There is a law of geometry involved. As pyramids grow larger—develop a wider base—they must grow taller. Hence, in the 20th century, we saw towering organizations develop with many layers of management. Ford Motors, Bank of America, Sierra Club, Blue Cross, and the State of California all were giants and models of organized, human effort.

In the mid 1980s, cracks appeared in the pyramids and entrepreneurship was the new, best thing. One of the rules for making organizations more innovative, more entrepreneurial, was to make them flatter. Flatter enterprises have fewer bosses per staff member, so there is less day-to-day supervision of individuals. The thesis was that less supervision would unleash a lot of potential creativity in the organization and generate more innovation and original thinking.

What is the verdict twenty years later? Hal Leavitt is an Emeritus Professor at the Stanford Graduate School of Business. Hal has written a new book in which he looks insightfully at organization hierarchies. His thoughts, in the article that follows, apply to both for-profits and nonprofits alike, regardless of size.
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Management by Harold J. Leavitt

THE NECESSARY EVIL OF HIERARCHIES

In achievement-oriented democracies, people complain about the inefficiency of top-down-managed organizations, but ultimately they can’t live without them.

A veteran executive once told one of my Stanford MBA classes, “All organizations are prisons. It’s just that the food is better in some than in others.” The students didn’t want to think they were preparing for a career in the slammer.

They are not alone. A great many scholars, educators, consultants, and executives simply don’t like what multilevel, pyramid-shaped structures do to people and to productivity. The hierarchies of large organizations breed infantilizing dependency, distrust, conflict, toadying, territoriality, distorted communication, and other human ailments. So, optimists that we are, we keep dancing on hierarchies’ unoccupied graves. In the near future, we’ve been telling each other for decades, democratic networks will replace those terrible top-down structures.

Why then, even in our high-tech information age, do we keep adding new hierarchies? And why do so many of us autonomous human beings spend so much of our lives incarcerated in those dehumanizing detention centers? There are many pragmatic answers to that question, answers involving the economics of productivity and efficiency, but this short piece is limited to psychological, even existential answers.

We can begin with one too easy answer: Let’s blame hierarchies on bad guys! Hierarchies are nothing more than the “immortality projects” of power-hungry organizational emperors.

In these days of self-serving CEOs, that old jeremiad may contain a modicum of merit. But it’s not a very solid argument. Absent rapacious CEOs, would corporate hierarchies just skulk away? Not likely. True that too many leaders have exploited their hierarchies for selfish ends. Notice, however, that one can make a strong case for the reverse argument. Instead of blaming hierarchies on bad guys, let’s blame bad guys on hierarchies. Power does indeed tend to corrupt. And once ensconced on pinnacles of large hierarchies, few top executives are eager to climb down.

But bad guys are far from the heart of the matter. Many good guys at the top have managed to maintain their integrity despite hierarchies’ corrupting influence. So here, then, are several perhaps more realistic psychological reasons:

First and most obvious: We tolerate hierarchies because they help us feed our families. In 2002, according to a Conference Board survey, roughly half of American employees didn’t like their jobs, and the percentage was rising, not falling. We may protest, organize unions, pass laws, and try many other ways to hold organizational hierarchies at bay, but we don’t really want to kill them. We need our paychecks.

A second reason for hierarchies’ persistence: We are their willing coconspirators. We gripe about hierarchies, yet we struggle to be accepted by them. Most of us try, quite actively, to get ourselves into the university or hired at Starbucks or Citibank. We may move from one hierarchy to another, but few of us choose to opt out of the whole system.

Still another reason: Hierarchies provide a clearly demarcated route toward status and wealth. When we finish school—that’s one hierarchy—most of us look for a job in another. In hierarchies, clerks can climb to department heads, corporals to sergeants, and parish priests can ascend to bishoprics. Hierarchies, that is to say, are major arenas in which we can play out our achievement needs.

Not all societies weave achievement stories into their cultural fabric, but in modern-day democracies most of us are taught to want to climb. Hierarchies provide brightly illuminated ladders that are quite consistent with our meritocratic parable: “Work hard, young person, and no matter your origin or pedigree, you too can reach the top.” That story remains largely true. Hard and good work really does help us climb ladders to success. But hierarchies are also consistent with a more worrisome corollary, the notion that success deserves to be one’s primary life goal. Yet few of us, even today, dispute the basic righteousness of that whole achievement orientation.

Our job in a hierarchical organization provides something more vital than the chance to climb. Like our families, communities, and religions, our jobs give us identity, a flag to fly. One need only scan the newspaper obituaries to see how much we are defined by our positions in hierarchies. Those positions tell the world--and ourselves—that we are somebody, not nobody.

Here’s a snap quiz: Write down—quickly, off the top of your head—three short answers to this question: WHO ARE YOU?

Do any of your answers have to do with your place in a hierarchical organization?

Think of how it feels to be pushed out of your position in your hierarchy, to be demoted, or to be out of a job for months. Loss of income is only part of the problem—and often a small part. Self-esteem is involved. In our individualistic, go-get-‘em culture, joblessness has become almost sinful. Executives who have been involuntarily released must put together bravely defensive cover stories as they hunt for new jobs. Only the very young and the very old are permitted the luxury of respectable joblessness. And for the very old, it is still important to make sure the world knows you have been a divisional executive at BP or a manager at Starbucks or a professor at Stanford.

For many of us--perhaps especially for Americans—our jobs have become even more than an indicator of who we are. They have become the central foci of our lives. In 2000, according to the International Labour Organization, we Americans worked approximately 350 hours more per year than Europeans. That’s nearly nine more 40-hour weeks.

Jobs in hierarchical organizations also give us a spurious—yet welcome—illusion of security, the illusion that they will shelter us from the uncontrollable turbulence of our surroundings. Snuggled into Mother Hierarchy’s ample bosom, our personhood is affirmed and our existential angst allayed. At least that was the way it felt for many of us, until—as on 9/11/01—the indestructible is destroyed or Enron implodes and Andersen falls apart. Then reality sets in, and with it the realization that we may have taken too many good things for granted.

Hierarchies also add structure to our lives. They provide routines and regularities. We need such things. A friend of mine, after he retired, took to keeping goats. “Why goats?” I asked. “I keep goats,” he replied, “because goats have to be milked regularly. They give me a reason to wake up every morning.” Without his goats he might have found himself—like many retirees—afloat in a sea of anomie.

Here’s a more controversial suggestion about why we support the hierarchies that so many of us profess to hate: Hierarchies evaluate us. They tell us how good or bad we are. Those evaluations are often invalid and even more often unjust. Nevertheless, we want to be evaluated—a bald assertion that will surely raise some hackles!

How can this guy say we want to be evaluated? I hate being evaluated. At school they marked us on a curve, so even if we all worked hard, some of us had to flunk. Now, in the company, they evaluate us in quartiles, so no matter how hard people at the lower end try, they’ll probably stay in the fourth quartile. We want to be evaluated? Baloney!

Many of us are not comfortable with the notion that some people should have the right to determine the worth of others. That decision belongs to God, not to my assistant vice president. Evaluations with the merest hint of negativity generate wails of protest from evaluators as well as evaluatees. Indeed, bitching about performance appraisals has almost become a national pastime.

Maybe that’s why human resource people seem to come up, annually, with new, guaranteed-painless appraisal techniques. This year’s 360-degree version promises—the memo says—to increase validity and remove all stress from the process. But those nostrums never quite do the job. So the howling continues.

How, then, can anyone in his own right mind assert that we want to be evaluated? Here’s an answer: People have achievement needs. On that dimension, managers—from supervisors to CEOs—are probably in the top decile of their nations’ populations. Humans are competitive, too, especially males. Twenty years of Jean Lipman-Blumen’s research on achieving styles with more than 20,000 male and female managers from around the world come up with only one consistent difference between the sexes. Men everywhere score higher on competitiveness (one of nine achieving styles) than women. But women managers score higher on competitiveness than non-managerial women. Managers, that is to say, are competitors, and competitors’ egos want report cards. The one thing that would probably generate even more fury than existing evaluation procedures would be no evaluation procedures at all.

Hierarchies, however, have no choice but to evaluate. A pyramid narrows as one approaches its top. That design requires organizations to select and cull and to justify their decisions about how to distribute pay, promotions, and other rewards. So they take their questionable measurements seriously. That’s the fair way, isn’t it? Better than promoting you because you’re the boss’s daughter-in-law! And though we grouch and grumble, most of us buy into that evaluation game.

Those are some of the emotional factors that help keep hierarchies going. But hierarchies also survive for many cognitive reasons. In our individual lives we use them every day. Whether building model airplanes—or real ones—we tend, quite naturally, to think and work hierarchically. Indeed, hierarchies are quite (don’t laugh) efficient structures. They’re still, despite their human failings, the best method ever invented for solving large, complicated problems.

So maybe we should focus less on hierarchies’ failings, and more on how we humans can live moral and fulfilling lives inside them.

Printed with permission of Dean Joss and the quarterly, Stanford Business magazine.

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