Why do organizational hierarchies exist?
I was discussing this question with a friend a few weeks ago – I actually read The Origin of Wealth because she said that it had a good discussion of this question. The answer in the book, which I sort of agree with, is that hierarchies are actually an efficient way to manage the information flow of larger organizations.
This is a consequence of the network effect on communications. The number of communication links necessary for everybody to know what everybody else is doing goes up exponentially with the size of the organization. An organization can’t grow beyond 100-150 people (Dunbar number-ish) without putting in some form of hierarchy or controlled communication, which is why alternative management structures like W.L. Gore split out new units whenever a unit grows beyond that size.
This communication “catastrophe” also lies behind the Mythical Man Month, where “Adding manpower to a late software project makes it later.” Adding manpower increases the size of the organization which exponentially increases the amount of communication necessary to make decisions about the project, which decreases the productivity of the people working on anything productive.
To grow an organization requires dedicating more and more people to handling communication. And that’s why middle management exists. We scorn middle managers as being useless parasites that just sit around talking all day in meetings, but their role is to make sure that information gets routed to where it needs to go in the company. Admittedly, their actions in real life are often dominated by petty backstabbing politics. But the purpose they serve is real, and larger organizations could not function without them.
Such organizations need people whose job is solely intracorporate communications. Unfortunately, many companies don’t realize this, so they give those people other roles, and nobody does the job of communication, leading to dysfunctional companies where the left hand doesn’t know what the right hand is doing. In particular, middle managers may think that their role is to direct their people and make decisions, distracting from their real purpose, which is to make sure that their team has all the information it needs from the organization, and that the needs of the team are being met by the organization.
It would be an interesting experiment to see if a larger organization could be run in a non-hierarchical fashion by explicitly designating certain people as intracorporate communication specialists, whose job was to circulate among the smaller teams of 5-20 people working on various things, and make sure that the teams knew about the relevant resources available to them and activities impacting them elsewhere in the organization. I might be biased, though, since a free floating role like that would be a good fit for me.
In case you’re wondering, we were talking about growing organizations at work and I was stunned to find myself defending middle management, so I thought I’d post about it. We now return you to your regularly scheduled silence while I go read about execution and operations, work on my company case studies, and contemplate my master’s project.