The most common definition of Hierarchy is a system or organization in which people or groups are ranked one above the other according to status or authority. But, for some people (especially people discussing systems) Hierarchy is an organization of system elements into groups of (sub-)system wholes, based on relative strength of element cohesion. The first definition is the most common one; I don’t think that someone can argue with this.
99.9% of the organizations are running base on the first definition of Hierarchy. For those organizations the following non-constructive behaviors are the daily reality:
Too much politics and Rivalry
Bad Communications due to Silos
Lack of ownership
Dependency on Strong Leaders
Lack of collaboration
Lack of innovation
Short term planning
Have you ever thought what the root cause of the above behavior is? When people are ranked one above the other according to status or authority, what matters is your location in the hierarchy ladder. If you want to advance yourself, you are in continuous competition with your peers. Competition Increase the above behavior as climbing the ladder is associated with proving that you are better than anyone else. Being better is usually associated with fewer errors and mistakes. It is not that error and mistakes are not happening in the hierarchical organization, they are kept within the group or just ignored. Enforcing individualism instead of team effort generate modus of operation that also put in jeopardy the future of organizations as companies need to deal with a complex business environment that requires different modes of operation.
As we all know not all the members of organizations are after power and authority, but those who are thriving in this system and force/encourage others to help them move up the ladder. This dynamic is responsible for some behaviors that I mentioned above such as lake of ownership and innovation.
If the hierarchical structure is the root cause of what we see in organization daily life (which impact surviving rate of organizations), Is there any other type of organizational structure that is a better fit for today’s world?
Most of the people seek the solution in the flat organization structure. A flat organization (also known as a horizontal organization) is an organizational structure with few or no levels of middle management between staff and executives. An organization’s structure refers to the nature of the distribution of the units and positions within it, also to the nature of the relationships among those units and positions. Flat organizations increase the complexity of an organization significantly as it required each member of an organization to interact with all other members. As organizations grow more and more, flat organization start to be a limitation to their growth and success. On the other hand, flat organizations provide a remedy to most of the problematic behavior associates with hierarchical organizations.
On top of the hierarchical and flat organizations, there is another alternative, decentralized organization created from independent groups. In this system, there isn’t any hierarchy as defined in our first definition. The organization is a set of functions (roles) needed to reach its purpose. Each function or entity has clear boundaries by a description of what they are managing and their responsibilities. Functions are grouped into entities, that are following the second definition of hierarchy (containing). Entities (groups) and functions have autonomy; they can run themselves any way that they prefer. So, although they grouped, they are not following the classical definition of a hierarchy. This structure is highly dependent on a clear purpose of the organization and a clear goal for each entity (group) that directly derive from the company purpose.
The decentralized organization doesn’t require consensus as decision making as one person fills each function, and he eligible to make decisions impacting what he is managing. On the other hand, decentralized organizations required clear, fast and straightforward conflict resolution that enable people to raise conflicts with other people decisions without hierarchy and management in place.
The decentralized organization is not a new structure, you can see it all around you. Decenralization is govern how your brain is working, economy, ecosystems and the internet.