Article: The moot point- Are hierarchies outdated in today’s digital era?


The moot point- Are hierarchies outdated in today’s digital era?

Does hierarchy combined with empowerment and flexibility create an environment where high performance and constant innovation can flourish? Read here!
The moot point- Are hierarchies outdated in today’s digital era?

Innovative technology disruptions are transforming the way businesses have been operating across the world. Organizations that are embracing such changes by reinventing themselves are the ones that are and will be able to best leverage these developments, else there is a serious threat of becoming irrelevant. The VUCA world and its impact can be seen globally and one way to help businesses navigate this challenging world is by placing the power of innovation in the hands of every employee and allowing for a nurturing space for creativity and autonomy across the board through adopting flatter set-ups and flexible work environment.

The Hierarchy Debate

Today, organizations worldwide are encouraging employees to don their creative caps at all times to ensure market shares and pole positions are retained. It is also acknowledged that innovative ideas are as likely to emerge from the bottom as they are from the middle or top. The moot point then is: are hierarchies outdated in today’s digital era? To some extent, they are. It is the hierarchical structures that once fostered the notion about inventions and that the best ideas generally emerged from the upper echelons. As the past decade or two have shown, some of the brightest ideas have emanated from the youngest minds. Thus, the case for flatter organizational structures has been increasingly growing stronger. To elaborate, flatter organizational structures lead to effective communication, more transparency and a better understanding of the linkages between business strategy and operations. This is augmented by the contributions each employee makes towards maintaining a flatter organization. Besides, the speed of decision-making can improve since the layers in an organization diminish. 

At Schneider Electric, the Span and Layer initiative has enabled us to downsize layers and hence, the hierarchy. The broad idea has been to have fewer people managers with larger spans within the organization who display a strong employee orientation in sync with the company’s people strategy. Our people priorities strongly focus on empowering team members and creating an environment that values free expression of ideas and opinions across levels. And while leaders often mentor and coach their teams, at Schneider Electric, we have created myriad opportunities and platforms for reverse mentoring. As is universally evident, Generation X is adept at working with pre-digital era technologies. But when it comes to digital technologies and social media, they are usually at sea. Conversely, the millennial staff in any organization is as adept at negotiating digital technologies and social media networks like ducks taking to the water. In such a scenario, the ‘juniors’ can mentor the ‘seniors’ in gaining a mastery of digital domains. 

A Balanced Perspective

At Schneider Electric, CXOs realize the importance of seeking regular inputs from the youth on different aspects. For instance, some of the CXOs have formed Sounding Boards comprising the young talent from different parts of the organization. The Sounding Board functions as an advisory body that joins the CXOs for conversations on strategic topics. These are mutually beneficial exchanges that provide the CXOs with fresh perspectives and allow the Sounding Board members the opportunity to build their understanding of the core topics. 

Another strategy to promote the flow of ideas and utilizing a flatter organizational structure is the concept of cross-functional project teams. This involves offering exposure and bringing people together from various functions and business units. In unison, the cross-functional team delivers on the organizational priorities, coming up with innovative solutions. To speed up such breakthroughs, project teams may not have reporting hierarchies. At Schneider Electric, we also have what we call the ‘Bold Pledge contest’, whereby each employee can contribute to the overarching purpose of the organization, irrespective of hierarchy. These are open digital forums created on Schneider Electric’s Yammer Platform, where bold ideas from employees are crowd-sourced, analyzed, and selected by the management team for implementation and deployment. 

Taking all things into account, it’s clear that hierarchies have sometimes impeded the best of ideas. Nevertheless, a note of caution needs to be sounded that hierarchies cannot be eliminated lock, stock, and barrel. While flatter organizations are the need of the hour, without certain direction, guidance and organizational systems, many employees may be unable to deliver their best performance. Consequently, some minimal form of hierarchy is essential to ensure every employee works for the company’s common purpose while adhering to the overall organizational ethos. Just the right hierarchy, combined with empowerment and flexibility creates an environment where high performance and constant innovation can flourish. 

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Topics: Leadership

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