About four years ago, managers at the London-based consulting firm where Dani works decided to flatten the company’s traditional hierarchy. The goal was to simplify the corporate structure and make the office less bureaucratic – reduce a rush-to-the-top competitiveness that drives employees to relentlessly chase the next promotion and title.
Dani says managers thought it would improve company culture. It achieved the opposite.
“They completely collapsed the seniority rankings and titles for our consultants and just retained a few very broad bands to signal how advanced someone was in their career,” explains Dani, now 39. “A real sense of chaos ensued.”
She remembers an employee “backlash” to the changes. “Some felt like they’d been demoted,” she says. “Instead of creating a less competitive environment, it actually created a more competitive environment, because people were desperate to prove their worth.” Many of her colleagues – especially younger employees who couldn’t see a clear path to seniority – quit.
Other colleagues, says Dani, lost motivation to perform their jobs well because they couldn’t see how they would be rewarded in a meaningful way. “Many seemed to be saying, ‘if I can’t see my progress reflected in an explicit job title, then what’s the point in even trying?’”
For most workers, the default corporate structure has always been hierarchical – akin to a pyramid with a broad base made up of most of the workforce, which gradually tapers to a narrow peak of top managers and C-suite executives.
Throughout the past several years, however, some organisations have experimented with flatter arrangements – fewer levels of seniority, and therefore fewer lines of reporting from the most junior employee to the most senior. These approaches are based around a less rigid hierarchy, with elements of self-management and autonomous departments and teams.
In some cases, employees have pushed hard for these changes, hopeful that a flatter organisation will equate to more responsibility, autonomy and control over how they structure their workdays and careers more broadly. The pandemic has had no small effect on these efforts, as workers have challenged traditional workplace norms, small and large. Many employees have also been eager to explore a way of working that departs from the command-and-control arrangement that many feel is antiquated and leaves workers feeling stressed out and disengaged.
But in cases in which this organisational change has been implemented, the results have been mixed. For some companies, moves to zap the traditional corporate ladder have backfired entirely. Now, management experts, along with employees, say flattening an organisational structure might have unintended consequences that actually worsen workplace culture, especially if the restructuring isn’t done in a smart and gradual way.
In other words, the corporate ladder some workers have been pushing back on may not be such a bad thing after all.
A recipe for chaos?
While not a silver bullet to solving organisational competition, there is some academic evidence that flatter organisational structures can help businesses succeed, while also creating a healthier work-life balance for employees.
One research paper from 2017, based on a study of more than 300 executives from around the world, for example, showed that companies with more organisational layers weren’t as nimble in targeting customers with new products and services. This can affect worker morale, and studies show removing those layers can increase employee satisfaction. Indeed, management scholars have generally found that autonomy is a major motivator for employees, and flatter structures are often implemented to grant individuals more independence.
Yet despite benefits like these, in some cases, the change may cause as much harm as good, say experts – including throwing companies into the kind of chaos Dani witnessed.
“While most of us associate hierarchies with control and bureaucracy with ‘red tape’, they also offer stability, consistency and predictability,” says Michael Smets, a professor of management at Saïd Business School at the University of Oxford. “Job descriptions and titles confer rights, obligations and authority. Importantly, they do so irrespective of the person who holds that position.”
When the traditionally hierarchical corporate ladder is dismantled, the process of change itself can make workers feel lost, irrelevant or frustrated (Credit: Getty Images)
In the worst cases, he adds, removing hierarchies may “give rise to an alternative – more clandestine – power structure, in which those with the right connections may accumulate informal influence”. This may be especially exclusionary to some employees, due to the psychological phenomenon of in-group bias – the tendency for people to give preferential treatment to others who belong to the same group.
“These connections are likely stronger among people who are alike and who like each other, which in turn makes it even harder for outsiders to break into the inner circle,” says Smets. “Ironically, the removal of hierarchies and clear organisational structures may therefore actually reproduce and reinforce existing inequities rather than create a more diverse and equitable workplace.”
‘It can be very disconcerting’
Subsequently, many of these changes can be deeply jarring for employees.
When the traditionally hierarchical corporate ladder is dismantled, the process of change itself can be disconcerting, and make workers feel lost, irrelevant or frustrated. This may especially be the case if companies change too quickly, says Todd Jick, a professor at Columbia Business School in New York City, who specialises in leadership and organisational change.
And even if workers might theoretically push back on corporate hierarchy, they may find themselves at odds with their own inherent preferences and motivations.
“Our instinct to look to authority for direction is deeply ingrained in us, it’s something that we’re socialised into doing at a very young age. We like it and we expect people above us to make decisions on our part,” says Jick. “So, if the structures are removed that enable that, it can be very disconcerting.”
Employees may also find themselves unnerved without a clear incentive structure to feel engaged and fairly rewarded.
Anna Tavis, clinical professor and academic director of the human capital management department at New York University’s School of Professional Studies, says humans tend to measure success in terms of money and promotions: in short, job titles. If the structures of the organisation are upended, employees can feel like they lack orientation.
“People need a way to signal to the world that they’re growing,” says Tavis.
Patience required
Ultimately, Dani’s employer in London reversed some of the most dramatic changes it had made: she says the executives were able to see the impact that those changes were having on employees and contributing to workers attrition. The company re-introduced some job titles to denote different seniority levels, which became clear benchmarks for progress again. The confusion subsided, she says, and she noticed a rise in employee morale.
Even if the new structure doesn’t work out, Columbia’s Jick says this sort of strategy U-turn may actually be a hallmark of organisational progress. The fact that a company is willing to try something new may signal the willingness to make “workplaces [that] can actually work for workers”, he says.
And while workers may well be tired of the traditional corporate ladder and eager to try something new, they perhaps should not outright dismiss what’s been in place for so long. After all, say experts, there’s plenty of upside to hierarchy, even if it’s uncomfortable some of the time.
Progress and change may come – whether it looks like a flatter company structure or something else – but patience may be required until workers get there.