Why Managers Matter

ONE OF the most important books you’ll read this year is Why Managers Matter: The Perils of the Bossless Company by Nicolai Foss and Peter Klein. Max DePree wrote that the first responsibility of a leader is to define reality. That’s what you will find here—a dose of reality.

It is popular today to talk about the bossless organization and the death of hierarchy. Not everyone is fooled by the hype. The purpose of the book is to dispel the notion that hierarchy and managers are on their way out. Any student of organizational theory knows that this is a reoccurring issue making it both contemporary and relevant.

Hierarchies not only work better than the alternatives most of the time but they are also aligned with our basic human nature, which, more than anything, explains why they persist. Of course, there is a great variation among hierarchies. Some people do them well, and some don’t. “Authority and hierarchy—rightly exercised—are useful and necessary for companies to thrive.”

The hierarchically organized company actually emerged during a period in world history notable for radical changes in technology, a sweeping expansion of global trade, and increases in public education—namely, the period from the middle of the nineteenth century until World War I.

Growth drives hierarchy. Hierarchies help to deal efficiently with complexity. And in times of great uncertainty, we need managers. “It is when something extraordinary happens that we need managers the most.” A well-structured hierarchy helps firms buffer unanticipated shocks.

The author’s close examination of bossless organizations reveals that they are perhaps flatter but not really bossless. Even the outliers like Gore, Valve, Zappos, Oticon, and Semco, are not genuinely bossless organizations. There is a place for these leaner, flatter structures. Bosslessness, at best, works for a handful of companies operating under special conditions, such as small companies that carry out simple tasks—like the food processor Morning Star.

Decentralized structures tend to be most effective in particular circumstances, such as where groups and tasks can be broken down into smaller independent units. Siloing, turf wars, and the like are more easily avoided when teams are organized around projects—say, building a bridge or developing a specific piece o software—rather than on the business functions such as marketing, sales, or finance.

Hierarchy helps solve the universal problems of coordination and cooperation. “Coordination means figuring out what should be done, by whom, when, how, and in what quantities.” Coordination defines responsibilities and how my job relates to yours. It is about how an organization brings people together. “Cooperation is about getting them to do it, even when doing so is not in everyone’s self-interest.” These management tasks don’t just go away just because we might decide to go Bossless. “Bosses matter, not just as figureheads but as designers, organizers, encouragers, enforcers.”

Decentralization and delegation are tools that managers can use when the conditions are right. They are not a unique feater of the bossless organization.

It is possible to delayer, cut management roles, and give workers more discretion, though doing so does not result, of course, in a bossless company. As we have seen, such organizations normally have very powerful bosses, cliques, and other sources of authority—and even the most bossless companies have bosses who set them up and make sure the model is working.

Although the authors would agree the management of people needs to change, that is not the point of the book. They cover how hierarchies have changed and how the people in them need to think about their work. We know how to manage people. We just don’t do it. And that is the key. We keep looking for some magic bullet as we look around at who or what to blame. Hierarchy is not the problem. Managers are not the problem. We are.

When things aren’t working right, it is expedient to blame something other than ourselves. Inequities, engagement, micromanagement, and the like are not the fault of the hierarchy. It is the fault of people in the hierarchy—leaders, managers, and employees alike.

The real value of this book to me is that it helps to take hierarchy and managers off the table so we can deal effectively with the organizational issues of the day. We can get on with the personal inner work necessary to get to where we need to be.

There are no universally “best” solutions to organizational problems, only trade-offs that depend on the contingencies facing the company. Identifying and acting upon those trade-offs—not decentralizing everything, everywhere—is the key to successful leadership.

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