Why Managers Matter

orONE of the most important books you will 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 the truth. That’s what you’ll find here—a dose of truth.

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 idea that hierarchy and managers are out. Any student of organization theory knows that this is a recurring issue that makes it contemporary and relevant.

Hierarchies not only work better than the alternatives most of the time but they are also consistent with our basic human nature, which, above all, explains why they persist. Of course, there are many differences in hierarchies. Some people do it well, and some don’t. “Authority and hierarchy – properly used – are useful and necessary for companies to thrive.”

The hierarchically organized company actually emerged in a period of world history marked by radical technological changes, a rapid expansion of global trade, and an increase in public education—namely, the period from the mid-nineteenth century to the First World War.

Growth drives hierarchy. Hierarchies help deal effectively with complexity. And in times of great uncertainty, we need managers. “It’s when something extraordinary happens that we need managers.” A well-structured hierarchy helps companies avoid unexpected shocks.

The author’s close examination of bossless organizations reveals that they may be more secretive but not truly bossless. Even outliers like Gore, Valve, Zappos, Oticon, and Semco, are not truly bossless organizations. There is a place for these thinner, flatter structures. Bosslessness, at best, works for some companies that operate under special conditions, such as small companies that do simple tasks—like food processor Morning Star.

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

Hierarchy helps solve universal problems coordination and cooperation. “Coordination means knowing what needs to be done, by whom, when, how, and in what quantity.” Coordination defines responsibilities and how my work relates to yours. It is about how an organization brings people together. “Cooperation is making them do it, even if doing it is not in everyone’s self-interest.” These management tasks don’t just go away just because we decide to go There is no boss. “Boss are important, not just as figureheads but as designers, organizers, motivators, implementers.”

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

It is possible to slow down, cut management roles, and give workers more discretion, although doing so will not result, of course, in a bossless company. As we have seen, such organizations often have very powerful bosses, cliques, and other sources of authority—and even most bossless companies have bosses who build them and ensure that the model worked.

Although the authors agree that people management needs to change, that is not the point of the book. They cover how hierarchies are changing and how people need to think about their work. We know how to manage people. We just didn’t do it. And that is the key. We keep looking for a magic bullet as we look around for who or what to blame. Hierarchy is not the problem. Managers are not the problem. It’s us.

When things don’t go our way, it’s appropriate to blame something other than ourselves. Inequity, engagement, micromanagement, etc. are not the fault of the hierarchy. It is the fault of the people in the hierarchy—leaders, managers, and employees.

The real value of this book for me is that it helps to get hierarchy and managers off the table so that we can be effective in dealing with the organizational issues of the day. We can continue the personal inner work necessary to reach what we need.

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

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