If someone were taking inappropriate or illegal actions in your organization, you, as a business leader, would hope that another employee who was aware of these actions would report the matter. You strive to set up an organization in which reporting a concern could be done without fear of retaliation. But what if an employee believed that any action taken by someone higher on the corporate ladder was, by default, appropriate; or blindly assumed that senior management was aware of these questionable activities?
Individuals occupying a lower-ranking position tend to form highly positive perceptions of their superiors’ competence – leading them to believe that those individuals should make more of the contributions. Chris Argyris, a Harvard professor and business theorist, argued that employees in lower-ranking positions become more dependent on their superiors and defer to them more, similar to the way children become dependent on and defer to their parents. Research has shown that individuals with higher rank are viewed as more intelligent and task-skilled, independent of their actual competence levels (Darley & Gross,1983; Sande, Ellard, & Ross, 1986). Thus, individuals in lower-ranking roles might begin to form overly positive perceptions of those at the top, and assume that those individuals have the capacity to take on the bulk of the group’s problems. A recent study (Locke & Anderson, 2010) found that when individuals placed in a lower-ranking role perceived their superior as more competent, they contributed less to the discussion and joint decision-making.
Here’s a different view of the effect of power and hierarchy – that in certain instances, employees may have an overly confident perception of their supervisors’ competence, leading to a false sense of confidence about the actions taken by their supervisors when those individuals are, in reality, making bad decisions or taking inappropriate actions. The typical beliefs about the effects of power and hierarchy are the “do what the boss tells me to do or I’ll get fired”, but the effects of power and hierarchy can manifest itself in different ways. Trevor Fetter, the President and CEO of Tenet Healthcare Corporation, relayed a story to me that put power and hierarchy in a different light. Fetter returned to Tenet in 2002 following scrutiny of the company’s compliance with certain healthcare regulations. Along with strengthening the company’s compliance and quality programs, Tenet held focus groups with employees to discuss the company’s activities that led to the questionable practices and scrutiny by federal investigators. One of the questions asked of these employees was whether or not they were aware that other employees higher on the corporate ladder were carrying out these questionable activities, and if so, if they had concerns regarding these activities. Incredibly, while several employees indicated that they were aware of and had concerns regarding the questionable activities, the employees assumed that senior management was aware of these activities and knew what they were doing; believed these activities to be appropriate, and therefore didn’t communicate their concerns to anyone. It was a “management must know what they’re doing” belief.
People in higher organizational positions have a tendency to dismiss information provided to them by individuals who are lower on the company “totem pole”, regardless of the fact that these individuals can be very credible sources who are closer to the information at hand and the disaster waiting to occur. The social psychologist Adam Galinsky from Northwestern University describes the dynamics of power and how power can corrupt sound decision-making – power has a tendency to make certain individuals feel invincible; as though they are immune from a disaster in their company or on their watch. In addition, power may make an individual falsely believe that the warnings don’t apply to them. But what happens when employees believe that their managers are immune from mistakes?
The takeaway for senior management of an organization is that employees may need both encouragement and a comfortable environment in which to relay their concerns regarding activities being taken by individuals above them in the company. We have to overcome the perception that just because an individual holds a high position on the corporate ladder, that all of there actions are proper. Any employee raising a concern should have knowledge of the process or activity in question, and credible data or information to support their concern. Even if you’re encouraging employees to come forward and report concerns, they may believe that management is infallible. As leaders of your organization, as odd as this may sound, you may have to slightly un-do that perception.
 C. Anderson, C.E. Brown, The functions and dysfunctions of hierarchy, Research in
Organizational Behavior (2010), doi:10.1016/j.riob.2010.08.002