People Follow Structure: How Less Hierarchy Changes the Workforce

Shifting to self-managed teams and worker autonomy has been linked to greater engagement and performance. But not every employee likes the change.

- By Markus Reitzig and Kathrin Heiss

MANAGERS TODAY ARE ATTUNED to current thinking that how companies are organized matters to their performance, so they frequently adjust the corporate structure in the interest of improving outcomes. But the effect those changes may have on the workforce itself is less well understood.

While research has shown that employees are a heterogeneous group and that attracting and retaining talent involves a mix of incentives, we know less about how various types of organizational structures appeal to different workers, and whether those structures bind them to their employer or make them want to leave.1

The more radical the changes that senior leadership intends to implement, the more critical this question becomes. Among the most dramatic transformations observed in the corporate landscape these days are moves from traditional, hierarchical organizing to working with flatter structures featuring fewer layers of command. These structures offer more autonomy but also impose burdens of self-organization on employees.2

Top management must think seriously about which structural changes to implement and which complementary measures to take to tailor the composition of their workforce to meet their needs. But first, they must have greater insight into how a shift from a hierarchical work structure to a more self-organized one may affect the composition of the workforce. They must understand what types of individuals will be newly drawn to the company, which ones will be likely to leave, and how individual case conditions may affect the outcome.