Are hierarchies still appropriate nowadays? 

However, as organizations grow larger, a dilemma arises: One person can no longer decide what everyone should do, and everyone cannot tell one person what to decide. So you try to solve the problem by first considering: who supplies what to whom? Who decides and is responsible for what? But that alone is not enough. Due to the number of individual topics, it is necessary to group areas together. You remember: one person cannot tell all members of an organization what to do because of their limited time and expertise. But that one person can check with those who are responsible for other areas. The team leaders then discuss it with their employees. The need for a structure – hierarchy – has arisen. Hierarchy thus summarizes areas of responsibility. Sounds logical, doesn’t it?  

Why then does hierarchy have such a bad image? This is due to a misconception. This results from the failure to understand that management and leadership doctrine, especially in large organizations, calls for dealing with contradictions and does not absolutize extremes. What went smoothly in a start-up without coordination and with few levels of rank, because agreements could be reached before an actual structure was created, must now be regulated in large organizations across several levels. How does that work?  

Well, unlike many technical processes where a result can be achieved without compromising the required parameters – the vernacular here would say “much helps a lot” – the management and leadership doctrine combines “good and bad” in such a way that the end result is a system where transaction costs are minimal. This is supported by the individual levels, which combine areas of responsibility. But beware: there is an optimum here, too. If the areas become too large – referring to flat hierarchies – then a manager has to coordinate horizontally with too many employees; if the areas remain too small, vertical coordination losses occur between the levels. So it is not about abolishing hierarchy, but about its optimal structure. In direct cooperation, a decision is then made between self-determination and external determination. It is about autonomy in implementing tasks, but also about the formalization of competencies and responsibilities. How much autonomy is appropriate is then expressed in the management style.  

What is needed, then, is an optimum of all the values, expectations, interests and needs of those who work together. Derived from this, modern executives are called upon to address situations in which they are not “in control,” because otherwise it destroys creativity/innovation, from those in which “command & control” in the hierarchy continues to apply. Thus, leadership behavior oscillates between cooperation and enforcement of rules.