Flat structures, research shows, can create more functional teams.

Staff Writer

By Dylan Walsh | Stanford Business contributor

Defined hierarchy. Commanding leadership. These corporate ligaments secure firms in the face of threats and unify them against competition. Few beliefs are more widely held in business.

The intuition, though, is wrong. “When you look at real organizations, having a clear hierarchy within your firm actually makes people turn on each other when they face an outside threat,” says Lindred Greer, a professor of organizational behavior at Stanford Graduate School of Business. Effective teamwork against threats requires not hierarchy, but egalitarianism; not centralized power, but a culture in which all voices count.

Along with Lisanne van Bunderen of the University of Amsterdam and Daan Van Knippenberg of Drexel University, the research team teased out this finding through two complementary studies. In the first study, an experiment, teams of three students developed and pitched a consultancy project to a prospective client. Some of these teams were non-hierarchical, while members of other teams arbitrarily received titles: senior consultant, consultant, junior consultant. Likewise, some teams faced no rivals, while others were told they were competing with a rival firm for clients. The researchers found that the subset of hierarchical teams facing competition with rival firms struggled with infighting while the egalitarian teams cooperated on their work.

In their second study, they investigated a Dutch health insurance company. They provided surveys to 158 existing teams within the firm. The surveys measured the degree to which teams felt egalitarian or hierarchical and how much they perceived conflict with other teams in the company. Company managers then rated team performance. Their results corroborated the experimental findings: Hierarchical teams that felt like they were competing against other teams generally underperformed, while egalitarian teams did not. (The results are forthcoming in an article for the Academy of Management Journal.)

The Benefit of a Common Fate

“The egalitarian teams were more focused on the group because they felt like ‘we’re in the same boat, we have a common fate,'” says van Bunderen. “They were able to work together, while the hierarchical team members felt a need to fend for themselves, likely at the expense of others.”

While this research targeted a specific theoretical gap in academic literature, the findings raise important questions for practitioners: Should hierarchy be avoided? If so, how can an organization arrange itself? How can leaders lead?

Greer emphasized the need to consider context when answering these questions. An organization that doesn’t face external threat — the U.S. Department of Agriculture, for instance — should function perfectly well with a bureaucratic and hierarchical structure. In a highly competitive market, though, egalitarian tendencies may support employee cooperation and, consequently, performance.

Within single organizations, too, different departments may benefit from different structures. Sales teams generally face steady competition from companies with similar services or products. Given this, promoting an egalitarian culture in sales may reduce employee friction. Engineers, meanwhile, are more insulated from the threat posed by engineers at other companies; standard hierarchies may work well in engineering departments.

Imagine There’s No Hierarchy

In some cases, hierarchy is an unavoidable part of the work. Greer is currently studying the interaction between surgeons and nurses, and surgeons lead by necessity. “If you took the surgeon out of the operating room, you would have some issues,” she says. But surgeons’ dominance in the operating room can also be problematic, creating dysfunctional power dynamics. To help solve this problem, Greer believes that the expression of hierarchy can be moderated. That is, surgeons can learn to behave in a way that’s less hierarchical.

Navy SEALS exemplify this idea. Strict hierarchy dominates out in the field: When a leader says go left, they go left. But when the team returns for debrief, “they literally leave their stripes at the door,” says Greer. The hierarchy disappears; nobody is a leader, nobody a follower. “They fluidly shift out of these hierarchical structures,” she says. “It would be great if business leaders could do this too: Shift from top-down command to a position in which everyone has a say.” Importantly, she reiterated, this kind of change is not only about keeping employees happy, but also about enhancing performance and benefiting the bottom line.

Taken together, these issues raise a fundamental question for Greer: What would it mean to wholly replace hierarchy? The small movement around Holacracy, she noted, which is designed to flatten organizations and distribute decision-making authority, has not yet demonstrated great success. “I’ve always said that if there were a Nobel Prize for management, it would go to the person who finds an organizational structure that’s not based on vertical differentiation, on hierarchy, on leadership,” she says. “Other than Holacracy there have to be ways to organize that don’t imply inequality and inequity — ways to organize that are more mutually respectful and reinforcing.”

This article was first published at Stanford Business Insights.