From Cog to Contributor: How to Extract Value from Hierarchy

Hierarchy can offer teams substantial coordination benefits, but hierarchy can also cause inequities and conflicts. We propose that the key to extract value from hierarchy, and avoid the downsides, lays in helping teams to overcome the self-esteem deficits that drive conflicts in hierarchical teams. Drawing on theories of conformity and social comparison, we propose that hierarchical environments pose a direct threat to individual distinctiveness and esteem. We test the novel idea that the self-esteem deficits imposed by hierarchy can be overcome if teams create the possibility for multiple sub-hierarchies to exist within the team, such that while there may be an overall leader, everyone still has their own unique sub-area in which they are the top of their own hierarchy. Such team environments can allow for the bright side of hierarchy – improved team coordination and performance – without the down side. We test our predictions via three studies – two experimental studies and a field quasi-experiment on 80 start-up teams. Our findings show that teams can indeed best extract value from hierarchy – in the form of coordination and performance improvements – when members all have their own unique areas.