Hierarchy organises the flow of authority within an organisation. But it’s also there to help prioritise different areas within the business.
In traditional, centralised organisations, hierarchy is viewed in terms of people. For example, higher-level management has more decision-making power than lower-level employees. But what about managerless companies? For example, those following decentralised governance models like Holacracy. With no people-based hierarchies, how can decision-making still flow throughout the organisation?
One of the common challenges with the traditional way of looking at hierarchies in organisations is that there’s often a gap and lack of alignment between strategic organisational objectives and those of different business units and departments.
A solution is to follow a hierarchy of purpose, not people. In doing so, people can show up in multiple parts of the organisation as everyone can hold a portfolio of roles rather than one role.
This article aims to explain the hierarchy of purpose and how it works in decentralised, managerless companies.
More and more organisations are tapping into the power of ensuring their organisation has a purpose—from appointing chief purpose officers to unveiling new purpose statements. While these efforts may be enough in traditional, centralised organisations, decentralised organisations take purpose a step further.
Decentralised organisations are anchored in an organisational purpose, which is used to drive long-term value within the organisation. The purpose is embedded in every process and system developed, and projects are based on their contributions to the purpose.
Without a purpose, it’s harder to achieve alignment between members, and there’s no way of knowing what projects to prioritise. Your purpose is your north star. In managerless companies, it’s a way to ensure all members are on the same path and contributing to the organisation’s long-term success.
With distributed authority in place, organisations need a way to coordinate and align work. The concept behind the hierarchy of purpose is to help all members within an organisation better prioritise projects and to assist with decision-making.
Traditional organisations often focus on developing strategies that try to predict and force a particular outcome—which is how decisions are made. But, as decentralised organisations tend to follow more of a “Sense and Respond” mindset, they need a way to make informed decisions on new and unexpected challenges. That’s where the purpose is so essential. Acting as the compass of the organisation, the purpose provides direction for members to make decisions.
Many decentralised organisations adopt a consent decision-making practice, whereby consent is given unless you can see how a decision would cause harm to the organisation—i.e. not contribute to the purpose. However, should urgent, unexpected circumstances arise, and a decision needs to be made quickly, any member can jump in and respond as they see best. This is because the organisation's purpose acts as a way to orient members to know how to make informed decisions on unexpected issues that come up.
Following the hierarchy of purpose is also a way to organise the work required to achieve, or at least continue striving towards, the purpose. It’s a way to prioritise which projects should come first, as well as guiding decision-making. For example, when deciding between A or B, you should ask yourself which option contributes more to achieving the purpose.
In practical terms, following a hierarchy of purpose means that you have an organisational purpose with sub-purposes. In Holacracy, a decentralised management framework - a Circle - is created to hold the organisation's purpose, and then various sub-Circles are created, each with their own sub-purpose.
Roles are created in line with a Circle’s purpose, contributing to moving towards that purpose. Each Circle has a Circle Lead who sets the strategies and priorities for the whole Circle. They also have the authority to create roles in that Circle and appoint people to these roles. Role fillers need to align their role work around these so that the entire Circle can effectively manifest its purpose. To do so, each role has authority over their role accountabilities.
Within these Circles, decisions are made by prioritising according to the purpose. But it’s important to note that prioritisations are relative as, in self-organised organisations, everyone has the authority (and responsibility) to make their own prioritisations moment-to-moment as unexpected events happen.
Determining what to do at any moment ultimately comes down to an intuitive judgement call firmly grounded by your role, the organisational purpose (and any sub-purposes) and your role’s accountabilities. It’s also important that decisions are made utilising Integrative Decision Making—a practice that seeks input and feedback while also allowing you to choose which input to integrate.
When everyone in the organisation clearly understands the company’s purpose, prioritising projects becomes second nature. This leads to better cohesion all around. In purpose-filled organisations, everyone can fulfil their and the organisation’s purpose because that’s what the system is designed to achieve.
By following a hierarchy of purpose, you’re ensuring that each part of the organisation is logically accountable for a sub-purpose of the main purpose. That way, departments, or Circles in Holacracy, have a clear relationship rather than working in silos—as they all contribute to the main organisational purpose.
Not only will this help with organisational development, but member development too. When people feel that their purpose is aligned with the organisation’s purpose, the benefits expand to include stronger engagement.
Following a hierarchy of purpose allows people to bring a greater consciousness to the complexities of the organisation's work. Instead of mindlessly doing something simply because a higher authority told you to, you’re consciously considering the greater impact of that work and ensuring each decision you make aligns with the greater purpose. Members get more fulfilment out of their work—which brings countless benefits to the organisation.
Nestr is a tool that allows members of decentralised organisations to align around purpose, prioritise role-based organisation and make power dynamics and hierarchies explicit by rooting them in governance.
For more on decentralised organisations, check out: Becoming Decentralised: Moving from hierarchy to collaboration
.png){kind=logo}
