BUSI 610 Week 7 Literature Review: Final Example

Self-Managing Organizations and the Limits of Less Hierarchy: A Review of the Literature

Abstract

This review examines research on self-managing organizations, which hand much of the authority once held by managers to teams and to people in defined roles. Drawing on fifteen peer-reviewed studies, it traces the idea to theories of organic design and information processing and synthesizes evidence from self-managing teams and from organizations without traditional bosses. The evidence shows that self-management can improve performance, empowerment and commitment, particularly for uncertain and interdependent work, but that it depends on structures that are easy to overlook: clear roles and procedures, peer monitoring, external leaders who intervene at the right moments and organizational support. Studies of hidden peer control and of start-ups that benefit from hierarchy show the limits of less hierarchical designs. The review concludes that self-management is best understood as a different structure rather than the absence of one, identifies gaps in the research and offers implications for managers.

Introduction

Organizations have long relied on hierarchy to divide work, coordinate effort and hold people accountable. Managers assign tasks, make decisions and monitor performance, and authority flows from the top down. In recent decades, however, a growing number of organizations have experimented with designs that reduce or remove managerial layers, distributing authority to teams or to individuals in defined roles. Some firms have become well known for running without traditional bosses, while many more use self-managing teams within otherwise conventional structures. The appeal is clear: faster decisions, more engaged employees and fewer costly layers of management. But so are the risks: confusion about who decides, conflict, burnout and coordination failures as organizations grow.

Daft (2016) frames organizational design as a set of choices about structure that must fit an organization's strategy, environment and technology. Self-management represents an extreme point on one of those choices, the degree of centralization and hierarchy. Whether that point is desirable is an empirical question, and the research that addresses it is scattered across studies of teams, studies of whole organizations and conceptual work on new forms of organizing.

The question here is practical: when does self-management, whether in a team or across a firm, raise performance and improve working life, and when does it do harm? It is organized thematically. After tracing the idea's roots and defining its terms, the review examines evidence from self-managing teams, evidence from organizations that have reduced hierarchy across the board, the hidden forms of control and leadership that flat structures require and the conditions under which self-management succeeds. It closes with a synthesis, unanswered questions and practical advice.

Method of the Review

Sources were identified through searches of management and organizational psychology databases using terms such as self-managing teams, self-managed work teams, team empowerment, self-managing organizations, holacracy, flat structure and less-hierarchical organizing, supplemented by the reference lists of review articles. Priority went to peer-reviewed studies that used comparison groups, multiple organizations or meta-analytic methods, and to influential conceptual articles that define the field. Case studies were included where they illuminate mechanisms, such as peer control or the reintroduction of managers, that larger studies cannot easily observe. The review draws on fifteen scholarly sources, grouped by the level they examine, team or organization, and by the question they address.

The review distinguishes between two literatures that are often blended in popular discussion. Research on self-managing teams examines groups that manage their own work within a larger organization that still has managers; research on self-managing organizations examines firms that decentralize authority across the whole enterprise. Findings from one do not automatically transfer to the other, and keeping them separate helps explain why the evidence sometimes appears to conflict.

Roots in Organization Design

The idea that less hierarchical structures suit some conditions is not new. Daft (2016) presents the distinction between mechanistic and organic organizations, drawn from classic research on how firms in stable and changing environments differ. Mechanistic organizations centralize authority, specialize tasks narrowly, rely on rules and communicate vertically; organic organizations decentralize decisions, define tasks flexibly, rely on teams and communicate laterally. Organic designs suit environments where conditions change rapidly and problems cannot be anticipated, while mechanistic designs suit stable, predictable environments.

Galbraith (1974) gave this distinction a precise logic. He argued that organizations are information-processing systems and that design succeeds when an organization can handle as much information as its tasks generate. When tasks are predictable, rules, hierarchy and goals can coordinate work with little information flowing up and down. As uncertainty increases, exceptions overwhelm the hierarchy, and organizations can either shrink how much information must move, for example by giving whole products or customers to self-contained units, or enlarge the channels that carry it through lateral relations such as liaison roles, task forces and teams. Self-managing teams combine both strategies: they are self-contained units with authority to resolve exceptions locally, reducing the load on the hierarchy.

These roots matter because they suggest that self-management is a response to specific conditions, not a universally superior design. A theory of design that predicts organic structures for uncertain work also predicts that mechanistic structures remain appropriate for routine work, a point to which this review will return. Daft's discussion of control systems adds a further root. Organizations can coordinate work through bureaucratic control, relying on rules and supervision, through market or output control, relying on measured results, or through clan control, relying on shared values and commitment. Self-managing designs lean heavily on clan and output control in place of bureaucratic supervision, which helps explain both their appeal in settings where rules cannot anticipate every situation and their dependence on shared norms and good performance information.

Defining Self-Managing Organizations

Research on self-management has used a range of terms, from autonomous work groups and self-directed teams to holacracy and boss-less organizations, which makes definitions essential. Lee and Edmondson (2017) propose a precise definition: self-managing organizations are those that radically decentralize authority in a formal and systematic way throughout the organization. Two features distinguish them from firms that simply empower some employees. First, decentralization is formal, written into the organization's rules and roles rather than dependent on a manager's goodwill. Second, it is systematic, applying across the organization rather than to selected teams. By this definition, a conventional firm with a few self-managing teams is not a self-managing organization, though the teams themselves are self-managing.

Puranam et al. (2014) offer a framework for judging whether such organizations are genuinely new. They argue that every organization must solve two universal problems: dividing labor, which involves breaking work into tasks and allocating those tasks to people, and integrating effort, which involves providing rewards and providing information so that people's work fits together. On their view, a form of organizing deserves to be called new only if it handles these problems differently. Martela (2019) applied a related framework to compare bureaucracy, Mintzberg's adhocracy and self-organizing designs, concluding that self-managing organizations are distinctive mainly in how they distribute decisions about who does what, relying on self-selection, peer processes and transparent rules rather than managerial assignment.

These definitions help separate claims. When a firm describes itself as flat, the questions are which decisions have actually been decentralized, how formally and to whom. The answers determine which body of evidence applies: research on self-managing teams, research on organizations without traditional managers, or both.

Evidence From Self-Managing Teams

The largest body of evidence concerns self-managing teams within organizations, and it is generally favorable. Cohen and Ledford (1994) studied a telecommunications company in which some groups operated as self-managing teams while others doing similar work remained under traditional supervision. Using this quasi-experimental comparison, they found the self-managing teams ahead on ratings of performance and of the quality of employees' working lives, although the advantage varied across types of work. The comparison groups make the study more persuasive than a case study, though teams were not assigned randomly, so preexisting differences could account for part of the effect.

Kirkman and Rosen (1999) shifted attention from formal self-management to the psychological experience of empowerment. Studying more than one hundred teams across several organizations, they found that teams whose members collectively felt their work was meaningful, had impact, offered autonomy and was within their capability performed better on productivity, proactivity and customer service and reported higher satisfaction and commitment. Importantly, empowerment depended on the organization's context: the behavior of external leaders, the responsibilities given to teams and human resource practices that supported teamwork all contributed. Their findings suggest that self-management is as much a property of the system around the team as of the team itself. This point has a practical corollary: an organization cannot simply declare teams self-managing and expect empowerment to follow. The surrounding systems, how teams are rewarded, what information they receive and how their leaders behave, must change as well, or the label will not match the reality employees experience.

Stewart (2006) provided the broadest quantitative evidence through a meta-analysis of research on team design. Combining results across many studies, he found that features such as team autonomy and empowering leadership were associated with higher team performance, along with member composition, though the strength of these relationships varied with the type of task. The meta-analysis strengthens confidence that autonomy generally helps but also cautions that its value depends on the work being done.

The evidence also identifies limits. Langfred (2004) identified a trap: when team members both trusted each other a great deal and worked largely on their own, they stopped checking each other's work, and results declined. The very qualities associated with good teams, trust and independence, became a liability when they reduced attention to whether work was being done well. Bunderson and Boumgarden (2010), studying self-managed production teams, found that teams with more structure, including specialized roles, formal procedures and a clear internal hierarchy, learned more than less structured teams, because structure reduced conflict and encouraged information sharing. Magpili and Pazos (2018), in a systematic review of input factors, concluded that self-managing team performance depends on factors at several levels, from members' skills and team composition to leadership and organizational support.

Taken together, the team evidence supports self-management, but a structured self-management in which autonomy is paired with roles, procedures and attention to performance. The studies that find the largest benefits describe teams embedded in supportive systems; the studies that find problems describe autonomy without monitoring or teams without clear roles. The disagreement is less about whether self-managing teams work than about which version of self-management is being studied.

Evidence From Whole Organizations

Evidence on organizations that have reduced hierarchy across the board is thinner and more mixed than evidence on teams, partly because such organizations are rare and partly because they are difficult to compare systematically. Lee and Edmondson (2017) reviewed the available research and identified recurring challenges for self-managing organizations, including ambiguity about how decisions are made, the difficulty of resolving conflicts without managerial authority, the burden on employees of taking on management tasks and the challenge of sustaining the design as organizations grow or face pressure. They concluded that self-managing organizations face real limits and that research should examine the specific practices that make them workable.

Studies of growth illustrate one of those limits. Burton et al. (2017) used GitHub, which started out with no conventional bosses and added managers as it grew, using it to explore the space between boss-less and hierarchical forms. The case suggests that as organizations grow, the coordination problems that peer processes can handle in a small group become harder to solve without designated roles for making decisions and allocating resources. Lee (2022), studying start-ups in the video game industry, found that hierarchy had different effects at different stages of work: studios with few layers came up with more original concepts, whereas studios with more layers were better at carrying concepts through to finished, commercially successful games. His findings challenge the popular view that start-ups should remain flat, suggesting instead that hierarchy helps with the execution and integration that turn creativity into results.

The comparative framework developed by Martela (2019) helps explain these patterns. Self-managing organizations solve the problem of allocating tasks through self-selection and peer processes, which work well when people have the information and motivation to choose well and when tasks can be adjusted flexibly. They solve the problem of coordinating effort through transparent rules and roles rather than managerial oversight. Where these mechanisms are strong, the organization can operate without many managers; where they are weak, for example in large organizations with interdependent work and limited shared information, the problems that managers traditionally solved reappear.

The organization-level evidence therefore suggests that self-management is possible but demanding. Organizations that sustain it invest heavily in formal rules, transparent information and processes for resolving conflict and making decisions, which means they are not unstructured at all; they have replaced one kind of structure with another. When those investments are not made, or when growth outpaces them, organizations tend to reintroduce hierarchy.

Hybrid Designs

Between conventional hierarchies and fully self-managing organizations lies a wide range of hybrid designs, and the evidence suggests that these may be the most practical for most firms. A hybrid might place self-managing teams in units where work is uncertain and interdependent, such as product development or complex customer service, while keeping hierarchical coordination for routine operations, compliance and the integration of work across units. Daft (2016) discusses designing different structures for different departments, which supports this approach, since departments with different technologies and environments often need different designs within the same organization.

The studies reviewed here are consistent with hybrids. Kirkman and Rosen (1999) found empowered teams performing well within organizations that still had external leaders and organizational systems. Lee (2022) found that hierarchy helped with execution while flatter structures helped with idea generation, which implies that an organization might use different structures for different stages of its work. The GitHub case examined by Burton et al. (2017) suggests that growing firms often move toward hybrids, keeping some peer-based processes while adding managers for coordination. A hybrid is not a compromise between good and bad designs; it is an application of the contingency principle that structure should fit the work.

Hybrids carry their own challenges. Employees who move between self-managing and hierarchical units may face different expectations, and the boundaries between units must be managed carefully so that self-managing teams receive the resources and information they need from the rest of the organization. Research on how to design and manage these boundaries remains limited, which is one of the gaps noted below.

Hidden Control and External Leadership

A common assumption is that removing managers frees employees from control. Barker (1993) challenged this assumption after observing a small electronics manufacturer that had abolished its supervisory layer in favor of teams. Members first agreed on values, then turned those values into norms and eventually into rules almost as precise as the old procedures, and they held each other to them. In Barker's term, control had become concertive, and in his account it bound workers more tightly than the old system had, since the watching now came from colleagues every hour of the day and lacked the procedural limits that restrain a supervisor. His study suggests that flat structures do not remove control but relocate it, sometimes in ways that employees find more demanding.

Self-managing teams also still need leadership, though of a different kind. Observing the coordinators assigned to self-managing teams at one plant, Manz and Sims (1987) concluded that the best of them avoided giving orders and instead coached members to watch, judge and reward their own work, an approach they described as leading workers to lead themselves. Morgeson (2005) refined this picture by showing that external leaders' active intervention helped most when teams faced novel or disruptive events, while unnecessary involvement in routine situations could undermine the team. The right amount of leadership, in other words, depends on the situation.

These studies have practical consequences for organizations considering self-management. Leaders must design peer control deliberately, with fair processes and limits, so that concertive control does not become oppressive. They must also redefine managerial roles rather than eliminate them, creating external leaders or coaches who support teams, help them build self-management skills and step in during crises. Organizations that remove managers without replacing these functions risk both oppressive peer pressure and teams left alone when they most need help.

Self-Management and Employee Well-Being

Much of the case for self-management rests on its benefits for employees: more autonomy, more meaningful work and greater commitment. The evidence supports some of these benefits. Kirkman and Rosen (1999) found that empowered teams reported higher job satisfaction and organizational commitment, and Cohen and Ledford (1994) found improvements in measures of the quality of work life. Autonomy is among the most consistently beneficial features of work design, and self-management increases it.

Yet the literature also reveals costs that are easy to overlook. Barker (1993) showed that peer control can be intense, with employees monitoring one another constantly and enforcing norms more strictly than managers had. Lee and Edmondson (2017) noted that self-managing organizations place management tasks, such as hiring, resolving conflict and allocating work, on employees who may not have chosen or been trained for them. When roles and decision rights are unclear, employees may spend considerable time and energy negotiating responsibilities, which can add stress rather than reduce it. The well-being effects of self-management therefore depend, like its performance effects, on how it is designed: autonomy supported by clear roles, training and fair processes is likely to benefit employees, while autonomy without structure may burden them.

Conditions for Effective Self-Management

Drawing these themes together, the literature points to several conditions under which self-management is most likely to succeed. The first is fit between the design and the work. Consistent with Galbraith (1974) and Daft (2016), self-management is most valuable when work is uncertain and interdependent, so that local knowledge and quick decisions matter, and least valuable when work is routine, where standardized procedures and hierarchy coordinate efficiently. The meta-analytic results of Stewart (2006) varied with task type, supporting this contingency view.

The second condition is clarity of roles and decision rights. Bunderson and Boumgarden (2010) showed that structure within self-managed teams supports learning, and organization-level research suggests that self-managing organizations depend on explicit rules about who decides what (Lee & Edmondson, 2017; Martela, 2019). Autonomy without clarity produces conflict and delay.

The third condition is mechanisms for monitoring and feedback. Langfred (2004) found that high trust and autonomy without monitoring hurt performance, and Barker (1993) showed that peer monitoring can become excessive. Effective self-management requires monitoring that is fair, transparent and focused on performance rather than conformity.

The fourth condition is leadership and organizational support. Kirkman and Rosen (1999) found that empowerment depended on external leaders, team responsibilities and supportive human resource practices, and Manz and Sims (1987) and Morgeson (2005) showed what effective external leadership looks like. Magpili and Pazos (2018) confirmed that factors at the organizational level shape team performance.

The fifth condition concerns scale and stage. Evidence from growing firms and start-ups suggests that the coordination demands of larger organizations and the execution demands of later stages may call for more hierarchy (Burton et al., 2017; Lee, 2022). Self-management may suit some units or stages of an organization better than others.

Synthesis

The literature supports a qualified conclusion. Self-managing designs can improve performance, empowerment and commitment, particularly for uncertain and interdependent work, as studies from Cohen and Ledford (1994) to the meta-analysis by Stewart (2006) show. But self-management is not the absence of structure. Its successful forms rely on clear roles, formal rules about decisions, mechanisms for monitoring and feedback and leaders who support rather than direct. Its failures often result from removing hierarchy without replacing the functions hierarchy performed.

This conclusion reconciles findings that appear contradictory. Studies showing that self-managing teams outperform traditional ones and studies showing that structure and hierarchy help are not in conflict once one recognizes that the successful self-managing teams were themselves structured, and that hierarchy helps most for the kinds of work, such as integration and execution, where self-management is weakest. The question for designers is therefore not whether to have structure, but which kind of structure fits each part of the work.

The synthesis also clarifies why public debate about flat organizations is often polarized. Advocates point to the engagement and speed of well-run self-managing teams; critics point to firms that abandoned self-management after confusion and turnover. Both are describing real outcomes, but of different designs implemented under different conditions. A firm that adopts self-management for interdependent, uncertain work, with clear rules and supportive leaders, faces very different odds than one that removes managers from routine operations and expects coordination to emerge on its own. The research suggests that the second outcome is predictable rather than surprising, and that the first is achievable but requires sustained investment in the systems that replace managerial hierarchy.

Gaps in the Research

Several gaps remain. First, rigorous studies of whole self-managing organizations are scarce; much of the evidence comes from teams within conventional firms or from single cases, which limits what can be concluded about organization-wide designs. Second, few studies follow organizations over time, so little is known about how self-managing designs evolve as firms grow, age or face crises. Third, research has concentrated on manufacturing, technology and professional services, leaving open how self-management works in sectors such as health care, government and retail. Fourth, the effects of self-management on employees' well-being deserve more attention: the evidence on concertive control suggests that flat structures can increase stress and pressure even as they increase autonomy. Finally, more comparative research is needed on hybrid designs that combine self-managing units with hierarchical coordination, since these may be the most common and practical forms. Studies that compare the same organization before and after a shift toward self-management, using objective performance data, would be especially valuable, as would research on how employees' careers develop in organizations with few managerial positions to be promoted into.

Implications for Managers

For managers considering less hierarchical designs, the literature offers several practical lessons. Start with the work: introduce self-management where tasks are uncertain and interdependent and where employees have the skills and information to make good decisions. Define decision rights and roles explicitly, so that autonomy does not become ambiguity. Build monitoring and feedback into the design, using transparent performance information rather than relying on trust alone. Redefine rather than eliminate leadership, preparing coaches and external leaders who can support teams and intervene when needed. Watch for the burdens that peer control can place on employees, and create fair processes for resolving conflict. Finally, expect to adjust the design as the organization grows, recognizing that some functions may need more hierarchy over time.

A phased approach reduces risk. An organization might begin with a pilot in one unit whose work suits self-management, define decision rights and performance measures in advance, train team members and the external leaders who will support them, and evaluate results against a comparable unit before expanding. Such a pilot allows the organization to learn which practices work in its own context and to adjust the design before committing the whole enterprise, and it creates internal examples that make later expansion more credible to skeptical employees and managers.

These lessons are consistent with the broader argument of Daft (2016) that structure should fit strategy, environment and technology. Self-management is a powerful option within that framework, not an exception to it.

A Biblical Perspective

Scripture offers a perspective on authority and responsibility that bears on this literature. The church is described as a body in which each member has a distinct function and all depend on one another (1 Corinthians 12:12-27), a picture of interdependence in which every part's contribution matters. At the same time, Scripture recognizes the role of leaders who serve, equip and coordinate others, as when Jethro advised Moses to appoint capable leaders over groups so that the burden of judging every matter would not fall on one person (Exodus 18:17-23). The passage is notable because it introduces structure in order to serve people better, not to control them.

The research reviewed here points in a similar direction. Self-management honors the dignity and capability of workers by entrusting them with real responsibility, but it works best when supported by leaders who equip teams and by structures that clarify responsibilities. Christian managers can draw on both insights, seeking designs that give people meaningful authority over their work while providing the support and coordination that make shared responsibility sustainable.

Conclusion

This review set out to learn when self-management helps and when it hurts. The research suggests that self-management succeeds when it fits uncertain, interdependent work, when roles and decision rights are clear, when monitoring and feedback are built in and when leaders and organizational systems support teams. It fails when hierarchy is removed without replacing the functions it served, when autonomy lacks accountability or when growth outpaces the mechanisms that coordinate peers. The most important insight from the literature is that self-management is a different kind of structure, not the absence of structure. Organizations that design it with that insight in mind are most likely to gain its benefits while avoiding its pitfalls.

References

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