Bob Sutton writing on LinkedIn (a source I rarely quote):

Organizations that are celebrated for their lack of hierarchy may downplay and reduce status differences, but they always have some people with greater formal and informal power than others – and associated pecking orders. And eliminating titles such as “manager” or “supervisor” doesn’t make the hierarchy disappear. For example, there has been a lot of talk lately about Zappos’ ongoing reorganization into something they call a “holacracy.” Some headlines suggest that the company is getting rid of bosses – that isn’t quite right. While more power is being pushed down the hierarchy, it persists under the new structure. More responsibility is being placed as people are moved into “circles” (which sound much like self-managing teams). Yet even though they have stopped using the word “manager” for many roles, there are still be people who perform what sound like middle management roles to me: They are responsible for staffing teams and dealing with employee performance issues. And, while Zappos is getting rid of a lot of titles, note that Tony Hsieh is still called the CEO.

Great point. I think one of the misunderstandings of “flat” structures is the idea that there is no hierarchy. As Bob points out, there is always hierarchy, whether formal or informal.

A friend of mine who worked at a company with no hierarchy (and open allocation) commented that the problem with “no hierarchy allowed at all”, is that a hierarchy still forms, around who’s loudest and most pushy about their ideas. The huge problem with that is that this hierarchy is static – because it’s not even official, and it’s based around intrinsic properties of its people, it can’t be changed.

The problem with hierarchy is not with the mere existence of hierarchy, but with that hierarchy remaining static. A good organisational structure recognises that there is always a hierarchy, formal or informal, but more importantly recognises that this hierarchy will have to change at some point, and that it should never become a barrier to company adaptation to new external circumstances.

At GrantTree, we have only two levels of formal hierarchy: directors and everyone else. However, there are plenty of informal hierarchies that form and break down depending on the work that’s being done, and as the company expands its product offerings, we are geared up towards letting the informal hierarchies change and reshape around new commercial realities.

Why do we have directors at all? Because by default purely democratic organisations tend to resist change. Directors are there to be agents of change, explicitly tasked with making positive change happen within the company before it’s a burning need – not because they’re there to give orders to their subordinates (a word we would never use within GrantTree).