ALFRED SLOAN AND THE HIERARCHICAL ORGANIZATION

Alfred P. Sloan Jr., in his twenty-three years as president of GM, explored and mastered this form of organizational relations better than anyone . From 1923 to 1946, Sloan showed how to put together and run a business with the modern corporate structure of hierarchy organized by divisions, job specializations, corporate offices, unity of command, and standardized procedures. His success made hierarchical corporate structure the unquestioned way to organize a business. Simply put, he divided the corporation into two functionally distinct parts , the corporate office and the operation unit. The corporate office became the brain, and the operating unit, which could be multiplied as needed, became the body. The brain did the thinking and set the course, and the body stayed the course, ideally without thinking ”all in accord with Taylor's management principles. Given the business conditions of the thirties, forties, and fifties, rank-based, autocratic management was marvelously successful.

Trouble with Unions

However, Sloan, along with other hierarchical managers of this period, had great problems dealing with unions. This conflict had several causes, but one key cause was the rank-based assumptions of the myth of leadership that guided the managerial decision making of the emerging large corporations. Because hierarchy and rank-based corporate structures subordinate the many to the few and grant what could appear to be excessive privileges to a few, they require constant validation of their position and policy. One way to do this is by appealing to the myth of leadership.

Aura of Legitimacy

The appearance of moral authority and even a sacred aura at the top of the hierarchy is essential to sustain the privileges of leadership. This need to establish and constantly reinforce the legitimacy of rank-based leadership requires that the myth of leadership be strongly supported by those in authority. If the majority of individuals in the organization do not acquiesce to the myth, the position and privilege of those at the top cannot be maintained without force. For these reasons hierarchy can create frequent conflict between labor and management.