Q: Government departments have an extremely hierarchical structure. Do they have to be hierarchical?

A: All organisations including private/​corporate organisations have a hierarchy – a structure with different levels of authority. Instead of looking at the reason for hierarchy, we need to first understand the need for it. 

An organisation has a set-up in which people are tied together through long-term relationships (not short-term contracts) towards a specific purpose. When a person/​entity buys a service from another, the relationship between these two (say between buyer and vendor) need not be hierarchical (even though there can be asymmetries between these two based on financial status and alternative opportunities available to each of them.) Similarly, when a company outsources a service to another one, the hierarchy in terms of that service is minimal. For example, when a university outsources transport services that it requires to a travel company. There is no hierarchal relationship between the people managing this service at the two ends – the university and the travel company. 

However, there are activities of the university which cannot be outsourced, such as teaching. Hence, it has employees (academics) for teaching. So, when people are employed to carry out a specific task, an organisation has to be formed. In other words, the need for an organisation arises when goods or services cannot be bought from the market or outsourced. This is the same way in which public organisations are formed — government employs people for a specific purpose. 

Q: Why cannot some services be outsourced?

A: This is mentioned briefly in a previous Q&A. Outsourcing requires a contractual agreement which specifies the quantity (frequency)/quality of work and remuneration. However, the volume/​intensity of work can be unpredictable. For example, if policing is outsourced by the government and if there is an immediate need for scaling up of operations, (due to a law-and-order situation) but since such a need may not have been envisaged in the contract, the service provider may ask for renegotiation. There may not be enough time for renegotiating the contract because there is a need for a quick response. Also, the quality of interactions between police officers and people may have intangible elements which cannot be detailed in the contract. The confidentiality of certain information which the police may collect from people may be compromised if it is handled by a private company. Private companies which take police/​security contracts may sell this information to third parties. Hence, there are several services which cannot be outsourced.

The second aspect to consider is cost. The transaction costs for hiring teachers for a university or software engineers for an IT company from an outsourcing firm can be very high. Hence, a university has teachers and an IT company, software engineers as employees. (Higher transaction costs involved in outsourcing or contracting out can be a reason for the existence of organisations.) When employees are recruited to carry out specific tasks, the size and scope of the organisation increase. Then there is a need to ensure that all these employees are managed to get the desired outcomes. There is a need for coordinated action and that may require hierarchical decision-making. There cannot be democratic decision-making at every level, and it may have to be entrusted to specific individuals for quicker decision-making and effective actions. 

Q: Though private/​corporate companies are also hierarchical, government departments seem a lot more rigidly hierarchical, showing clear signs of power and post. What could be behind this pattern?

A: Yes, there can be a difference between private companies and government departments in terms of hierarchy. In the former, the work of its employees is expected to contribute to its bottom line (or profit). In many cases, the contribution of each employee towards the profit can be measured/​monitored. Hence, an employee who contributes to the profit significantly may get promotions and may have a less hierarchical relationship with the manager/​owner. What the employee contributes to the profit is most important in deciding the relationship between the employee and their manager. 

In this respect, there are two key differences in government organisations. First, it is the society as a whole which may benefit from the hard and effective work of their employees and not one or a set of individuals as in the case of owners in a private company. Hence, there may not be an incentive to reward the hard-working employees of public organisations. Secondly, the outcome of the work of such organisations is an improvement in social welfare (say in terms of education, healthcare, law and order, social security, etc.)  of citizens and not the profit of the company. The latter is a lot more invisible, intangible, difficult to monitor and long-term in nature. Hence, rewards for their employees cannot be based on (short-term) performance. 

Monetary rewards for government employees may have to be based on certain benchmarks which are relevant across the board (and cannot be tweaked for individuals based on performance). Promotions also may have to be based on certain transparent procedures. Seniority and experience may matter. Since monetary compensation for government officials may not be notably high (as in the case of private company managers whose rewards can be high based on the company’s profits), non-monetary rewards may matter. This may be reflected in other forms, such as the size of the room, access to official cars, number of orderlies and so on. The ability to exercise power over a number of employees (subordinates) is another privilege that may be sought in public organisations. All these may make the structure of government organisations a lot more hierarchical. 

Q: Even if we take that public organisations are a lot more hierarchical than private companies, one can see differences in this regard between developed and developing countries like India. One may see ​‘vulgar’ expressions of power by higher officials in our country. What may be the reason behind this?

A: Yes, it is true that all features mentioned earlier may not be adequate to explain the excessively hierarchical nature of government organisations in India or other developing countries. Yes, there can be a ​‘vulgar’ display of power by higher officials in these countries. There can be rituals reflecting differences in terms of power in job positions, which may take a lot of time of government officials without adding much to their performance in terms of the social purpose. One can see meetings in India where the size of the chair is different for different officers. There is a presumption that those who are in a higher position are a lot more knowledgeable than those who are at the frontline. This presumptive knowledge may discourage higher officials from learning from others, say experts who are outside the government or lower-level employees of the government. This may prevent free communication between different levels of officialdom, and the lack of such communication may work against proper learning of lessons and course correction in the strategies of governments. Government officials may instruct even school teachers how to do their tasks, and at the same time, the latter may not openly express their viewpoints in front of these officers. This may discourage even knowledgeable workers from understanding the specific situation and responding ingeniously (in an autonomous way) and instead may encourage them to wait for instructions from above even on relatively simpler matters. They may fall back on general guidelines which may not consider specific features, and this may make their response mechanistic and sometimes inappropriate/​inadequate to the situation. It may kill the intrinsic motivation of public sector officials, since they may see meeting the targets given from above as enough to complete their tasks. This can worsen the red tape in government procedures. All these are harmful to the effective functioning of public organisations.

So, the reason for such a hierarchy could be that it is a reflection of the structures of society. India, and many such countries, are yet to come out of feudal social relationships or elite control of politics and democracy. Conventionally feudalists/​elites controlled democracies and governments when these were formed. They enjoyed privileges sanctioned by society. Even when non-elite leaders emerged through democracies, they wanted to enjoy these feudal privileges. Officialdom is part of the ruling structure, and each official sees himself/​herself as a feudal lord over subordinates. The demand for higher-level positions in government is also for feudal power and privileges. One can see officers who are excessively subservient to their superiors and overly commanding of their subordinates. These subordinates may look for opportunities to exercise their power for the sake of power as part of their job promotions. Structures of public administration which were created by colonial rulers did not break these feudal privileges. The reforms in administration are also slower (there is not an adequate demand by society for such reforms). The small size of the middle class in India could be a reason. 

The experience of India (and such countries) versus that of the developed world indicates that government organisations in the developed world do not have to be excessively hierarchical. Though there have to be elaborate rules and administrative systems for decision-making in government organisations all over the world, the rituals of hierarchy can be avoided. People at different levels can interact a lot more horizontally/​equitably, a person’s opinion can be taken based on their intrinsic merit and not based on their hierarchical position.

Q: Hierarchy is important in government organisations. How can this hierarchy be made or behave in such a way that it enhances the effectiveness of public organisations?

A: Hierarchy to some extent is useful for effectiveness. Through hierarchy, the decision-making power rests with specific individuals. This solves the collective action problem to a great extent. For example, the strategies of fighting in a military zone cannot be decided through participatory decisions of all army personnel. Government organisations may face a number of such situations. 

However, hierarchical organisations can be reformed to make these a lot more effective. In another Q&A note, we have seen that monetary incentives may have limitations in public organisations and there is a need to sustain intrinsic motivation and public-service orientation of employees. The behaviour of higher-level officers should be such that it sustains these motivations/​orientations of their subordinates. Too much micro-management of the work of each employee/​subordinate may work against their intrinsic motivation. Secondly, an employee at each level may have better/​superior information on their work domain, which may not be available to superior officers. There is a need to create an enabling situation where this information is solicited and used. (The perception of superiors that ​‘they know everything’ and there is no value in the knowledge of their subordinates may affect the effectiveness of organisations). There should be a greater awareness that hierarchy is to enhance the effectiveness of organisations and not to meet the ​‘power needs’ of specific individuals. ​‘Power’ should not be seen as a privilege or part of the perks of higher-level officers. The rituals of hierarchy, like the size of chairs mentioned previously, can be avoided or minimised. 

Job promotions in public organisations (like monetary compensation) have to be based on transparent norms (and as noted earlier, cannot be tweaked for individual performances). This may have a certain efficiency cost since (individuals who perform well cannot be rewarded highly). Managers cannot hire employees whom they think would perform well (though such discretionary hiring is a lot more possible in private companies). In general, arbitrariness in employment and job promotion may work against the sustenance of the intrinsic motivation of employees. This is known in the administrative system and that is why seniority, or the passing of transparent examinations, are reckoned as qualifications for occupying higher-level positions in public organisations (though these may not be the appropriate qualifications for doing the job well.) An arbitrariness in this regard may encourage employees to focus more on those aspects of work which may get the attention and recognition of their managers (and this can have a negative impact on their performance as far as the expected social outcome of the public organisation is concerned.) This can also lead to frustrations in well-performing employees. 

As noted in another Q&A note, the social and human development of the context may matter in this regard too. In developed societies, one can see two people interacting a lot more equitably even when they have a hierarchical relationship in an organisation whereas this is less visible in countries like India. The functioning of the hierarchy of public organisations may become connected to the level of (human) development of a country. Are employees belonging to different levels willing to have a more equitable interaction among themselves? Are they focussing more on the substantive aspects of their work and less on the rituals of maintaining their positions? Are superiors dealing with subordinates based on their performance as public officials or based on personal loyalty? The functioning of hierarchy is more likely to change in a society that has undergone certain social transformations (and not when these remain feudal ones where a small section of elites dominates the majority of people). 

Q: What may happen when lower-level employees are unionised?

A: We should note that unions have certain benefits too (in addition to the increase in the bargaining power of workers which may lead to higher wages). When there are a large number of employees at the same level, they may have work-related issues which require negotiation with employers. Unions may help reduce the transaction costs associated with this negotiation (since the employer needs to discuss with only a few leaders and not with every employee). In fact, this is useful to employers. Unionisation can also enhance the self-esteem of employees, and this may enable them to demand less hierarchical dealing by superior officers. Unionised employees can also have a higher public-service orientation, or unions can be a platform to enhance the latter. However, unionisation can also reduce the effectiveness of supervision by superiors. Employees may resist attempts to penalise those erring employees, and this can have a negative impact on the performance of organisations. 

These possible outcomes should encourage us to think about unionisation in a nuanced way rather than taking a simplistic pro- or anti-position. The possibility and impact of unionisation also depend on social conditions. There may be cases where unionisation attempts may be suppressed where elites are in control. When non-elites including employees get mobilised, unions may become stronger, but it can impact the performance of organisations. How do we see employees empowered through unions and other ways but at the same time motivated to provide effective service to the public at large? This too may be connected to socioeconomic development of the context. 

Q: Though changes in the ​‘culture’ of public organisations are desirable, what can be ways of making such changes? Is it through training or education for public officials?

A: Yes, appropriate training and education may be useful to some extent. But mechanistic training which may not communicate ground-level experience may not be very effective. However, there may be a need to advocate and attempt behavioural changes on the part of public officials. It may be noted that government officials who deal with their subordinates in a less hierarchical manner enabling the latter to express their knowledge and experience are a minority. Their subordinates may have a relatively higher-level autonomy in carrying out their tasks, which may enhance their intrinsic motivation. However, this is not part of the dominant culture of public organisations in India. One way to change this is to bring in the desirable practices. This may require the system to identify ​‘good practices’ and enable people who practice these to exert informal peer pressure on others. However, this is a slow process. 

From a social point of view, the internal functioning of public organisations may change, when there is external pressure from people. However, it is incorrect to expect such pressure merely by making certain instruments (like the Right to Information Act) available. People may not use such instruments in all contexts. As noted earlier, the pressure is connected to human development, and one way for society to improve the accountability of public organisations is to take steps to enhance this human development (we discuss this in detail in another Q&A note). 

Santhakumar V is Professor, Azim Premji University, Bengaluru

Featured photo by Kirill Bobrov on Unsplash