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The utopian dream of a “flat hierarchy” is actually a nightmare

Flat hierarchies may be in fashion, but structures and chains of command were created for a reason. Someone has to be in charge

Zappos CEO Tony Hsieh

Zappos CEO Tony Hsieh speaking at the company’s “Life is Beautiful” conference in 2015. (Filmagic/Getty)

Jo Freeman spent much of the 1960s living with her activist peers on communes—including a stint as part of a women’s liberation collective in which everyone had equal say and stature. It sounds nice, in theory; but that utopian experiment left Freeman with serious doubts about the efficacy of leaderless organizations. In fact, as she wrote in an influential 1972 essay, “The Tyranny of Structurelessness,” in the absence of formal leadership, informal power dynamics emerge anyway—a shadow hierarchy dotted with people who exert control through charisma or fear but are accountable to no one.

If it seems a stretch to apply the experiences of a radical second-wave feminist to the business world, consider that a surprising number of companies—big and small—are today opting to operate as ersatz capitalist communes. Flat hierarchies are in fashion; conventional reporting structures are seen as cumbersome, square and passé.

The modern-day bible for this way of thinking is a 2014 book by Belgian organizational behaviour consultant Frederic Laloux called Reinventing Organizations, which posits that reporting structures (and, indeed, job descriptions) have no purpose in the workplace of the future. Plenty of idealistic business people read it and, in the case of Zappos CEO Tony Hsieh—who had already been experimenting with making the online shoe retailer a hierarchy-free “Holacracy”—embraced it as gospel. In a sprawling email to his entire staff last spring, Hsieh mandated employees read Reinventing Organizations, announced the company was eliminating all management positions and issued an ultimatum to either get on board with a bossless future or get out (with a generous severance).

The idea was that employees of Zappos—a place that famously offers job candidates a $2,000 buyout to not take the gig as a way of ensuring everyone really wants to be there—would be galvanized by Hsieh’s throw down. Instead, many employees became confused about who was responsible for what; as veteran staffer Rachel Murch told The New Republic, “No one knows how to get things done anymore.” People started to leave; in 2015, the company’s turnover rate was 30%. That’s high in any organization, much less one that had been a poster child for employee engagement.

Zappos isn’t the only company where a flat work structure has flopped. At tech startup GitHub, a former employee complained publicly about being harassed on the job, the subtext being that such behaviour thrived because there were no formal mechanisms through which to report it. And in March of this year, Medium, the online publishing platform co-founded by Twitter’s Ev Williams, renounced the self-managing holacracy it had been using since 2012, citing what the company’s head of operations called “a small but persistent tax on both our effectiveness and our sense of connection to one another”—the exact kind of inefficiencies hierarchy-free zones are supposed to eliminate.

The idea of slashing red tape and freeing teams to self-organize is certainly seductive, but in practice, few organizations can operate that way without devolving into chaos. Someone needs to keep things on track, make executive decisions, and hold scoundrels and slackers accountable. People just aren’t great at doing that kind of uncomfortable reckoning when no one bears explicit responsibility for it. Self-motivation doesn’t generally extend to performing such awkward tasks as calling out a co-worker for doing a crappy job.

This is no defence of hierarchy for hierarchy’s sake. Bureaucracy is a drag, and there’s a reason corporate chains of command are so often the stuff of Kafka-esque nightmares. But there are ways to foster productive, collaborative, meritocratic environments that don’t require blowing up your entire org chart: Take methods like open-book management, brainstorming scrums and pretty much the entire lean management philosophy. There aren’t too many ’60s-style communes around these days. Consider why that is—before you flatten your entire company.