Why Teams Still Need Leaders

In recent years, agile and flat working structures have gained favor at many companies and struck a responsive chord with employees who are put off by stifling hierarchies. But doing away with hierarchy can cause confusion, spark complaints from employees, and hasten departures, says Lindred (Lindy) Greer, associate professor of management and organizations at the University of Michigan’s Ross School of Business and faculty director at its Sanger Leadership Center. While agreeing that rigid forms of hierarchy can impede innovation, she has found that it can provide many important benefits when managed well.

Greer first became interested in team structures more than a decade ago while investigating diversity, hoping to understand how gender and race play out in social interactions. She found that team members tended to be less focused on their colleagues’ gender and ethnicity than on the power they wielded. She then decided to explore how hierarchies work in organizations and what happens when they go wrong. She has written a number of groundbreaking articles on hierarchy, status, and the social dynamics of teams, including, most recently, “Why and When Hierarchy Impacts Team Effectiveness” in the Journal of Applied Psychology.1

MIT Sloan Management Review correspondent Frieda Klotz spoke to Greer as she was about to travel to Seattle to coteach a course on leadership development with an orchestra conductor at a business incubator. What follows is an edited version of their conversation.

MIT Sloan Management Review: A few years ago, many management experts and business leaders were saying that hierarchy had had its day and that the future belonged to flat organizations. What’s happening? Is the pendulum swinging back?

Greer: Hierarchy is probably the most common form of organizing the workplace. There aren’t a lot of good alternatives to it, and companies need some say in managing workers, particularly as they scale. However, there are also a lot of downsides to hierarchy, and over the last decade my collaborators and I have documented the many ways in which it can go wrong. Team members squabble over resources, engage in power struggles, and battle over rank. All of this harms performance. One of the burning questions in management research right now is, what are the best alternatives to hierarchy? But it’s a complex picture — hierarchy isn’t always bad or harmful, and its effectiveness may depend on where and how it’s implemented, and how the person at the top manages the hierarchy. For example, there is growing interest in remote work and virtual teams, and in that context hierarchy works quite well.

Why is hierarchy a good way to structure virtual teams?

Greer: Hierarchy makes it easier to coordinate how people work together. So for teams that most need structure — those operating under uncertain conditions or when the task is unclear, as often happens in virtual or remote teams — hierarchy is highly effective. It still has downsides, but the need for it is so great that it trumps whatever internal politics and bureaucracy come with it. You simply need that structure to keep people moving together.

Often when people work remotely, there is an assumption that they have more autonomy and freedom than office workers. But is it wrong to think so?

Greer: Hierarchy does not have to mean less autonomy. For example, when I talk to the CEOs of companies doing really well with a remote-work model — I’m thinking about Automattic, which owns WordPress, or 10up, a successful web-design company — they emphasize the need for structure. In practice, this means that they put much more effort into coordinating how people work together than other companies. They formalize role descriptions and onboarding better, and they’re more intentional and specific in their recruiting and hiring. For example, they’ll do interviews through Slack to test independence and communication virtually. They say this makes them better at navigating the people side of business largely because the remote workforce is utterly intentional about the way interactions are structured.

But even though the workers are accountable to someone, they can still retain decision control in their areas of expertise because the company has clear values that guide how to make decisions. That’s the thing: Hierarchy can go hand in hand with autonomy. It doesn’t have to be one or the other.

What does your recent research say about how hierarchy works or doesn’t work in an office environment?

Greer: Research has generally historically focused on the benefits of hierarchy. The core assumption, drawn from animal behavior, was that hierarchy was a natural way to organize people, that if one person was dominant, others would be more submissive. The research assumes that people find hierarchy comfortable and seek it out in times of crisis. My research challenges the view that hierarchy is always good by showing that it can lead to inequities and conflicts within teams. One of the problems is that the structure it provides isn’t always the right one, in both the form of structure and the context in which it is applied. For example, people aren’t always happy about how they’re ranked, and there can be power struggles and turmoil around roles. In some contexts, like creative brainstorming, hierarchy just gets in the way and fosters competition rather than collaboration.

How does that kind of conflict affect team performance?

Greer: In the 2018 paper in the Journal of Applied Psychology, my coauthors and I showed that on average, hierarchy causes power struggles and personal conflicts and can thereby undermine team performance. In other research, we found that 70% of the time peer disputes turned into personal conflicts and power struggles.2 This was really bad for the teams’ productivity as well as for the employees’ happiness.

Given the potential problems, what can companies do?

Greer: Managers need to be smarter about how they use hierarchy. Good leaders know how to flex — to use hierarchy to get things done but also to flatten the organization when they want workers to be creative. The Navy SEALs have an excellent approach: When they’re on the ground, there’s a clear chain of command. If their commander says, “Get out now,” there’s no playing devil’s advocate — no one argues. You listen and you fall into rank.

But once they go back to the base to debrief, Navy SEALs literally take their stripes off at the door. When they sit down, everybody’s equal and has a voice. This is important because one person on the team might have noticed something really critical that nobody else saw, which could inform their plans for the next assignment. So they flatten out; they share ideas. Then they go back outside, put on their stripes and uniforms, and literally fall into rank again.

I spent the last half year or so studying startups to see if there were companies that had effective ways of flexing as well. These were early-stage tech companies, representing both B2B and B2C business models. Many of them just accepted hierarchy, while others were resigned to being flat and chaotic. But some of the best-managed companies were able to flex the hierarchy fluidly. Day to day and meeting to meeting, I saw managers who could make the team hierarchical but also flatten it when they needed to. I think realizing how to manage that duality — and allow for autonomy — is at the heart of this. At the end of the day there needs to be a leader, but it doesn’t mean every interaction is hierarchical.

Are there special skills managers need to learn?

Greer: Companies are realizing that to do hierarchy well, they really need to invest in leadership development. Even startups realize that leadership is a set of behavioral tools that can be learned.

A lot of the companies are also experimenting with different types of structures, where project teams are flatter but report regularly to a panel of internal company advisers (as opposed to leaders). The trouble is that a lot of these experiments are not data driven. They don’t collect large-scale data to see whether the infrastructure actually works.

One experiment that has received a fair amount of exposure is known as holacracy. It was introduced by management at Zappos, the online shoe retailer, in 2013, where it was used to scale back hierarchy in favor of flat, cross-functional groups. In the course of the experiment, Zappos discovered that it needed an elaborate rule book to guide people on how to use the holacratic method. In fact, it was much more complicated than the hierarchy they’d started off with. When the CEO, Tony Hsieh, gave employees the option of accepting the new system or leaving the company, one-third of them walked out.3 Since then, Zappos has made a bunch of changes but has maintained some aspects of the system. Although I think ideas like holacracy have value, in my view imposing rigid schemes is the wrong way to go.

As for other approaches, there are aspects of agile that have shown promise. But companies still need to figure out how to allow for moments of hierarchy. Members of agile teams still need to coordinate and find ways to resolve conflicts. Even if you’re not using hierarchy, you always need a decision-making role. The question is, how can you encourage working together and coordination in a simple and elegant manner?

So where does this leave managers? Do they keep looking for good alternatives to hierarchy or focus on the flexible flattening you’ve described?

Greer: Until we have an alternative model that is established and has been shown to work, the simplest and safest approach for companies is to use hierarchy but also to train leaders to use it well: to be able to flex and adapt how they use it. This means selecting leaders who have the skill sets to foster teams that are empowered and hierarchical, while training both leaders and teams on how to adapt the hierarchical structure to handle the demands.