Abhorred by some as a means for social domination, adored by others for its apparent success, hierarchy (from ancient Greek hiereus (ιερευς) “priest” and arkhe (αρχη) “rule”) remains a dominant feature of contemporary organizations. But why?
The following essay sees hierarchy as a particular form of group coordination, defined by its distribution of roles and decision-making responsibility among the members of an organization.
Hierarchy has three fundamental features: a plurality of social strata, or ranks, to which individuals are assigned; subordination, meaning that people of lower rank are responsible for carrying out the decisions of people of higher rank; and concentration of decision-making power, which implies that there are fewer people at the top of the organization than there are at the bottom, hence its characteristic representation as a pyramid.
I start by analyzing some of the basic structural characteristics of hierarchy. There are two reasons which make hierarchy an attractive form of coordination: its time-related efficiency and, by extension, its capacity to solve collective action problems in large organizations.
The efficiency dilemma
There is a fundamental trade-off that characterizes decision-making processes. Decisions can be made by few or by many. Each extreme comes with its benefits and disadvantages.
Let us start with many. Consulting many people before agreeing on a decision has the notable advantage of integrating a high amount of individual preferences and knowledge in the decision-making process. And yet, the higher the number of people involved, the more likely the process will be time-consuming. This is because dialogue requires a division of time among participants: while someone speaks, others must wait for their turn.
Giving everyone an opportunity to speak in large groups can thus create an endless discussion (there are a few exceptions to this: participatory processes during which all have the possibility to express themselves simultaneously. Voting, surveys, and suggestion boxes are but a few examples of procedures that allow for efficient, although limited, expression of individual preferences.)
One way to avoid never-ending deliberation is to restrict it to a limited period of time. However, the higher the number of participants, the less time there is for each to participate. Large deliberating assemblies end up requiring substantial time to achieve constructive dialogue, and even more to achieve consensus. As such there are limits to the extent to which time can be constrained.
There may also be second-order effects. Philosopher Jeremy Bentham noted that the larger the assembly, the more the “active aptitude” of its members becomes diluted: given their reduced influence, members have less incentive to actively participate. This leaves us with a “vacant seat” problem: some members may decide to opt out in order to spend their time elsewhere, resulting in a decision that is not as representative as one might have wished.
Now let us consider what happens in the opposite situation. If only a few people are involved in taking a decision, there is a risk that the dictum will reflect the narrow perspective of those who are in a position to dictate their will. Nonetheless, by avoiding the usual deliberation and confrontation of participatory processes, this may in fact achieve considerable economies of time. The resulting trade-off is illustrated in the following table:
This is one of the structural features of hierarchy: it is simply better at getting things done quickly and efficiently, although this does not guarantee that decisions are well-informed.
Hierarchical organizations usually compensate for this weakness by implementing additional bottom-up information transmission processes, whereby people at the bottom of the pyramid codify and synthesize available knowledge for the benefit of decision-makers. Still, one other reason explains the prevalence of hierarchy: its capacity to deal with organizational growth and complexity.
Dealing with growth and complexity
As an organization grows, its internal dynamics become increasingly complex. Increasing the number of agents within an organization equally increases the probability that some agents will end up having overlapping interests for perceived exclusive resources (whether for financial gain, reputation, control over projects, or the attention of superiors.)
Theories of ecological competition argue that in such environments, “the intensity of competition depends on the number of actors in the competing population”. In addition, psychologists have noted that an individual’s cognitive capacity to form significant committed relationships is generally limited to about 150 people.
Both ecological dynamics and cognitive limitations thus suggest that as the number of organizational agents increases, so does the probability of political behaviour, dissension and conflict. The capacity for fast decision-making makes hierarchy almost ideally suited to deal with such political problems. Troublemakers can quickly be sanctioned. Whenever an internal or external crisis arises, central authorities can watch, observe, and intervene at the moment that suits them best. Additional layers and subdivisions can easily be created in order to rearrange subordinates into manageable groups. This provides hierarchical organizations with a coercive structure that allows them to react rather effectively to unexpected events.
The capacity for coercion also makes hierarchy an efficient solution for dealing with collective action problems. In fact, many social innovations would probably never have emerged without hierarchy. This is notably the case of irrigation, which saw its first extensive agricultural use in the Fertile Crescent. Manual irrigation is particularly prone to the free-rider problem: because it takes time and effort to bring out water from a river, it is much easier to let your neighbour do the work first and then simply divert his water onto your own land. Relying on a coercive hierarchy helps avoid such problems by making sure that everyone follows the rules.
My next piece turns to the human and societal elements that contribute to making hierarchy such a predominant feature of contemporary organizations.
Image : Jokographic.
 This follows economist Kenneth Arrow’s (1951) theory of social choice. Arrow claims that for every type of organization, there is generally a set of desirable characteristics for collective decision-making. However, no form of decision-making can possibly satisfy all of these desirable characteristics at the same. Any mechanism for taking decisions on behalf of a group of individuals will therefore imply some form of trade-off. This goes for any kind of group.
 Bentham (1791), cited by Elster (2013).
 As Herbert Simon (1947/1997: 256) once noted, “the criterion of efficiency dictates that choice of alternatives which produces the largest result for the given application of resources” (i.e. time and money).?
 This also implies that decisions may not be representative of group members’ interests. Contrary to Arrow (1951), Miller (1992) quite brilliantly points out that “a close analysis of hierarchy [using the mechanism designs of social theory] suggests that the natural outcome of self-interested behavior in a hierarchy should be persistent inefficiency. Hierarchy does not permit a perfect realignment of individual with group interests.” (Miller, 1992: 12)
 Hannan and Carroll (1991: 30).?
 Hill and Dunbar (2003).
 The idea that hierarchies are better suited to deal with problems of large-scale coordination are notably embedded in Robert Michels’ (1915) “iron law of oligarchy.”?
 Heath (2001).
 Some write of these early civilizations as “hydraulic empires.” See Wittfogel (1957).
 Many parts of the developing world (such as the rice paddies of rural China) still employ designated “water guardians” to monitor irrigation practices among farmers and warn authorities of any abuse.
Arrow, Kenneth (1951). “Alternative Approaches to the Theory of Choice in Risk-Taking Situations”, Econometrica, Vol. 19, No. 4, pp. 404-437.
Elster, Jon (2013). Securities against Misrule: Juries, Assemblies, Elections. Cambridge University Press.
Hannan, Michael T. and Glenn R. Carroll (1991). Dynamics of Organizational Populations: Density, Legitimation and Competition. New York: Oxford University Press.
Heath (2001). The Efficient Society. Penguin Books.
Hill, R. A. and R. I. M. Dunbar (2003). “Social Network Size in Humans”, Human Nature, Vol. 14, Issue 1, pp. 53-72.
Miller, Gary J. (1992). Managerial Dilemmas: The Political Economy of Hierarchy. Cambridge University Press.
Simon, Herbert (1947/1997). Administrative Behavior. Simon and Schuster.
Wittfogel, Karl August (1957). Oriental despotism: a comparative study of total power. New Haven: Yale University Press.