Research Shows Flatter Hierarchies’ Hidden Cost

Flat hierarchies have increasingly taken effect in businesses—especially among small and/or tech-focused businesses.

Departing from the traditional hierarchical structure, the “flat” model reduces formal supervision in ways that are often assumed to foster egalitarianism and collaboration among employees.

While previous research and media reporting have examined the propensity for flat hierarchies to boost innovation, as well as employee autonomy and satisfaction, new findings show a “hidden cost” from flatter hierarchies: They may reduce gender diversity.

“Firms that tout flatter hierarchies attract a lower share of applicants that are women,” says Assistant Professor of Management and Organization Reuben Hurst at the University of Maryland’s Robert H. Smith School of Business and co-author of “The effect of flatter hierarchy on applicant pool gender diversity: Evidence from experiments,” in Strategic Management Journal.

This relative aversion seems related to the fact that, compared to men, “women perceive flatter structures to (1) offer less opportunity for career advancement, (2) burden them with more work, and (3) be more difficult to fit into,” write Hurst and his co-authors Saerom (Ronnie) Lee of the University of Pennsylvania’s Wharton School of Business and Justin Frake of the University of Michigan’s Ross School of Business.

To examine how job seekers react to a flat hierarchy, they partnered with a US healthcare startup, which gave them permission to help recruit a software engineer and a business development representative. They sent emails to prospective applicants in which they randomized whether the company was characterized as having a flatter hierarchy. They found that characterizing the firm's organizational structure as “flatter” reduced the proportion of interested women job seekers by 14% and lowered the share of women applicants by 28%.

A follow-up survey of about 8,500 subjects showed the relative aversion by women “corresponded to perceptions of less opportunity for career progression, becoming saddled with a disproportionately heavier workload (including extra tasks, e.g., cleaning, note-taking, food delivery) and being more difficult to fit into.

The authors acknowledge both men and women may perceive and be repelled by flatter employers providing fewer promotional opportunities, resulting in more intense competition and conflict. However, “this perception may be stronger among women,” they write.

And “more generally, women may be disproportionately disinclined to apply to flatter employers if they perceive these structures as having less managerial oversight and cultivating informal ‘bro cultures’ that marginalize women.”

The perceptions stem, say the authors, from the propensity for people to surround themselves with like-minded—and like-cultured—individuals, creating echo chambers and consolidating power in in-groups. “This almost always puts women and minorities at a disadvantage.”

Hurst says, “Organizations looking to increase their representation of women and foster an inclusive work environment shouldn’t, necessarily, create more layers in their hierarchy.” Instead, he adds, “These companies should instead address the perceived challenges and underlying issues associated with flatter structures to mitigate biases and inequalities that can turn their workplace into a ‘good ol’ boys club’ and deter women.”

Read the full study, as published by Strategic Management Journal.