No Boss Is No Solution Either

While the working world around us has changed rapidly, the organizational form of most companies essentially has remained the same for 150 years. There are teams, departments, and business areas; and there are bosses that lead them. Classic hierarchies. Some may find this anachronistic, but are there viable alternatives?

In recent years, digitization and worldwide networks have driven economic change. We’re talking about the Internet of Things (IoT). This may sound very advanced, and it is. But there is one area that so far has stubbornly resisted (almost) every modernization: the way companies are organized.

Reduced to the essential, companies today are structured exactly the way they were 150 years ago, at the beginning of the Industrial Revolution. There are teams, departments, and business areas, each with their own managers, and above them one or more managing directors.

Even when the hierarchy is very flat, ultimately managers make the decisions and assume responsibility, to a greater or lesser extent. Why has the classic hierarchy lasted so long when everyone is preaching individual responsibility, collective intelligence, and agile structures?

Hierarchies deliver security and reduce complexity

There are at least two reasons. The first is that hierarchies fulfill important social functions: They provide security and decrease complexity. When I have a boss, I know whom I have to approach to get my decisions approved. I know who judges my performance. Who solves conflicts in serious situations. Who is to blame when things aren’t going well or cuts are looming. The boss.

Who would perform this function otherwise? Naturally, there are high-potential employees — especially among Millennials, rumor has it — who need leeway and like to work in self-organizing, agile, virtual teams. And they should be given their autonomy. But there is also the other, large group that much prefers clear instructions, even if they aren’t liked, to the uncertainty spawned by too much freedom and having to make their own decisions.

I don’t mean this negatively; not everyone has to seek self-realization at work. And even as an employee who otherwise has a lot of independence, I wouldn’t want to make certain decisions with far-reaching consequences: what strategy the company should pursue or who should be laid off when cost-cutting measures are implemented.

Merely eliminating structures is not a new organizational form

Another reason: If there is no hierarchy, what is there? Getting rid of structures per se is not a new, modern form of organization. If there is no hierarchy, it has to be replaced by a framework that regulates how teams are organized, decisions taken, and conflicts solved.

In a German newspaper article titled “Kein Chef ist auch keine Lösung” (No boss is no solution either), the Süddeutsche Zeitung tells the story of the company Traum-Ferienwohnungen. The internet firm is now over 15 years old, has more than 100 employees, and dissolved classic structures and hierarchies in 2015.

In a nutshell, it now has “integrative teams” rather than departments, and decisions are made by different staff members depending on the needs, though not democratically. It works, but the managing director says: “The idea that we are finished has to be abandoned.” It is a continual process, he says. Every single company has to find its own organizational form, even every single employee.

The alternative has to be feasible

This is surely an option for companies in which everyone has to work very creatively. But it does not apply to every company. Not every firm has the nerves or the time to continually work on its organization and decision-making processes; there is enough change as it is. And above all, companies need managers and staff who support such a concept (see above). Since not all of them do, there still have to be companies with a classic hierarchy in which employees can feel at home.

Modern times notwithstanding, as long as no one thinks of something better to which thousands of companies across the globe can adapt, departments and bosses will remain for a while. At least for another 150 years, I’d say. Like everything in life, a fixed hierarchy has advantages and disadvantages, costs and benefits. And just between us: If we can’t curse incompetent leaders now and then, what will be left for us to do?