The hierarchical structure of modern corporate offices can be traced back to 19^th century railroad companies. With vast networks of track stretched across the country, transportation magnates needed to designate clear lines of communication among their far-flung operations. A system of middle managers and regional executives eventually rose to prominence and ensured that things ran smoothly. Over the course of the 20^th century, businesses of all stripes adopted this top-down structure as their own, eventually leading to the sea of cubicles of today.

Some social scientists claim this ubiquitous method of hierarchy is an example of humanity’s natural inclination to select a pecking order. But a growing number of entrepreneurs are fighting against this instinct by experimenting with boss-less offices. For instance, the staff at the Michigan-based software developer Menlo Innovations decides who gets hired and who gets fired. Employees work in rotating teams and are encouraged to guide the progress of their own projects, eliminating the need for middle managers. Co-founder Rich Sheridan’s eight-year-old daughter provided the inspiration for this unusual office plan when she pointed out during a visit that people constantly asked her dad to make decisions for them. “I realized that the organization couldn’t move any faster than me,” says Sheridan.

While he and business partner James Goebel develop Menlo’s overall strategy, day-to-day execution of that work is completely determined by the staff. Employees speak openly in order to generate feedback and are not required to grant the company’s founders any special treatment. They must also be capable of working so closely with other people that they receive almost no personal kudos: every success is the result of the team, not any individual in it. To this end, Menlo is not really the place for “corporate-ladder climbers,” as one staffer described them. The company’s attitude focuses on “kindergarten skills” like geniality, curiosity and generosity. All this fits in with the profit sharing, all-for-one ethos of Menlo. The office environment is so transparent that there’s even a big board that lists the names of all the company’s employees along with their salaries. Although at least one “Menlonian” described this practice as “liberating,” the motivational efficacy of this chart is still under consideration by the company. Should CEO Sheridan ever want to get rid of it, though, he’d have to ask his employees first.

Questions:

1. Will the Menlo business model be adapted by other businesses?

2. What are the primary characteristics employees need to succeed at Menlo?

Source: Matthew Shaer, “The Boss Stops Here,” New York, June 16, 2013. Photo courtsy of Norsez.