Time to look beyond hierarchies

Some years ago, I decided (against the conventional wisdom of that time) to ask a young MBA graduate we had hired from a top B school to mentor me as only a ‘digital native’ could. I was part of an organization with the usual hierarchies, where decisions typically flowed from top to bottom. That decision and the consequent experience over the years have taught me the valuable insight of how value can be found ‘anywhere on the pyramid’.

When it comes to organizational structures and hierarchies, one will find proponents of both the traditional structures as well as the flatter structures, largely prevalent in startups. It is believed that flatter structures allow for creativity to thrive, foster collaboration, and make teams more adaptable. Traditional structures are often viewed as bureaucratic, which hinder collaboration and are largely resistant to change. Proponents of the traditional top-down structures will obviously differ from the above line of reasoning quoting how traditional hierarchy brings in the necessary accountability. In my own opinion, the choice will vary from one organization to another. It, however, needs to be a conscious decision (and almost always a ‘work in progress’) which must depend upon only one thing – the customer! 

What customer wants and how best and fast can an organization fulfill that need should be the real challenge for all organization design specialists. There is now an increased focus on agility and customer service.  ‘Are my best people serving my best customers?’ should be the question organizations need to keep revisiting. The answer to this should automatically determine the levels or hierarchies an organization needs. Problem arises when it’s the other way round. Some organizations in the past have tried to do away with ‘managers’ and ‘supervisors’, in hope that this structural change will drive the necessary culture change and make them more agile, only to return to their earlier structures once chaos ensued. If you really understand your customer, the structure may not matter at all. If your customer wants a resolution the very first time they call you, the trick lies in empowering your people at all levels to do what is best for the customer, and not in reducing the levels.

Are my best people serving my best customers?' should be the question organizations need to keep revisiting. The answer to this should automatically determine the levels or hierarchies an organization needs

When I walk into a Starbucks and don’t like the coffee, the person behind the counter will immediately offer me a new one. They will not need to consult a supervisor before offering a customer free replacement nor will have keep track of how many replacements or fill forms as to why the coffee had to be replaced. Now understand that Starbucks also has someone in the store who manages it. There is a hierarchy, but it does not come in the way to empowerment. 

Proponents of flatter structures also point out how the workforce is changing. Gen Zs are all set to enter the workplace, further complicating the generational dynamics within organizations. They Zs are innovative, enterprising and have at their disposal, a vast sea of information and data. They are self-starters and like to create new things. They prefer autonomy and opportunities to do things differently. Organizations need to be ready for this new generation of employees. 

Here again, there is a school of thought which suggests that to make the best of this talent, they need to be left ‘unhindered’ and without supervision. While I believe that the current generation of workers is more independent than ever, even they need supervisors and mentors to help them make the most of their abilities. Their ideas and network can help bring an ‘outside-in’ perspective, which will be highly valued in an increasingly uncertain business environment, but needs the right direction. ‘Hierarchy’ in the present scenario, therefore, needs to manifest differently. It has to be based on ‘what you know’/ ‘what skills you have’ rather than by virtue of your level.

I don’t believe that hierarchies inherently are a problem. It is how they are used, understood (rather misunderstood) and applied that often creates problems. It is often observed that even new-age organizations, as they grow bigger, tend to become more hierarchical as they allow for better control. Hierarchies and bureaucracy are twins and if one is around other can’t be far behind. Challenge is how to delink the two and ensure one does not feed the other. Any layer that is present must add value. Supervisors need to provide their teams ‘space’ to lead and we at Aviva do that by giving young people bigger jobs and empowering them to make decisions; clearing the way for people to do their jobs by removing roadblocks and outlining clear outcomes; and encouraging challenge and competition within teams irrespective of levels.

There is no right or wrong answer to what are the optimum levels of hierarchies for an organization to have in order to succeed. What’s clear is that hierarchies will exist in some or the other manner and no matter how many times you break them, they will build back. In such a scenario, organizations must ensure agility, empowerment, respect for best ideas, quick decision making (while providing opportunities to fail) and acceptance to challenge and being challenged to succeed.