Hierarchy is Killing Your Business

Most organizations still have a hierarchical, command-and-control organizational structure, sometimes called “smoke stacks” or “silos.”  A hierarchical organization has more defined roles, procedures, and lines of communication. Typically, there is a chain of command which needs to be followed. The functional specialists in charge of each smoke stack tend to focus on optimizing their own functional area, often to the detriment of the organization as a whole. In addition, the hierarchy gives these managers a monopoly on the authority to act on matters related to their functional specialty.  The combined effect is both a desire to resist change and the authority to resist change, which often creates insurmountable roadblocks to Lean improvement projects.

A hierarchical organization can be compared to a totem pole. The least important employees, generally those who earn the least with little responsibility and little input into company decision making, are at the bottom of the pole. The top of the pole includes the owner of the business, CEO, or other major players in the decision making process of the company. In between the low men on the totem pole and the top men is everyone else in order from the least responsible to the most responsible. Each step upwards on the totem pole generally offers higher pay and more responsibility.

Too many levels of hierarchy have disadvantages:

1. Too Rigid. Organizations need to be able to adapt quickly to changing market conditions. Put simply, a hierarchy can’t handle speed well. Rules and procedures that inevitably accompany hierarchies almost never change fast even if they are now irrelevant, overly burdensome, and the like. Hierarchies can’t jump to the left or the right easily, and over time it’s easy to keep adding levels and rules, to keep making silo walls thicker.
2. Stifle Innovation. In a hierarchy, there’s a process for everything, and usually these processes are followed to the letter. Innovative organizations, however, are always questioning the status quo. They ask: “How can we do this better?” which often results in a sudden change in direction. Hierarchies simply aren’t built this way. If action is going to be taken, it has to be built into the plan a year ahead of time.
3. Poor Communication. People in hierarchical structures tend to want to approve communications as they pass up and down the hierarchy. This can cause delays and confusion. A manager may not get to an email for several days and may then offer an opinion or place a restriction that kills the communication altogether. The sheer amount of time a directive can take to reach employees from the head office can cause costly delays.
4. Slow Decision Making. Decision-making is usually slower in hierarchical structures because responsibility and authority are concentrated in a few people at the top. The hierarchical system places limits on the responsibility and authority of individual employees, which reduces an organization's ability to adapt to dynamic business conditions. Although a command-and-control hierarchical system might work well in a crisis, it is of limited help after the crisis is over.
5. Little Empowerment. In a rigid hierarchy, the people who deal directly with customer problems may have the least authority to solve them. The higher on the rung the manager is, the more distance she may have from the customer. The rules of a hierarchy require that higher-ups approve decisions, and this can mean that people in the field or at the front counter may not be able to move quickly to respond to customer needs.

The more layers and levels of management, team leaders division heads, etc., that you have in your company, the more challenging it becomes for information to travel throughout the organization, and the more people are likely to become territorial. By keeping the layers of information to minimal we can empower people to provide solutions and to be directly attached to all of our company goals.

Every employee should be empowered to act independently in the best interests of the company and our customers. Teams should be trusted to work together to find the best possible solutions to problems – and to put them straight into action.