Dharmesh Shah, co-founder and CTO at the marketing and sales software firm HubSpot, distills his 128-slide presentation on company culture down to its essence, describing it as a business's "operating system" that lets people do their best work. Shah says entrepreneurs must create a company culture they love, because one will eventually emerge no matter what.
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Startups may want to downplay the free food, beer and haircuts and start hiring and treating workers like the adults they need to thrive long term, according to acclaimed leadership consultant Patty McCord. In this episode, the former chief talent officer of Netflix speaks bluntly with host Bob Sutton about how backstabbing, passive-aggressive behavior and overall coddling of employees are all bad for businesses — and how actual grown-ups can hear and handle the truth, even when they disagree.
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Management scholar Adam Grant discusses research showing how firms that hire candidates based on how well they will fit into the company’s culture perform differently depending on the stage of the business. Grant, a management professor at the University of Pennsylvania’s Wharton School, also presents another question for businesses to consider when hiring: What can this person contribute to the company’s culture?
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I was raised to view hierarchy as a bad thing. My late father, an entrepreneur, often ranted about the idiocy he battled in the corporate and government bureaucracies that made life difficult for his little company. He loved the Peter Principle because, to him, it explained why so many organizations were packed with people who had risen to their level of incompetence. Perhaps because of my upbringing, I have always been drawn to arguments — such as management guru Gary Hamel makes — that “bureaucracy must die” and that top-down control is “toxic.”
Given my ingrained biases, I was taken aback by my own answer during an interview with McKinsey partner Rik Kirkland. He was interviewing me about Scaling Up Excellence, the book that Huggy Rao and I came out with in 2014. Rik closed the interview by asking what I learned from our scaling research that surprised me most. I immediately said something like, “I have always despised hierarchies in my heart, but this research taught me that they are good and necessary — of course some are good and others are bad, but spreading and sustaining excellence depends on having an effective pecking order.” As I told Rik once the filming stopped (it was a video interview that appeared on the McKinsey Quarterly site), I was surprised to hear my own answer to his question about surprises!
Huggy and I reached this conclusion for two main reasons. I still feel a bit ambivalent about it, but the evidence is overwhelming:
- Hierarchy is inevitable. As our Stanford colleagues Deb Gruenfeld and Lara Tiedens show in a detailed review of research on hierarchy, although the forms it takes vary wildly, it is impossible to find groups or organizations where all members have roughly equal status and power. Whether researchers study people, dogs, or baboons, hierarchies are evident after just minutes of observation. And when strangers meet for the first time, a hierarchy of leaders and followers begins to emerge immediately. This rapid development of pecking orders is seen, for example, in groups of college students who meet in psychology experiments and when strangers start chatting on the street corner — leaders, followers and other signs of status differences nearly always emerge (along with more subtle roles such as “joker,” “hero” and even “scapegoat”).
Gruenfeld and Tiedens conclude: “When scholars attempt to find an organization that is not characterized by hierarchy, they cannot.”
Organizations that are celebrated for their lack of hierarchy may downplay and reduce status differences, but they always have some people with greater formal and informal power than others — and associated pecking orders. And eliminating titles such as “manager” or “supervisor” doesn’t make the hierarchy disappear. For example, there has been a lot of talk lately about Zappos’ ongoing reorganization into something they call a “holacracy.” Some headlines suggest that the company is getting rid of bosses — that isn’t quite right. While more power is being pushed down the hierarchy, it persists under the new structure. More responsibility is being placed as people are moved into “circles” (which sound much like self-managing teams). Yet even though they have stopped using the word “manager” for many roles, there are still people who perform what sounds like middle-management roles to me: They are responsible for staffing teams and dealing with employee performance issues. And, while Zappos is getting rid of a lot of titles, note that Tony Hsieh is still called the CEO.
Hsieh may delegate and empower people more than many CEOs. But Wired’s cute claim that he is “the boss that isn’t” strikes me as somewhat misleading. As I discussed with Jena McGregor when she interviewed me for the Washington Post article she wrote on the change, Hsieh is using his power and position at the top of the pecking order to institute the new structure (which seems like a good idea, at least based on what I learned about it). In fact, this kind of claim that an organization is non-hierarchical because the top dog wields his or her power to push greater responsibility and accountability down to lower levels is also seen in hype about other companies including IDEO and W.L. Gore. Yes, when people are given decision-making power and have the requisite confidence and skills, leaders do not need to monitor or coach them as closely – but there is still a hierarchy and certain people have more decision authority than others.
In short, if you can find a group of people (or dogs or baboons) without a hierarchy, I want to hear about it. Yes, power and status differences are sometimes reduced, but hierarchy is a fact of organizational life.
- Organizations and people need hierarchy. While there is no doubt that some hierarchies are better designed than others, an interesting test is what happens when there is little or no consensus about who has more – and less — power. Gruenfeld and Tiedens describe a series of studies showing that when such agreement is absent (so the nature of the formal or informal pecking order is not clear), members become less committed to their groups, less productive and effective, dysfunctional competition for status emerge, and coordination and cooperation suffer.
Another interesting test is what happens when layers of management are removed in a company. Certainly, some organizations have too many layers, but some quite famous founders have discovered that they need intermediate layers — even though they long for the good old days when it was just them and a small team. Google Co-Founder and CEO Larry Page is exhibit one. As we wrote in Scaling Up Excellence:
‘Page has been described as “obsessed with making Google work like a smaller company.” In 2001, when Google grew to about 400 people, Page decided that middle managers were creating complexity and friction — symptoms of John Greathouse’s “Big Dumb Company Disease.” So he got rid of all of them. More than 100 engineers reported to a single overwhelmed executive. Frustration and confusion was rampant. Without those middle managers, it was nearly impossible for people to do their work and for executives to grasp and influence what was happening in the company. Page learned the hard way that a hierarchy can be too flat and that middle managers are often a necessary complexity.’
The upshot is that, as you scale an organization, getting rid of the hierarchy — or even assuming that a flatter one is better — is the wrong goal. Your job is to build the best hierarchy you can.
An earlier version of this article appeared on LinkedIn. Bob Sutton is on Twitter @work_matters.
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In this lecture that parallels his book Good Boss, Bad Boss, Stanford professor Bob Sutton unpacks the best habits of beloved and effective managers, and details the worst habits of those who fail to lead. The best leaders develop and nurture those who work for them. However, when bosses gain more power, they can easily grow oblivious to the needs of those they lead.
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Meg Whitman, president and CEO of Hewlett Packard Enterprise, discusses the difficulty of changing a company’s culture and how the key is to focus on a few core values and constantly repeat the message. Whitman also stresses the importance of identifying the obstacles standing in the way of change, and making sure the message is just as clear to far-flung groups within a large organization.
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In order to understand how friction helps and harms work, Stanford’s Bob Sutton, author of the forthcoming “Asshole Survival Guide,” interviews management expert Michael Dearing, a former senior vice president at eBay who has done corporate strategy for the Walt Disney Co. and now heads Harrison Metal, a VC and education firm that focuses on general management, business leadership and product development. Discover the timeless truths of good management, the rules of engagement to allow for creative tension, and the virtue of velocity for the entrepreneur.
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Bob Tinker, founding CEO of MobileIron, explains that entrepreneurs can choose to proactively build company culture or let it form organically. Either way, founders should be deliberate about how workplace culture develops and know that it becomes set when the team grows to 20 members, according to Tinker. In eight years, his startup grew from the three co-founders into a workforce of nearly 1,000 employees before it went public.