Most arguments about hierarchy are arguments about speed. Layers slow decisions, so cut the layers. That framing misses the more corrosive cost, the one that does not appear in a process map. A pyramid does not only route decisions. It ranks people, permanently and publicly, and that ranking changes how they think, speak, and grow. In an era of quiet quitting and stubbornly low engagement, the status bill is coming due.
Hierarchy sells status, not just coordination
When Lee and Edmondson (2017) catalog the costs of managerial hierarchy, they list the familiar ones, rigidity and weak handling of complex non-routine problems, and then a subtler one: hierarchy reinforces status differences that stifle the development of the people inside it. This is easy to underrate because status feels like a side effect. It is closer to a core function. A ladder is, definitionally, an instrument for saying who ranks above whom. Coordination is what it advertises. Ranking is what it delivers on every rung.
The consequence is that information stops flowing uphill. People do not challenge a decision two levels above them, do not surface the awkward fact, do not admit the thing they do not understand, because on a ranked ladder each of those acts costs status. The org chart quietly teaches everyone below the top that candor is expensive.
This is also why the pyramid is bad at developing people, a cost Lee and Edmondson (2017) name directly. Development requires exposure, the chance to make a real decision and be seen doing it. A steep ranking rations exactly that exposure, reserving consequential choices for the higher rungs and handing everyone else pre-decided instructions to execute. People do not grow into judgment they are never permitted to use. Over years, the structure produces the very passivity that leaders then complain about, and blame on the workforce rather than on the ladder that trained it.
The classic remedy was transparency, not just autonomy
Semco's response to this is often summarized as giving workers freedom, but the deeper move was attacking status directly. Semler (1989) describes workers setting their own hours, voting on major corporate decisions, and, crucially, seeing the monthly financial books. Open information is a status leveler. When everyone can read the numbers, authority can no longer rest on privileged access to them, and a shop-floor worker can argue with a manager from the same facts. The later teaching case on the firm records the same instinct taken further: the organizational chart was eliminated, and employees helped choose their own managers (Siehl, Killian and Perez, 1999). Choosing your boss is a direct assault on the idea that rank is a fixed property of a person.
W. L. Gore encodes the same principle in its structure. Grønning (2016) documents a lattice in which the CEO is selected through an internal process of peer recognition rather than appointed from above, and leadership attaches to contribution rather than title. Status there is earned in the open and can move, which is precisely what a rigid ranking prevents. A person whose standing rests on recognition has a reason to keep contributing; a person whose standing rests on a title has a reason mainly to defend it. Those are different incentives, and they produce different organizations.
Disengagement is a status problem in disguise
The contemporary relevance is that the modern complaint about work is rarely about pay alone. It is about voice, respect, and the sense that effort will be seen. A structure that hardens status differences, in the words of Lee and Edmondson (2017), is a structure that tells most of its people their judgment matters less by design. Call it quiet quitting if you like; a good deal of it is the rational response to a system where speaking up has a poor return.
None of this means status can be abolished. Foss and Klein (2022) are right that flat firms are few and do not reliably outperform, and informal status hierarchies reassert themselves even where formal ones are removed. The realistic goal is not a world without rank. It is a rank that is earned, visible, and reversible rather than assigned, hidden behind a title, and permanent.
The teaching case on Semco captures how far this can go when it is pursued deliberately. Siehl, Killian and Perez (1999) record employees not only choosing their own managers but participating in the important decisions of the business, which turns rank from a fixed attribute of a person into a temporary function held at the discretion of the people affected by it. That is the structural version of lowering the status tax. It does not ask managers to be humble; it removes their ability to treat rank as property.
The practical test for a leader is simple to state and uncomfortable to pass. Watch who speaks in a room with three levels present. If candor drops as seniority rises, the hierarchy is charging its status rent, and the firm is paying it in the ideas that never get said. Lowering that tax does not require deleting the chart. It requires the two things Semco and Gore made structural: information everyone can see, and standing that a person can earn back.
Sources
- Lee, M. Y. & Edmondson, A. C. (2017). Self-managing organizations: Exploring the limits of less-hierarchical organizing. Identifies that hierarchy reinforces status differences that stifle development, the core cost this piece examines. https://www.sciencedirect.com/science/article/abs/pii/S0191308517300059
- Semler, R. (1989). Managing Without Managers. Documents open monthly books and workers voting and setting schedules at Semco, used as a status-leveling remedy. https://hbr.org/1989/09/managing-without-managers
- Siehl, C., Killian, D. & Perez, F. (1999). Ricardo Semler and Semco S.A. Teaching case recording that Semco eliminated the org chart and let employees choose their managers, a direct challenge to fixed rank. http://www.saludygestion.com/archives/Ricardo%20Semler%20&%20Semco,%20Thunderbird.pdf
- Grønning, T. (2016). Working Without a Boss: Lattice Organization at W. L. Gore & Associates. Documents a CEO chosen by peer recognition and leadership tied to contribution, showing status earned in the open. https://sk.sagepub.com/cases/download/person-to-person-communication-at-wl-gore-associates-inc