Reportgreen2003

The Flattening Firm: Evidence from Panel Data on the Changing Nature of Corporate Hierarchies

66 citations0/0 files storedNational Bureau of Economic Research

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Corporate Finance and Governance Human Resource and Talent Management Organizational Management and Leadership

Abstract

Using a detailed database of managerial job descriptions, reporting relationships, and compensation structures in over 300 large U.S. firms, we find that firm hierarchies are becoming flatter.The number of positions reporting directly to the CEO has gone up significantly over time while the number of levels between the lowest managers with profit center responsibility (division heads) and the CEO has decreased.More of these managers now report directly to the CEO and more are being appointed officers of the firm, reflecting a delegation of authority.Moreover, division managers who move closer to the CEO receive higher pay and greater long term incentives, suggesting that all this is not simply a change in organizational charts with no real consequences.We discuss several possible explanations that may account for some of these changes.

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References

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Cited by

2004Hierarchies, Specialization, and the Utilization of Knowledge: Theory and Evidence from the Legal Services Industry 2005The Role of the Senior HR Executive in Japan and the United States: Employment Relations, Corporate Governance, and Values 2005Flattening the Organization: The Effect of Organizational Reporting Structure on Budgeting Effectiveness 2006Why Has CEO Pay Increased so Much?2007Corporate Hierarchies and the Size of Nations: Theory and Evidence 2011Beyond addiction: Hierarchy and other ways of getting strategy done

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