Business & Leadership

How to Reconcile Leadership and Hierarchy in a Modern Company?

Organizations have long been based on a strict command and control model, but those days are coming to an end. In the modern workplace, executives and staff members alike aspire to being listened to, to having their independence recognized and respected. A vast movement around the liberated company has occurred and it proposes a radical rethink of the way a company is run.

Organizations have long been based on a strict command and control model, but those days are coming to an end. In the modern workplace, executives and staff members alike aspire to being listened to, to having their independence recognized and respected. A vast movement around the liberated company has occurred and it proposes a radical rethink of the way a company is run.


For many the concept of a liberated company is concerning. Is it just a fancy term for chaos? Is it possible? How to incorporate the promise of freedom from niggling checks on work, without opening the door too wide to other excesses, such as slackness. How to successfully ‘let go.’ The answer is in a modern and balanced pact between Leadership, trust and also a hierarchy which rethinks its role, to encourage more than control.

 

The modern governance of a liberated company is not anarchy, rather it finds the right balance between Leadership and management hierarchy. Management have two tools of governance at their disposal, leadership and power. They must use the first one more than the second.

 

Why do companies have this fear of giving more control over to their staff, to trusting their colleagues? Why do they feel the need to put in place checks, processes and bureaucracy?

 

The need to satisfy the client, the overriding necessity to produce in a measurable and reliable way, goes a long way to explaining why legitimate checks and processes exist. And yet this often crucial imperative can lead to a shift toward authoritarian tendencies and a cutting off of dialogue between management and staff, because fear is a bad teacher and because those who have the final say, the higher-ups, sometimes want to speak more than listen.

 

The management team has two modes of intervention ‒ of governing ‒ at their disposal: leadership and power. How can one be reconciled with the other? Before answering this, it’s important to define what we mean by each, their qualities and limits.

 

When it comes to power, we must make a distinction between legitimate power and illegitimate and abusive power. Legitimate power, to be the ultimate decision maker, is not a problem per se. Legitimate, non-abusive power is not forbidden or useless. It provides, when there is disagreement, a means to progress. It sets the ground-rules for working together, it bestows responsibility, and rights and obligations.

 

Don’t confuse legitimate and responsible power with illegitimate power and its abuse. The abuse of power, frequent in some organizations, and well publicized in the media, explains the need for liberated companies, stronger autonomy, and another mode of governance, founded on Leadership.

 

In terms of governance, power (legitimate) is founded on a vertical company organization. The higher-ups make decisions and the lower-downs carry them out. The apparent efficiency of this model makes it tempting. Yet models of organization founded on this top-down structure have shown their limits: the temptation to abuse power, the possible disconnect between management and teams, the danger that a company stops listening to clients, etc.

 

When it comes to Leadership, we are talking about a different type of governance, based on a flat relationship between management and staff. Leadership is based on participation and the creation of voluntary consensus, and not on the power to have the final say. Companies where governance is based on free participation liberate the creative energies of staff. The other characteristic of governance by Leadership is the decentralization of power, empowerment. Empowerment encourages the movement of decisions ‘further down’ or towards the interface between a company and its clients, closer to the teams out on point.         

 

Marrying governance founded on leadership and one founded on classic power (legitimate) is important in order to have contrasting ways of functioning. But in practice, each company uses the two modes of governance, leadership and power, as well as horizontality (respect and consensus) and verticality (the final decision). The real question, which rests unexplored, is: “How to combine two modes of governance which seem diametrically opposed?” Governance founded on power (legitimate) provides efficiency, security and clarity. Governance founded on leadership provides creativity, job-satisfaction and togetherness. Could we do without one or the other? Doubtless we couldn’t. Even in companies that claim to have a liberated workforce, there is still a strategy imposed by shareholders and management, but it is one that is conscious of and strongly encourages freedom in course of action and organizational choice.

 

 

The seven guiding principles of a liberated company, in relation to the ways companies have classically operated are as follows:

1- Do away with endless checks

2- Make workers more autonomous

3- Connect well-being at work to productivity

4- Adopt the principle of subsidiarity

5- Have a vision, carried by a charismatic leader, outstanding and humble

6- Have shared values

7- Inverse the managerial pyramid

               

 

By Pierre Lorenceau

 

 

This article also appears in our monthly newsletter “Leaders Wisdom Journal”. To Subscribe.

Read the full Special Report: Leadership & the Liberated Company

Do liberated companies get results? Are they better places to work than those with hierarchical management structures? Leaders League examines the phenomenon in the latest installment in our Leadership series.
Summary Bernard Laporte: “Authority means nothing without leadership” Clara Gaymard: “A liberated company puts people at the heart of its ambitions” Jean-Pierre Raffarin: “The leader is not the star” Google: Freedom With Strings Attached?

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