Who’s the Boss?

If you’re reading this at your desk, maybe that desk is in the middle of many other desks that look the same as yours. And maybe the workspace occupied by the president of your company is indistinguishable from that occupied by a summer intern. If so, then you’re at a company that tries hard to be non-hierarchical in its workspace.

Among seven winning entries in the “Beyond Bureaucracy Challenge,” a contest put on by McKinsey, Gary Hamel’s Management Innovation eXchange (MIX) and Harvard Business Review, is one that offers suggestions on “creating a nonhierarchical workspace.” It concerns an effort by Vodafone UK to transform its headquarters into a place with “no offices and no dedicated desks,” creating “a leveling effect on the traditional hierarchy, since no executive is very far out of reach.”

We ourselves are big fans of this setup, having knocked down all the internal walls in our workspace at the Drucker Institute. Indeed, we’ve noted how such a physical arrangement can foster collaboration and creativity both across, as well as up and down, the organization. We’ve also discussed whether a “pancake” or a “pyramid” is preferable as an organizational structure.

But, at the same time, we recognize that it’s possible to push the concept too far by blindly accepting what has become a near-assumption in some business circles today—namely, that hierarchy, where preventable, must be prevented. Peter Drucker was a great skeptic of this mindset. “One hears a great deal today about ‘the end of hierarchy,’” Drucker wrote in Management Challenges for the 21st Century. “This is blatant nonsense. In any institution there has to be a final authority, that is, a ‘boss’—someone who can make the final decisions and who can expect them to be obeyed.”

And while Drucker didn’t insist that organizations strive for hierarchy, he nevertheless urged business leaders to keep in mind its merits. “A hierarchy does not, as the critics claim, make the superior more powerful,” Drucker pointed out in Management: Tasks, Responsibilities, Practices. “On the contrary, the first effect of hierarchical organization is to protect the subordinate against arbitrary authority from above. It does this by defining carefully the sphere within which the subordinate has the authority, the sphere within which the superior cannot interfere.”

It also, just as crucially, prevents people from being unclear about who they’re reporting to and for what. Without a clear hierarchy, Drucker wrote, “the subordinate is likely to find himself caught between conflicting demands, conflicting commands and conflicts of interest as well as of loyalty. ‘Better one bad master than two good ones,’ says an old peasant proverb.”

What do you think: Is hierarchy in an organization inherently bad?