Why Managers Matter

Does a company function better with bosses or without them? The answer may not be as straightforward as it seems.

1. Hierarchy Exists to Solve Complexity

Hierarchy is born out of necessity in complex organizations. It’s designed to streamline communication, manage relationships, and align everyone’s goals. Without it, chaos and inefficiency can take hold. The power and responsibilities within a hierarchy are defined so that people understand whom to turn to for decisions and how collaboration can operate smoothly.

Hierarchy establishes clear policies and procedures. These frameworks ensure conflicts are resolved efficiently and operations run predictably. It serves as the backbone for delegating tasks and maintaining alignment across many teams, especially as companies grow in size and ambition.

Although hierarchy is often seen negatively, it wasn’t created to limit individual freedom. Instead, it’s a tool to help teams coordinate and succeed. Critics of hierarchy often focus on instances of misuse—rigid structures or micromanagement—that don’t reflect its intended purpose.

Examples

• A large corporation using an organizational chart to facilitate decisions quickly.
• Hospitals leveraging chain-of-command structures in emergencies to save lives.
• Military hierarchies creating order and clarity during critical missions.

2. The Alluring Vision of Bossless Companies

A leaderless, flat company is a tempting concept for many. It promises an egalitarian workplace where everyone has an equal say, autonomy is respected, and collaboration thrives. In this structure, decisions are often made through consensus, removing the bottlenecks that come with multi-layered management.

Proponents argue that flat structures eliminate bureaucracy and enable faster innovation. Employees take on decision-making power, feeling a greater sense of ownership and motivation. Advocates suggest this approach creates a workplace full of creative energy and less resentment toward traditional "bosses."

However, the promise of equality often proves illusive. Complete flatness rarely works in practice because humans instinctively form informal groups and hierarchies. These hidden leaders surface to fill the void left by formal management.

Examples

• Valve Corporation claims to operate without managers but has informal power dynamics resembling "popular kids" deciding the company's direction.
• Crowdsourced models like Wikipedia appear flat but rely on early adopters who establish long-term norms and standards.
• Companies attempting decentralization often revert due to issues like unclear accountability.

3. Misused Hierarchy Causes Frustration

Hierarchy itself is not the problem—it’s how it’s implemented. When used poorly, it can stifle creativity, lower morale, and create inefficiencies. Workers in rigid hierarchies often feel powerless and uninspired, reduced to following scripts without exercising their own skills or judgment.

Micromanagement amplifies these issues. When higher-ups make every minor decision and scrutinize workers' every move, employees lose confidence and become disengaged. Over time, this limits productivity and innovation as resentment builds.

Organizations with too many layers of management can also suffer communication breakdowns. Slow decision-making and diluted accountability can hinder progress, making workers long for more autonomy and streamlined workflows.

Examples

• Overly detailed procedures at a bureaucratic agency that prevent workers from adapting to changing conditions.
• A micromanaging boss rewriting every report, demoralizing their team.
• Large companies with excessive middle management facing delays in implementing urgent strategies.

4. Flat Structures Aren’t as Pure as They Seem

Few, if any, companies sustain a truly bossless model. When middle management is removed, upper executives step closer to daily operations. Ironically, this can result in more micromanagement, not less. Executives may unintentionally overstep, impacting employees' independence.

Even companies celebrated as examples of flat structures often hide informal hierarchies. Whether in the form of social cliques or unspoken seniority, decision-making power doesn’t disappear; it just moves into the shadows. Flat organizations can also face challenges when they grow, as more people make consensus-driven decisions harder to reach.

Ultimately, flat structures might work well for smaller or minimally complex organizations, but scaling up demands at least some hierarchy to succeed.

Examples

• Studies showing that delayering often leads companies to increase executive involvement.
• Startups functioning flatly at first but introducing management as they expand.
• Hidden influencers at companies like Valve informal power despite no official titles.

5. The Balance Between Hierarchical and Flat Models

Neither hierarchy nor flatness is the perfect solution for every scenario. Each company needs to evaluate what works best based on its goals, team size, and type of work performed. The answer lies somewhere between the two extremes.

Hierarchy provides structure, while flatness fosters creativity and autonomy. A well-balanced organization draws from both, ensuring efficiency without losing flexibility. Leaders play a role, not as controllers, but as supportive guides empowering their teams.

Striking the right balance is often a matter of trial and error. Companies must regularly adapt their approach as they grow or face new challenges.

Examples

• Apple’s revival under Steve Jobs, whose decisive leadership pulled the company out of a slump.
• Morning Star’s near-bossless tomato packing operations working effectively due to contract-based coordination.
• Wikipedia blending decentralized crowdsourcing with structured processes and rules.

6. Hierarchy Allows for Delegation and Coordination

Division of labor becomes simpler in hierarchies because managers delegate responsibilities clearly. This is especially critical in organizations juggling multiple projects across several teams. Hierarchy clarifies accountability and ensures resources are allocated properly.

Delegation also helps keep managers focused on larger strategic tasks. Without hierarchical roles, certain strategic functions might be neglected or inefficiently handled by employees juggling too many hats.

For an organization with interdependent teams, a few decision-makers can help resolve disputes and ensure no duplication of effort takes place.

Examples

• Multi-team collaborations at tech companies relying on managers to balance project timelines.
• Public transportation departments assigning clear supervisory roles to avoid chaotic workflows.
• Larger educational institutions depending on administration roles for smooth operations.

7. Flat Approaches Thrive With Simpler Goals

Bossless models succeed when organizational goals are straightforward and the work itself is less interdependent. By cutting layers of management, employees can freely experiment and share ideas. This model fosters innovation and energy in smaller teams.

Flat organizations can also save money initially by reducing payroll expenses on managers and administrative personnel. This lean approach can be effective in startup phases, where operations are simpler and fast pivots are essential.

However, as complexity rises, flat organizations hit practical limits. They often struggle to scale without establishing some management roles.

Examples

• Startups using flat teams when small but later adding structure as they expand.
• Research labs encouraging collaboration among scientists without supervisors.
• Artistic collectives functioning well with informal agreements.

8. Decision-Making Is Critical in Design

The efficiency of any structure depends on who is making the decisions. Companies must determine which decisions require centralized authority and which can be decentralized. Balancing this creates smoother workflows and prevents bottlenecks.

Decision-making roles can change over time. Many companies use flat approaches for everyday matters but maintain hierarchical decision-making for major strategic choices.

The right balance keeps employees empowered while maintaining direction. No matter the structure, clarity around decisions is vital.

Examples

• Morning Star employees defining tasks clearly in their internal contracts.
• Wikipedia’s decentralized editing with hierarchical enforcement of site guidelines.
• Military combining centralized orders with decentralized action in field operations.

9. Organizational Structure Should Be Fluid

No company should see its current structure as permanent. Both hierarchy and flatness have strengths and weaknesses that show differently as companies evolve. Adapting to challenges and reevaluating structure ensures long-term success.

Some organizations experiment with hybrid approaches, adding or removing management layers as situations demand. This agility prevents stagnation and fosters growth.

The companies that do best are those unafraid to adjust, combining structure and flexibility in new ways.

Examples

• Tech firms establishing temporary roles for urgent projects.
• Seasonal businesses like Morning Star adapting with seasonal workers without rigid hierarchies.
• Apple balancing structured leadership with freedom for innovation teams.

Takeaways

1. Start by assessing your company's needs and set decision-making roles accordingly.
2. If trying a flat structure, create clear frameworks that ensure accountability.
3. Regularly review your structure's effectiveness and adjust as goals or teams evolve.