Hierarchy's Last Stand: Your Paycheck
It's a puzzle that some people still seek high status for its own sake. Leadership, wealth, and well-being have increasingly little to do with hierarchy, and the perks of power aren't what they used to be.
Hierarchy hasn't disappeared, but its days are numbered. The benefits of higher status are rapidly disappearing, and those who like lording it over others or feeling immune from the rules can no longer get away with it. Status no longer confers a "Get Out of Jail Free" card, as too many indicted and convicted executives have learned. Arrogance doesn't pay. Better to be humble than humiliated.
Higher status used to be equated with wisdom. A person at the top, or anyone older and more experienced, could claim to know more than those below. He could have the final word, issue decisions in a puff of smoke, and tell underlings what to do. Not any longer, with rapid technological development rendering some knowledge obsolete and a global knowledge explosion democratizing access to the rest.
Titles are losing their signaling value. Autocrats of the breakfast table (a book title 150 years ago) get pushback from their children. Internet-savvy students can know more than their teachers do. The Internet and social media make position in a hierarchy less important that the ability to attract followers. Facebook pages or Twitter feeds are followed for their content, and anyone can claim a domain name in her own name. As they say in the education business, "the sage on the stage" must become "the guide on the side." Leaders of the future must admit what they don't know and seek reverse mentors — more "junior" people who have fresher or just different knowledge.
Protection from criticism is another disappearing perk of power. High officials of the traditional kind could make sure that they were never in the direct presence of anyone who disagrees with them. Aides, flatterers, bodyguards, or censors could buffer them against the unpleasant or absorb attacks by proxy. But in the digital age, criticism and challenge go right to the top. In fact, the best leaders make a point of meeting with critics. One CEO of the new, humbler variety published a dialogue with a customer who questioned high prices in the company newsletter, replete with pointed attacks, some of which he admitted he couldn't answer well.
Status doesn't confer privacy or exclusivity either. Invitations to elite events such as Davos are still coveted, but those events are also broadly covered, including by the new anyone's-a-journalist who carries a smartphone camera. Actions and conversations increasingly leave a digital trace, which has led to the downfall of careless corporate (and consulting) titans. And openness and transparency are not just digital; Michael Bloomberg is an example of a leader who converted the hushed, mausoleum-like executive floor we know at most companies to the open beehive of Bloomberg LLC and New York City Hall, putting his Mayoral office in the middle of the buzz.
Of course, high positions still provide opportunities; a President of the United States has a bully pulpit and can use it to command attention. But attention will be ephemeral if his actions don't respect.
Hierarchy's last stand is compensation systems that tie pay tightly to rank, not to performance. In the classic hierarchical career bargain, people would join a company or government service with ambition and energy, and they would over-perform and be under-compensated for it. But as they gradually rose through the ranks, they could reach a level at which it became possible to under-perform and be over-compensated. A caricature, but sadly still true: Consider the enormous pay packages for CEOs in companies that lose money. Shareholder protests (such as those in the U.K.), voting against compensation committee recommendations, and young over-performers who demand better rewards without having to wait might herald an end to this situation.
The bad news for status-seekers: People hungry for power might have to eat crow. Or at least develop a taste for humility.
The good news: Leaders who are willing to be one of the team, learn new things from new people, face their critics directly, accept accountability for performance, stop worrying about who is higher or lower, and value the mission more than their own status, are likely to be effective, well-regarded, and happy.