Big Data Confirms It: Less Hierarchy = Stronger Culture

Title: Are less hierarchical firms organized around stronger cultures? Evidence from big data

Dataset: 40 million professional profiles and 1.5 million employee reviews.

Result: The fewer managers a company has, the stronger its culture.

Big data just confirmed what many of us in the self-management world have felt for years:

You can’t remove hierarchy without replacing the belief system that holds people together.

From hierarchy to self-management

Most companies still run on the same collective story:

The managers decide. The non-managers execute.

That’s hierarchy. The status-quo belief system people hold when entering the workplace. It’s predictable. Safe.

But when you flatten (when you remove middle managers, formal titles, and reporting chains) you’re not just deleting boxes on an org chart.

You’re also deleting the shared hierarchical belief system.

And if no alternative coherent belief system replaces it, chaos creeps in.

What big data tells us

Marchetti & Puranam analysed tens of thousands of firms by matching their managerial layers with the language employees use online.

Here’s what makes their research remarkable: they didn’t just look at a handful of companies.

They combined two massive datasets:

• One capturing how organizations are structured based on 40 million professional profiles.
• The other how employees experience and describe them, based on 1.5 million Glassdoor reviews.

Armed with this data, they tested two competing hypotheses:

1. The substitution hypothesis (functional equivalence): If culture and hierarchy are both ways of aligning people, then firms with fewer managers should have stronger cultures; because culture takes over the integrative role hierarchy once played.
2. The fragmentation hypothesis: Alternatively, more managers might fragment organizations into subcultures under different supervisors, thereby weakening overall cultural coherence.

They ran rigorous statistical models (controlling for industry, size, age, and complexity) and found clear evidence for the first hypothesis.

Across more than 20,000 firms, those with fewer managerial layers had significantly stronger shared culture.

So when we say “less hierarchy = stronger culture,” it’s not metaphorical. It’s backed by millions of data points.​

The next question

But this study also raises an even deeper question:

What exactly is that culture when you flatten the hierarchy?

Because what the data calls “strong culture” isn’t just a set of values on the wall.

In the researcher's words, a company with a “strong culture” isn’t necessarily one with “good” or “bad” values.

It’s one where people agree on what those values are. It's about coherence, not about content.

It’s a shared belief about how fairness, coordination, and responsibility should work in the organization.

The three belief systems beyond hierarchy

Across the most progressive companies we’ve studied, those replacement belief systems tend to take three distinct forms.

In our Corporate Rebels Masterclass, we dive deeper into these three logics, exploring how each creates its own way of aligning work, trust, and accountability once the hierarchy is gone.

Every self-managing company we’ve studied seems to replace the hierarchical belief system with one of three other belief systems:

1. Market knows best - the rational network

In this worldview, fairness is achieved through proportion and exchange.

People behave like entrepreneurs, guided by transparent contracts, clear ratios, and market-like bidding for resources or opportunities.

The underlying belief is simple: value should flow to those who create it.

Organizations like Haier, Disco Corp, and Gaiax turn their internal markets into engines of autonomy and discipline.

2. Fairness above all - the collective of peers

This belief system rests on balance and reciprocity.

People give and take in equal measure, ensuring no one exploits and no one coasts.

Instead of formal contracts, they rely on social contracts, consent decision-making, elected and rotated leadership, and voluntary commitment systems to maintain equilibrium.

It’s the moral heartbeat of companies like NER Group, Liip, Equal Experts, Niverplast, Eppo, and Net Protections, where equality is the compass that guides every interaction.

3. Purpose unites us - the community of belonging

Here, coordination comes from unconditional contributions, solidarity and altruism, rather than transactions or tit-for-tat exchanges.

People act from beloning, care, and devotion to a common purpose.

Contribution isn’t measured but felt, rooted in the conviction that “we’re in this together.”

In organizations like Buurtzorg or TeamLab, the collective belief is that unity and meaning (more than money or metrics) create coherence and motivates people to act not because they’re told to, but because they believe in what they’re part of.​

Culture isn't a perk. It's the new operating system

Each of the three belief systems answers the same question (how do we align without bosses?) in its own language: through proportion, reciprocity, or belonging.

So, when you flatten, culture stops being wallpaper but becomes the load-bearing wall.

And that’s exactly what Marchetti & Puranam’s study proves.

Culture is no “soft” practice. It’s the infrastructure of belief that makes a self-managing system hold.

The study also serves as a quiet caution:

Companies that flatten without strengthening culture don’t become agile.

They become fragile.

Because if the collective story doesn’t shift, the ghost of hierarchy returns.

In meetings.

In decisions.

In whispers of “someone should just decide.”

So here’s the real challenge for every organization going flat:

You’re not redesigning boxes. You’re rewriting beliefs.

Otherwise, your “flat” org will quietly re-inflate.

Because in the end, self-management isn’t about cutting layers.

It’s about changing what people believe holds them together.