“All hell broke loose”: Is it time to embrace corporate hierarchy?
The following article is from the BBC website and is written by Josie Cox, a features correspondent.
Some companies are simplifying their organizational structures to see if a flatter hierarchy is better. Sometimes, employees learn this the hard way.
About four years ago, the managers at the London consultancy where Dani works decided to simplify the company’s traditional hierarchy. The goal was to streamline the corporate structure and reduce office bureaucracy, thereby diminishing the competitiveness that drives employees to relentlessly pursue the next promotion and position.
Dani says the managers thought it would improve the company culture. The result was the opposite.
“They completely eliminated seniority rankings and titles for our consultants and only kept a few general categories to indicate each person’s level of professional development,” explains Dani, 39. “It created absolute chaos.”
He recalls the strong reaction from employees to the changes. “Some felt demoted,” he says. “Instead of creating a less competitive environment, it actually made it more so, because people were desperate to prove themselves.” Many of his colleagues, especially the younger ones who didn’t see a clear path to seniority, quit.
Other colleagues, Dani adds, lost the motivation to do their jobs well because they didn’t see how they would be meaningfully rewarded. Many seemed to be saying, “If I don’t see my progress reflected in an explicit job title, why bother?”
For most workers, the traditional corporate structure has always been hierarchical, similar to a pyramid with a broad base encompassing most of the staff, which gradually narrows to a top of senior managers and top executives.
However, in recent years, some organizations have experimented with more horizontal structures: fewer hierarchical levels and, therefore, fewer reporting lines from the lowest-ranking employee to the highest. These approaches are based on a less rigid hierarchy, with elements of self-management and autonomous departments and teams.
In some cases, employees have strongly advocated for these changes,
hoping that a more horizontal organization will translate into greater responsibility, autonomy, and control over how they structure their workdays and, more generally, their career paths. The pandemic has had a significant impact on these efforts, as workers have questioned traditional workplace norms, both on a small and large scale. Many employees have also shown interest in exploring a way of working that moves away from the command-and-control model, which many consider outdated and a source of stress and demotivation.
Many seemed to be saying, «If I don’t see my progress reflected in an explicit job title, why bother trying?» Dani remarks.
However, in cases where this organizational change has been implemented, the results have been mixed. For some companies, measures to eliminate the traditional corporate hierarchy have backfired. Now, management experts, along with employees themselves, assert that flattening the organizational structure could have unintended consequences that actually worsen the work culture, especially if the restructuring is not carried out intelligently and gradually.
In other words, the corporate hierarchy that some employees have opposed might not be so bad after all.
A recipe for chaos?
While not the ultimate solution to organizational competition, there is some academic evidence suggesting that flatter organizational structures can help companies succeed while creating a healthier work-life balance for employees.
A 2017 study, based on research with more than 300 executives worldwide, showed that companies with more hierarchical levels were not as agile in launching new products and services to their customers. This can affect employee morale, and some studies indicate that eliminating those levels can increase employee satisfaction. In fact, management experts have found that autonomy is a major motivator for employees, and flatter structures are often implemented to give them greater independence.
However, despite these benefits, in some cases, change can be as detrimental as it is beneficial, according to experts, even plunging companies into the kind of chaos Dani witnessed.
“While most of us associate hierarchies with control and bureaucracy with cumbersome procedures, they also offer stability, consistency, and predictability,” says Michael Smets, professor of management at the Saïd Business School at the University of Oxford. “Job descriptions and titles confer rights, obligations, and authority. And more importantly, they do so regardless of who holds that position.”
When the traditional hierarchical structure of companies is dismantled, the change process itself can generate feelings of disorientation, irrelevance, or frustration among employees (Credit: Getty Images). In the worst-case scenario, he adds, the elimination of hierarchies can lead to an alternative, more clandestine power structure, in which those with the right connections can accumulate informal influence. This can be especially exclusionary for some employees, due to the psychological phenomenon of ingroup bias: the tendency to give preferential treatment to those who belong to the same group.
Those outside the group have a difficult time.
“These connections are likely to be stronger among similar people who like each other, which in turn makes it even harder for outsiders to enter the inner circle,” says Smets. Ironically, eliminating hierarchies and clear organizational structures can actually reproduce and reinforce existing inequalities rather than create a more diverse and equitable work environment.
“It can be very disconcerting.”
Consequently, many of these changes can be deeply unsettling for employees.
When the traditional corporate hierarchy is dismantled, the change process itself can be disconcerting and leave workers feeling lost, irrelevant, or frustrated. This can happen especially if companies change too quickly, says Todd Jick, a professor at Columbia Business School in New York, specializing in leadership and organizational change.
And even if employees could, in theory, challenge the corporate hierarchy, they may find themselves conflicted by their own preferences and motivations.
“Our instinct to seek guidance from authority is deeply ingrained; it’s something we’re taught from a very young age. We like and expect those above us to make decisions for us,” explains Jick. “So, if you remove the structures that enable this, it can be very disconcerting.”
Job descriptions and titles confer rights, obligations, and authority. Importantly, they do so regardless of who holds the position. – Michael Smets
Employees may also feel uneasy without a clear incentive structure that allows them to feel engaged and fairly rewarded.
Anna Tavis, clinical professor and academic director of the human capital management department at NYU’s School of Professional Studies, says that human beings tend to measure success in terms of money and promotions—in short, in terms of job titles. If organizational structures are disrupted, employees can feel disoriented.
“People need a way to demonstrate their growth,” says Tavis.
Patience is required.
Eventually, the company where Dani worked in London reversed some of the more drastic changes it had implemented. She explains that management was able to observe the impact these changes were having on employees and how they were contributing to staff turnover. The company reintroduced some job titles to indicate different seniority levels, which once again became clear indicators of advancement. The confusion lessened, she says, and she noticed an improvement in employee morale.
Even if the new structure doesn’t work, Jick, from Columbia University, says that this kind of strategic shift can actually be an indicator of organizational progress. A company’s willingness to try something new can signal its commitment to creating “workplaces that actually work for employees,” he says.
And while employees may be tired of the traditional corporate hierarchy and eager to try something new, perhaps they shouldn’t completely dismiss what has been in place for so long. After all, according to experts, hierarchy has many advantages, even if it can sometimes be uncomfortable.
Progress and change may come—whether in the form of a more horizontal business structure or otherwise—but it may take patience for employees to embrace it.
AI is already revolutionizing the corporate structure by reducing the distance between senior management and the rest of the employees
The following contribution comes from Fortune and is authored by Beatrice Nolan, a technology reporter on Fortune’s AI team, where she covers artificial intelligence and emerging technologies, as well as their impact on work, industry, and culture. Previously, she worked as a technology reporter at Business Insider. She is based in Fortune’s London office and holds a degree in English Literature from the University of York. You can contact her securely via Signal at beatricenolan.
AI is not just a new tool for the modern workplace; it is quietly transforming how companies are organized.
AI is subtly changing the traditional corporate hierarchy, flattening structures, and redefining job roles from the ground up. Companies like Amazon, Moderna, and McKinsey are eliminating middle management levels, merging departments, and deploying AI agents to automate routine tasks. As AI automates a variety of tasks, even senior management is changing, with the emergence of new AI-driven leadership roles and the transformation of traditional power dynamics.
The traditional corporate hierarchical structure—a well-defined power triangle with executives at the top and junior employees at the bottom—is undergoing a quiet revolution thanks to AI.
At Moderna, Human Resources and Technology now share a single department, overseen by a Chief People and Digital Officer. At another AI-focused healthcare company, a team of 10 software engineers has been replaced by a three-person unit overseeing AI agents. At Amazon, middle management levels are being eliminated as part of a broader strategy to achieve a more agile, AI-ready structure.
AI is not just a new tool for the modern workplace; it is quietly transforming how companies are organized.
We could call it “the great flattening.”
As business leaders rush to integrate AI across all their operations, entry-level positions are disappearing, management levels are shrinking, and traditional team roles are becoming blurred. At Fortune 500 companies, middle management and entry-level workers are being affected, but even at the top, new power dynamics are emerging as the old pyramid structure of corporate life begins to flatten.
Executives in the tech sector have been keen to promote a vision where AI automates tedious work tasks, eliminating bureaucracy and allowing interpersonal skills and creativity to flourish.
Or, as Microsoft’s Satya Nadella put it earlier this year: “I think with AI and work with my colleagues.”
While the utopian idea of a world without tasks like editing Excel spreadsheets or classifying files sounds great in theory, what does an AI-centric organization actually look like in practice?
A Simplified Structure Through AI
A key theme in organizations adopting AI-centric structures is a simplification of the business structure, essentially meaning fewer levels of managerial oversight, the elimination of junior or support roles, and an increasing reliance on AI systems to handle tasks previously performed by human employees.
It can also mean the collapse or merging of traditional team structures.
For example, the pharmaceutical company Moderna recently merged its technology and human resources departments into a single function, appointing a Chief People and Digital Technology Officer to oversee both teams. According to the Wall Street Journal, this decision was partly due to the company’s partnership with OpenAI and its commitment to using AI to manage tasks such as HR support and some entry-level positions.
At the consulting firm McKinsey, the company is deploying thousands of AI agents to support consultants in tasks such as creating presentations, synthesizing research, and verifying the logic of arguments. Furthermore, about 40% of the firm’s revenue currently comes from consulting on AI and related technologies.
“If your organization prioritizes AI, you can use these AI agents to perform much of the execution work,” Nick South, managing director and senior partner at Boston Consulting Group, told Fortune. “And when we organize our processes and delivery processes around this AI-native workforce, the role of humans changes.”
This is partly because the nature of individual job roles will change as tasks are automated by AI tools or agents.
“Our job roles are being deconstructed, as some tasks may be taken over by AI and others may be entirely new, so the meaning or function of work changes,” said Eva Selenko, a professor of work psychology at Loughborough Business School. “Less of a certain role may be needed, but that person will take on a different role in another area.”
This doesn’t mean entire jobs will be replaced, but it could mean that employee roles will diversify and they will take on tasks outside their usual scope of responsibilities, or even their usual team. According to Selenko, job roles are becoming blurred as tasks are automated and their importance within the organization shifts. As a result, strict divisions between teams may begin to break down.
If we add to this the presence of AI agents performing autonomous work, the traditional organizational chart begins to look radically different.
«We are now moving toward a more horizontal network of human teams overseeing AI agents,» said Rob Levin, senior partner at McKinsey and leader of QuantumBlack, McKinsey’s AI division.
«In early examples, we see that a client company building an agent factory that supports multiple business workflows can manage between 50 and 100 AI agents with just two or three people,» he explained.
As an example, Levin mentioned a healthcare company that had replaced a traditional 10-person software development team with much smaller, three-person units. These units consist of a product manager, a software engineer who can effectively guide the AI coding tools, and a systems architect who ensures integration with the company’s overall technology ecosystem.
However, these kinds of major structural changes are easier to implement in small organizations or startups than in large companies with more complex structures.
The Precarious Situation of the Middle Manager
One of the ways companies, especially in the tech sector, have tried to simplify and flatten their structures for the AI era is by drastically reducing management positions. Palantir CEO Alex Karp, for example, announced on Monday’s earnings call his intention to eliminate 500 positions from his 4,100-person workforce. He called it a “crazy, efficient revolution.”
Middle managers have faced considerable criticism, particularly from tech CEOs like Andy Jassy, who has argued that they can hinder speed, accountability, and innovation at Amazon, especially in the context of AI-driven organizational change.
Jassy is currently pushing for a more horizontal organizational structure at Amazon by increasing the ratio of individual contributors to managers, aiming to eliminate hierarchical levels and streamline decision-making.
However, according to experts consulted by Fortune, organizations shouldn’t discard middle managers just yet.
“One obvious possibility [for more horizontal organizations] is that it will lead to a reduction in the number of managers,” said Tristan L. Botelho, associ
