good at. We realized that here, our job was to create things that hadn't existed before. Managers are good at institutionalizing procedures, but in our line of work, that's not always good. Sometimes the skills in one generation of product are irrelevant to the skills in another generation. Our industry is in such technological, design, and artistic flux that we need somebody who can recognize that. It's pretty rare for someone to be in a lead role on two consecutive projects."

Valve's unique structure--in which Newell isn't directly in charge of anyone, and all employees can greenlight ideas and make hiring decisions--has paid off. Not only are its immensely popular first-person shooter games digitally distributed to 35 million members via its Steam network, but the company's culture of experimentation has birthed innovative projects such as a $70,000 wearable prototype (think: Terminator vision) that a person can use to look around a room and see information overlaid on objects.

According to VentureBeat, when Newell spoke at a gaming conference in Seattle last month, he said his organization works because he recruits the most expensive people and helps them to be as productive as possible. "A lot of times I make people better by getting stupid, distracting, bureaucratic stuff off their desk," he said. "That's an incredibly easy way to make a senior person more productive."

Other tactics that work for Valve, he said, include outfitting employees with desks on wheels so they can literally move around to the projects they most want to work on, as well as giving new hires quirky assignments such as updating the employee handbook or giving Newell himself a task to do. 

"It usually takes about six months for new people to really internalize the way the company works," he said.

How to Strike a Balance

Although the success of Valve's structure might seem to smack against the findings from Tiedens's and Zitek's study, it's clear Newell has been intentional about what he's doing. For one thing, when he asks every new employee to update the company handbook, it's a way of getting him or her familiar with the company's expectations--that, in itself, probably dispels a lot of the uncertainty Tiedens says can come from a loose or flat organizational structure.

"People often think equality is a natural state that doesn't have to be managed, but it does," Tiedens says. "It's harder for people to understand and learn an egalitarian structure. So you need more clarity in other structural variables, like really clear job titles, for instance." Spelling out relationships among staff is another way to help employees understand how an organization works.

So, should you throw away the org chart? Not unless you're ready to give your employees the kind of clarity they will need to thrive in a managerless organization.

Last updated: Aug 16, 2012




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