Pyramid Scheme

Based on research by Siyu Yu

• Most workers surveyed visualize their organization as either a ladder structure or a pyramid.
• The quality of relationships in pyramid-structured workplaces is higher than in ladder-structured workplaces.
• Ladder-structured hierarchies have lower group performance than pyramid-structured hierarchies.

It’s a paradox of power: research shows that hierarchies often undermine the very structures they are designed to uphold. Within organizations, conflicts between members can erode entire systems. In a groundbreaking paper, Rice Business Professor Siyu Yu shows that even visual perceptions of the hierarchy can influence its success. 

In the first study of its kind, Yu joined a team of colleagues to explore how humans visualize the hierarchies to which they belong – and how that thought process influences group processes and outcomes.

The researchers found that most of the people they studied thought of hierarchies in terms of pyramids or ladders (a tiny minority visualized them as circles or squares). In a ladder hierarchy or stratified structure, each member occupies a particular rung. A pyramid hierarchy is more centralized, with one person at the top and multiple people on the lower levels. Think of corporate giant CISCO, a typical pyramid, versus a mid-size dry cleaning business, with the owner at the top and one person on each rung below, down to the entry-level cashier. 

These are far more than fanciful images, the researchers argued. Psychological research has long shown that individuals think, feel and act in response to mental representations of their environment. Intuitively, the link between perception and behavior has been articulated as far back as biblical times: “As a man thinketh, so is he” – or, for that matter, she or they.

To better understand the practical effects of these visualizations, Yu’s team conducted five studies with 2,951 people and 221 workplace groups. They chose from nationwide pools monitored by West and East Coast American universities. The studies took place in the United States and the Netherlands and included multiple ethnicities, men and women, and income groups ranging from college students to seasoned professionals earning upwards of $90,000 annually.  

In the first study, the team asked participants to indicate the shape that best reflected how they thought about hierarchies: pyramid, ladder, circle or square. In the second study, the researchers measured social relationship quality within different groups: participants were asked to rate their answers to questions such as, “Are your needs met at work? Do you feel socially supported?” In the third study, the researchers focused on professional workgroups, measuring relationship quality, group performance and the likelihood that individuals compare themselves to others in the group. 

Subjects who perceived their working group as a ladder, the researchers found, were more likely to compare their rank and station with others. Their relationships were also weaker: when asked whether they trusted their team members, most subjects disagreed or strongly disagreed. When asked whether they thought about if they were better or worse than their colleagues, they agreed and strongly agreed. These comparisons and lack of trust indirectly correlated with lower performance levels, the research showed.

Perceiving one’s organization as a ladder structure, Yu’s team argued, undermines group members’ relationships with each other and hinders collective performance. In contrast, participants who visualized the same company as pyramids rated radically higher on all three quality measures.

Interestingly, the impact of these visualizations is similar, whether the visualizations reflect an actual company structure or simply an individual’s perception of that structure. “It can be created by both perception and actual rank, for example, job titles,” Yu said in an interview. “So, as a practical implication, companies should think about ways to reduce the ladder system, such as with a promotion system that seems more like a pyramid, or by creating the mutual belief that upward mobility within the company is not a ladder or zero-sum.”

Managers, in other words, need to pay close attention to how subordinates see their workplace. Even if your firm is structured as a pyramid, your team members could perceive it to be a ladder – with a cut-throat climb to the top. For the sake of both work performance and quality of life, Yu said, managers, human resources directors and C-suite members should do their best to discern how their workers visualize the company – and, if the paradigm is a ladder, work hard to reduce the workplace vertigo that goes with it. 

Siyu Yu is an Assistant Professor of Management – Organizational Behavior at the Jones Graduate School of Business Rice University.

Lindred L. Greer is an Associate Professor for Management and Organizations and Michael R. and Mary Kay Hallman Fellow at New York University’s Stern School of Business.

Nir Halevy is an Associate Professor of Organizational Behavior at the Graduate School of Stanford Business.

Lisanne van Bunderen is a lecturer at the University of Amsterdam in The Netherlands.

To learn more please see: Yu, S., Greer, L. L., Halevy, N., & van Bunderen, L. (2019). On Ladders and Pyramids: Hierarchy’s Shape Determines Relationships and Performance in Groups. Personality and Social Psychology Bulletin, 45(12), 1717–1733. https://doi.org/10.1177/0146167219842867