Is Flat for Everyone? Investigating Who Thrives and Who Struggles in Decentralized Structures

41 Pages Posted: 6 Apr 2022 Last revised: 16 Sep 2022

See all articles by Michael Y. Lee

Michael Y. Lee

INSEAD

Paul Green

University of Texas at Austin - Red McCombs School of Business; Harvard Business School

Date Written: September 16, 2022

Abstract

A core argument regarding decentralization is that adopting such structures improves the engagement, satisfaction and commitment of lower-level workers, and in doing so, makes organizations more egalitarian. We propose that decentralization’s impact on the quality of employee work experience varies by an employee’s level of job performance, such that decentralization systematically improves the quality of work experience of high performers but degrades the experience of low performers. We leverage a randomized field experiment with a decentralization treatment inside a single organization to test this proposition and find that the introduction of a decentralized structure improved the engagement, job satisfaction, and intentions to remain in the organization for high performers but negatively impacted the same outcomes for low performers. This analysis suggests that decentralization creates a work environment that benefits some workers but leaves others behind, triggering increased stratification in worker outcomes along some dimensions. The results of this study hold implications for the study of decentralization and its effects, the management of human capital, and the human consequences of the future of work.

Keywords: Decentralization, Hierarchy, Organization Design, Future of Work, Employee Engagement, Employee Well-being, Field Experiments

Suggested Citation

Lee, Michael Y. and Green, Paul, Is Flat for Everyone? Investigating Who Thrives and Who Struggles in Decentralized Structures (September 16, 2022). INSEAD Working Paper No. 2022/44/OBH, Available at SSRN: https://ssrn.com/abstract=4077075 or http://dx.doi.org/10.2139/ssrn.4077075

Michael Y. Lee (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Paul Green

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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