Can large corporations afford to be nonhierarchical?

Hierarchy has long been the prevailing structure in the corporate world, with clear lines of authority, well-defined roles, and decision-making concentrated at the top. However, in recent years, a new concept has gained momentum — the idea of becoming nonhierarchical.

Organisations without hierarchies prioritise decentralisation, autonomy and shared decision-making. Instead of rigidly-defined roles, individuals are empowered to contribute their unique skills and ideas, fostering a sense of ownership and motivation. Communication channels are open, and information flows freely across the organisation.

Jaikrishna B, group head – HR, Amara Raja Group, observes that it is possible for large organisations to adopt a more decentralised or networked structure, or a ‘network of teams’ structure. However, completely eliminating hierarchy in such organisations is a complex effort that requires a more thoughtful and planned approach.

“It’s important to recognise that the specific benefits and drawbacks of adopting a non-hierarchical structure can vary based on factors such as the organisation’s industry, sector, and the implementation approach chosen. Successful implementation requires careful planning, effective communication and continuous evaluation.”

Jaikrishna B, group head – HR, Amara Raja Group

“In large organisations, the viability of being nonhierarchical hinges on several critical factors. First, the existing complexity of operations must be considered, as implementing a hierarchy-less structure requires careful change management and a re-evaluation of workflows and processes. Second, the prevailing organisational culture plays a crucial role, as cultural interventions may be necessary to shift mindsets and ensure widespread adoption of flat structures and decentralised decision-making,” explains Jaikrishna B.

Benefits of adopting a hierarchy-less model

In large corporations, being nonhierarchical also promotes a sense of ownership and autonomy among the employees. By decentralising decision-making, individuals feel empowered to contribute their ideas, which boosts engagement and satisfaction. Employees are more likely to be motivated and committed when they have a voice in shaping the organisation’s direction. This increased engagement translates into higher productivity and retention rates. Hierarchy-less structures enable them to adapt swiftly to changing circumstances. Decisions can be made at the most relevant level, avoiding bottlenecks and delays. Employees are encouraged to take initiative and explore innovative solutions, leading to a more agile response to market demands.

There are several advantages to adopting a hierarchy-less model within an organisation. First, it promotes empowerment at all levels, allowing more individuals to participate in the decision-making processes. This leads to increased agility and speed within the organisation and boosts employee engagement. When employees’ ideas are acknowledged and implemented, they feel valued and motivated.

Another significant benefit is improved adaptability to market dynamics. In times of uncertainty or unexpected events, such as black swan events, organisations with a flatter structure can make decisions more quickly and efficiently. This enables them to respond and adapt rapidly to changing circumstances, ensuring their survival and success.

Challenges to overcome

· Cultural transformation: Shifting from a hierarchical culture to a nonhierarchical one requires a significant cultural transformation. This change may face resistance from employees accustomed to traditional structures. Leaders must invest in comprehensive change-management strategies, ensuring transparency and clear communication, and providing support and training to help employees adapt to new ways of working.

· Maintaining accountability: Without clear hierarchical structures, accountability can become challenging to define. It is crucial to establish transparent performance-evaluation systems, goal-alignment frameworks, and feedback mechanisms to ensure that individuals remain accountable for their responsibilities.

“Hierarchies often provide a clear path for employees in terms of promotions and recognition. Employees see the promotion matrix as a motivational factor, knowing that their hard work can lead to career growth and rewards.”

Samir Bhiwapurkar, head of HR and general administration, Japfa Comfeed

· Decision-making complexity: Distributing decision-making authority across the organisation can introduce complexity. It is essential to establish clear decision-making frameworks that balance autonomy and alignment with strategic goals. This ensures that decisions are made efficiently and consistently, avoiding potential conflicts or confusion.

According to Jaikrishna B, “It’s important to recognise that the specific benefits and drawbacks of adopting a non-hierarchical structure can vary based on factors such as the organisation’s industry, sector, and the implementation approach chosen. Successful implementation requires careful planning, effective communication and continuous evaluation.”

Samir Bhiwapurkar, head of HR and general administration, Japfa Comfeed, is of the opinion that many traditional companies have established ways of working with clear hierarchies, so it would be challenging for them to adapt to a hierarchy-less model. They will need to establish new processes and policies to support this transition. Accountability, responsibility and delegation metrics will need to be well defined and enforced.

Bhiwapurkar goes on to say, “Without strong metrics and systems in place, it would be difficult for employees to understand their roles and responsibilities in a non-hierarchical organisation. In larger or more traditional organisations, hierarchies play a significant role in structuring the workflow and ensuring efficiency. Companies such as Google and other flat organisations have undergone a change- management process to successfully implement a hierarchy-less structure. Startups often adopt a flat structure from the beginning.”

Sunil Singh, senior HR leader and founder, Mindstream Consulting, says that in an ideal scenario, there would be a clear division of responsibilities where certain individuals perform tasks, while others supervise them.

“Over time, the concept of promotions became a social norm in the corporate world, with the expectation that designations should change regularly. This added an element of motivation to the process, linking promotion to job satisfaction.”

Sunil Singh, senior HR leader and founder, Mindstream Consulting

“Over time, the concept of promotions became a social norm in the corporate world, with the expectation that designations should change regularly. This added an element of motivation to the process, linking promotion to job satisfaction. Consequently, organisations, regardless of their size, became less streamlined as promotions became a means of attracting and retaining employees. This not only affected the internal structure of the organisation but also had broader social implications,” opines Singh.

He also adds that the introduction of digital media for supervising employees brought about significant changes. With tools for task-driven product management and communication, a single person could oversee a large number of individuals. This development allowed for greater efficiency and the ability to separate low-skilled, transactional workers from those requiring specialised skills.

Bhiwapurkar believes, “Hierarchies often provide a clear path for employees in terms of promotions and recognition. Employees see the promotion matrix as a motivational factor, knowing that their hard work can lead to career growth and rewards.”

Furthermore, without such structures in place, Bhiwapurkar explains that employees may feel that there are no incentives for their efforts, potentially leading to demotivation. He adds, “Therefore, organisations transitioning to a nonhierarchical model need to carefully address these concerns and establish alternative mechanisms to motivate and reward employees effectively.”