The psychology of hierarchy among employees: Welcome to the ballet

By Mike Cook
For The Bellingham Business Journal

Understanding the psychology of organizational hierarchy is a key contributor to business success. You have probably already read several articles about the necessity, value and power of hierarchy, but what about the psychology?

If your business is small(er), the idea of talking about hierarchy may not even make sense to you. As the owner, you may work in the business. In that case, for your employees — explicitly or implicitly — you are the origin of the hierarchy.

For you it may simply be everyone reporting to you.

However, for your employees that arrangement constitutes hierarchy. Real or imagined, in their minds there is a hierarchy and it has everything to do with authority and control until you make it otherwise.

This is where the psychology comes in.

You must realize that beyond “everyone reports to you,” there are signs of informal hierarchy as well that employees follow:

  • Do you apparently treat any employees more favorably than others?
  • Are certain employees allowed to be challenging to work with?
  • Are you openly critical of certain employees and openly forgiving with others?
  • Is there a clear understanding of what constitutes great service?
  • Have employees been trained to work with autonomy?

As you read through this brief list you may find yourself becoming either conscious of certain behavior or annoyed with thoughts like, “Why can’t they just act like adults?”

As far as your employees acting like adults, I would ask: have you set it up so they can?

Is there a need for hierarchy? You bet. Not having a clearly defined and helpful hierarchy is as irresponsible as one devoted only to control. It is one of the keys to your long-term success. Ultimately what you want is a business that delivers on its promises even on the days when you are home sick or on vacation. A hierarchy that instills confidence in employees will do that.

People are not machine parts, despite quotes like the one below found in a recent article by David Ingram, “Why is Organizational Structure Important?” which appeared in the Houston Chronicle:

“By paying mind to the organizational structure, departments can work more like well-oiled machines, focusing time and energy on productive tasks.”

There is so much to say about all that is wrong with using mechanical terminology like “well-oiled machines” when talking about today’s organizations that I am not even going to go there.

I’ll just say this: Stop it.

Your coffee shop will never be a well-oiled machine. Your auto service shop will never be a well-oiled machine. Your hair salon or spa will never be a well-oiled machine.

And you should be glad they won’t; they are centers of service and therefore more like ballets than machines. Your employees need to be able to dance with your customers since service is so personal and individualized. Machines don’t do service; they do production, and very few businesses these days are strictly production.

So now, back to the psychology. Historically, the graphic organizational chart and the term hierarchy were synonymous. Boxes and connecting lines were used to depict the flow of control and authority within an organization. This was, and still is, a pretty two-dimensional understanding of hierarchy. This representation assumed a lot of things that do not hold true in your coffee shop or hair salon. First and foremost, it assumes that everyday proceeds smoothly. Honestly, when was the last time that happened?

Stuff happens each day, all day long that has little to do with what was planned. You open the front door, roll the dice and it is a crap shoot from beginning to end. In a successful business, especially one that is smaller, well trained and confident employees do not have time to worry about who is in charge. They need to be focused and prepared to deal with what needs to be done, right now.

Psychologically, employees in the smaller business need to see the “hierarchy” as a source of empowerment and a resource — a place to go when they have a need for some way to deliver service, not a place to go for permission. When the customer has a need and an employee must ask for permission, the customer thinks, “If you cannot provide the service I need, why am I talking to you?” Employees know that. They just became invisible.

Your employee’s psychological needs are as important as their training needs. Let them know you trust them, give them the tools to deliver and be there when things go sideways.

You will end up with something much more valuable than control. You will get performance.

Mike Cook lives in Anacortes. His columns appear on every other Tuesday. He teaches in the MBA program at Western Washington University and also runs a CEO peer advisory group in the Whatcom/Skagit area. He can be reached at


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