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Do We Still Need a Hierarchy?

 

“Those pronounced dead live longer” is a well-known saying which should perhaps also be applied to traditional organisational forms. Despite all the discussions on concepts such as holacracy and sociocracy as alternative organisational forms, traditional structures are many companies appear to function in unchanged form. Nevertheless, the recurring attempt to find alternatives to the “old hierarchy” can be found as a constant trend in the organisation development. Why is this indeed the case? Thomas Schumacher and Rudolf Wimmer have given reasons for this in the Organisation Development journal through the following three developments which I completely and totally support.

 

Firstly, the digital transformation forces all organisations – to an extent never previously seen in the past – to rethink their internal processes and structures. New cooperation forms must be used in order to exploit speed and innovativeness for one’s own competitive advantage. Almost no business segment is immune to this, it is only a question of time regarding when companies and institutions will begin to transform themselves. For some time, I have been cooperating with a group of companies in the healthcare sector which has recognised that it must consistently embark on its journey into the digital world. In this regard, the digitalisation is clearly regarded by the management team as being, on the one hand, indeed a threat, but, on the other hand, also as an opportunity – it always depends on what we make of it. If we now do nothing, then the digitalisation will be a threat for every company.

 

Secondly, the theme of agility as a central theme triggers a profound restructuring of the organisational models. The volatility in the business environment makes a rapid response to changed customer behaviour necessary; this ability to be agile will evolve to become an ability to safeguard the survival of companies.  Management practices in today’s expert organisations are simply overmatched by the challenge of cooperations which are becoming more and more interdisciplinary. In many discussions on agility, I thus experience that people are searching for methods and tools. However, agility is a changing values system which will enable us to offer the correct responses to changing environmental conditions; tools are only the means to an end, but we must first learn to understand the end in order to find the right tool.

 

Thirdly, companies must focus on the dawn of a completely new generation – the millennials – and the personal sense of fulfilment craved by the employees. This requires new cooperation models which enable more highly self-determining work forms. Many – certainly not all – young people then regard their work as fulfilling if they work in a self-determining manner and their abilities and their capabilities can continue to be developed upon an on-going basis. If companies do not meet these challenges, then they will soon have no more employees in the labour market. Because, at present, the generation of baby-boomers is increasingly entering into retirement and thus proportionally fewer people are entering the labour market, this entails the often-cited “war of talent”. Thus, we have no choice, but to address the needs of the new generation. We need solutions in order to be able to make employees excited about our companies in the future as well.

 

The consequence of these developments is moving in the direction of less hierarchy and more self-organisation with an emphasis on team-based forms of work organisations that rely on lateral cooperation forms. Schumacher and Wimmer have noted in this regard that many organisational solutions currently being discussed have, as before, an experimental character which reminds one to be cautious during their critical assessment. However, less hierarchy also does not mean no hierarchy at all. And, from my perspective, it is much more essential, instead of asking the existential question, to instead ask the functional question, “What do we still need from the hierarchy?” before we send it into retirement.

 

The management through the hierarchy and self-organisation are in this regard oftentimes regarded as being “opposing forces” whereby management is to be avoided and replaced through self-organisation. But also the self-organisation must, within the context of an organisation, accept that management is embodied by authority figures. During the initial phase of a company, they are classically the founders, but even if the company continues to be developed and these persons leave the company’s system, then their management function must be assumed by other persons. Thus, we should learn to understand obvious “opposing forces” as a single entity (analogously to Yin and Yang for forces or principles which are polar opposites and nonetheless intertwined). 

 

Particularly in times of transformations, various logics of organisational design must be able to co-exist. Thus, modern, successful organizations will develop the abilities to allow low-hierarchical organizational forms to co-exist within traditionally-structured organizational approaches. Thus, we still need the hierarchy, but perhaps no longer in this form to which we have long been accustomed.


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