Do businesses need hierarchy to succeed?

16 Aug 2019 By Joanne Skilton

Organisations must look to find new ways of setting their employees free, argues Joanne Skilton

In the UK, hierarchy has been the bedrock of workplace culture that has existed since the industrial era. It has been argued, and to some extent proven, to be an effective means of organisation and a way to ensure a standard of output. Hierarchy, it has been suggested, provides employees with goals that they can aspire to, giving a clear route to climb up the workplace ladder until they reach senior positions after several promotions.

However, in recent years we have seen a shift in this trend. There are those like Ricardo Semler, CEO, author and champion of radical co-corporate democracy who have stated: “The key to management is to get rid of managers.” This may spell the end of pyramid structures which many view as too rigid and ineffective. There are also many companies which state they have removed hierarchical structures from their business – or at the very least claimed to have done so – in order to attract and retain the best talent. 

This trend has largely entered discussions due to Generation Z, who will make up a substantial part of the workforce in ten years’ time. Generation Z, typically those born in the 90s, are usually defined as being more pioneering than their older peers and desire to be part of an organisation that is driving tomorrow’s agenda. Processes and structures within a business must therefore remain agile to not only cater to this new demographic in the workforce but also keep up pace with the digitalised age where process must be more streamlined anyway. 

There are several key trends that are set to change the traditional hierarchy structure of the workplace:

Purpose-driven leadership

Perhaps it is up to businesses to change what they define as a leader or manager. There is a growing body of research that concludes that purpose-driven organisations perform better and have more engaged and passionate employees. They have higher levels of innovation and considerably higher levels of staff retention. Individual employees report feeling more successful and supported by leadership, and people who have a purpose in their lives even have a 15 per cent lower risk of death. It is easy to see why purpose will continue to be prioritised over coming decades as it will be those who focus more on this rather than hierarchy who have the potential to see better returns and more productive employees. 

Embedded purpose in everything you do

Purpose is developing a shared understanding of what we are here to achieve – the vision and values that underpin the organisation. In purpose-driven companies, organisational, team, and individual purpose is explicit and aligned. At L’Oreal, for example, chief human resources officer Stephane Charbonnier says: “People will want to work for leaders who inspire their purpose – enabling them to be the best they can be.” 

Leaders will require a more relational role, with emphasis on emotional intelligence and creative leadership. While leaders must drive purpose, vision and an agile strategy, managers need to evolve to stay relevant within changing organisational models. If they fail to do so they will alienate their teams and become out of touch, struggling to get the most out of their workforce.

The rise of the ‘orchestral manager’

It is clear that in today’s society the old ‘command and control’ hierarchical style is no longer suited to the purpose-driven organisation. The real question is whether the idea of management we inherited from the industrial era has outlived its usefulness now that organisational models are moving towards individual autonomy, networks and teams. The manager must oversee everything, trust everyone to get on with their tasks, but ultimately be responsible for the direction of the business. 

Overall then, business must look to find new ways of setting their employees free and to develop internal purpose. It is undoubtedly true that as organisations grow, individual passion and engagement tend to decline. To keep agility within a business, companies must set people free from the constraints of rigid and complex hierarchies to do their best work. This autonomy works best with an explicit set of rules – a handful of crisp and clear statements that guide interaction, values and expectations and link back directly to the organisation’s purpose and vision. 

Joanne Skilton is chief commercial officer at Unily

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