Prisms and Org Charts: Dynamics of Formal Authority and Status in Contemporary Organizations

• In Event: 1184 - Section on Organizations, Occupations, and Work Refereed Roundtable Session
  In Refereed Roundtable 100min: Table 08. Management and Performance

Abstract

Do changes in formal authority set off shifts in organizational status hierarchies or do they merely formalize emergent status hierarchies? Recent theoretical work on contemporary organizations has claimed, on the one hand, that leaders' control over formal structures facilitates coordination and, on the other, that leaders' ability to make organizational changes is constrained by increasingly open and permissive communication about their decisions. This paper argues that this tension is best understood as the product of dynamic interactions of formal and informal hierarchies, and seeks to establish the temporal sequencing of changes in both. In doing so, it addresses two gaps in the literature: (1) it offers a theoretical and empirical account of formal and informal hierarchies' interaction in organizations and (2) it explains the dynamics of status hierarchies by focusing on moments of change. This study examines a single organization employing a unique combination of data: metadata from 5 million user interactions with a task management system over three years; interviews conducted using a dynamic data-supplemented protocol; participant observation; and HR records of changes in the official management structure of the organization. It replicates prior findings that status increases predate the exercise of authority by up to 20 weeks. It also finds, surprisingly, that whereas informal authority follows this slowly-increasing status trajectory, formal changes in authority are characterized by much more rapid changes in status---the same increases happen in 3-4 weeks instead of 20. I argue that these results suggest that authority can have two different bases in contemporary organizations. Transitions into informal authority are characterized by status sensitivity that limits exercises of authority until higher status is obtained, whereas transitions into formal authority reflect discontinuous status valuations caused by updated common knowledge when the org chart changes.

Author

• Clark Bernier, Princeton University