Avoiding hierarchy

Gerard Fairtlough, author of The Three Ways of Getting Things Done, advises small businesses on how to avoid falling into the organisational hierarchy trap.

It is easier to organise a small business than a large one. Of course, this is a major reason why small businesses are able to complete successfully with big ones. Small businesses can be quicker on their feet, readier to adapt, more human places to work in.

Yet small businesses are often just as hierarchical as big ones. They don’t have the layers of managers found in large, bureaucratic organizations. But they often have dominant bosses – founders, owners or strong personalities – who like being in charge. The underlings generally accept this. They’re used to hierarchy and know how it works. It’s familiar and they think it’s inevitable. Many businesses try to ameliorate hierarchy’s bad effects, but few question the basic idea.

In every small business, whether you’re a boss or a subordinate and however hectic the pace of business life, it is worthwhile stopping to consider whether organisational hierarchy is as inevitable or as valuable as you’ve always assumed. It is worthwhile thinking about alternatives and trying them out. You might find better ways of working – more effective, less stressful, less dependent on key individuals.

Twenty-five years ago I founded the biopharmaceutical company Celltech, It grew to be a £1.5 billion business, but it started small. From the beginning, my colleagues and I tried to avoid hierarchical practices, although we retained conventional job titles and reporting relationships. Importantly, everyone in the business was treated with respect and trust, and a virtuous cycle emerged in which openness and commitment reinforced each other. I learned that non-hierarchical ways really did work, although looking back, I see that we could have been much bolder in our use of them.

Since then, I’ve studied other non-hierarchical organisations – in business, in government and in the not-for-profit sector – and I know there are many moves a small business can make to reduce hierarchy and increase effectiveness. Some of these moves are well-tried, others are novel and a few may be risky. Some seem trivial in themselves, but cumulatively they create a radically different way of getting things done. Here are some examples:

• Complete openness with everyone in the business, on all work-related matters. You can start with current performance, including financial results, move on to strategic issues, and finally to openness on rewards – what everyone is paid.
• Regular get-togethers of everyone in the business. These can be light-hearted, dress-down affairs during which a few serious points can be made. Or they can be crisp, start-the-week gatherings, in which different people report on current tasks.
• Job rotation. As a project progresses, the people who made good contributions in its early stages may not be the best suited for the later stages. Handing around leadership may become the natural way to do things – in contrast to hierarchy, in which the presently powerful want to retain their power.
• Systems that de-couple reward from organisational position. These are not necessarily egalitarian – for instance, large bonuses can be paid for particular achievements. Decisions about rewards have to be open and may be made by a group drawn from across the organisation.
• Separation of powers. In democratic countries we take it for granted that law-makers, judges and executive government are separate, and that none of these dominates the others. It is possible to adapt this national-scale scheme for use in a small business. Decisions on who is hired or fired can be separate from decisions about money, or about product design. Hierarchy addicts particularly dislike the separation of powers, warning about gridlock or slow decision-making. My experience is that decisions may be slower, but they are usually better.
• Democracy, in the sense of voting. In law and accounting firms it is standard for appointment of partners. In these firms it is one element among others, such as the development of individual talent, performance reviews for everyone, task rotation, and balance between individual initiative and collective responsibility.
• Celebration of success. Public celebration, and sometimes public reward in the form of bonuses or prizes, of successfully completed tasks – a big new customer, a technical breakthrough, a new stock-control system that actually works – is an important way of recognising the contribution that everyone can make.

Hierarchy is so entrenched that its replacement will only happen through lots of small changes, dependent on local learning, not external blueprints. Nevertheless, I can suggest four guiding principles:

• Understanding. If we understand the grip hierarchy has on human beings then we will be more likely to move confidently away from it.
• Innovation. Imagination, experimentation and persistence will enable us to discover all kinds of novel institutions and new practices for getting things done.
• Balance. Innovation should be tempered with stability. What is best in the long run should be balanced against what is possible in the short run. Risk and reward should be in balance.
• Courage. Downgrading hierarchy will nearly always mean upsetting powerful people. This takes guts. It should not be a headlong attack, rather the sustained exercise of the leadership potential that most people have, even if it goes unrecognised.