Slow Decisions: Why Hierarchies Slow Down Companies in Transformation

Five approval layers. Three days average processing time per layer. Fifteen working days until the final decision. And then it turns out: market conditions have changed in the meantime.

Leaders in hierarchical structures experience this scenario daily. The question they usually ask is: “How can we decide faster?” The question they should ask: “Why is our structure built in a way that slows down decisions?”

Why Hierarchies Decide Slowly

Research on organizational structures identifies several structural causes for decision delays:¹

Approval cascades: Each hierarchy level adds latency. In an organization with five levels, even a simple decision passes through multiple review instances. The math is unforgiving: if each level takes an average of two to three days, it adds up to weeks.

Authority concentration: In classic hierarchies, decision-making authority is concentrated with few people. They become bottlenecks—not because they work slowly, but because too many decisions flow through too few points.

Information loss: With each level that information travels upward, context and nuance are lost. Decision-makers at the top make decisions based on reduced information.²

A study on digital transformation at Mercedes-Benz documents how the company recognized these patterns: traditional hierarchies hindered responsiveness to market changes.³ The solution was not to approve faster, but to rethink the structure itself.

The Hidden Costs of Slow Decisions

Slow decisions have downstream costs that are rarely quantified:

Missed market windows: In dynamic markets, speed is a competitive advantage. While internal coordination is underway, faster competitors act.

Frustration and initiative loss: Employees whose ideas get stuck in approval loops for weeks stop contributing new ideas. Research shows that perceived autonomy directly correlates with engagement.⁴

Transformation blockades: Organizational change requires hundreds of coordinated decisions. If each one takes weeks, transformation becomes practically impossible.

When Hierarchy Is Actually Faster

Research also shows: hierarchy is not universally slower. It depends on context.⁵

Crisis decisions: In acute crises with clear action options, clear chains of command enable faster response. When there’s no time for alignment, clear authorities are an advantage.

The “Flat Paradox”: Studies on flat startups reveal a surprising pattern: flat structures accelerate creative decisions (what do we build?) but slow down execution decisions (how do we scale?).⁶

Coordination costs: Distributed authority reduces approval bottlenecks but increases coordination overhead. When many voices must be heard, net speed can decrease.

The honest answer is: the optimal structure depends on what type of decisions an organization makes most frequently.

Diagnostics: Identify Your Decision Bottlenecks

Before considering structural changes, analysis is worthwhile:

Approval Chain Mapping: For three typical decisions from recent months, trace the complete approval path. How many levels? How many days?

Bottleneck Identification: Where do decisions pile up? Is it the same person or function?

Decision Type Analysis: Distinguish between:

• Strategic decisions (rare, high impact)
• Operational decisions (frequent, medium impact)
• Tactical decisions (daily, low impact)

Where is the latency? For which type is speed critical?

Structural vs. Cultural Causes

A common mistake: “We need to change our culture and empower people.”

Empowerment without structural change fails. A manager in a classic hierarchy cannot simply empower their team to make decisions—the structure doesn’t provide for it. They can be well-meaning, but their structural possibilities remain limited.⁷

Research shows: structural changes must be authentically implemented. When responsibility is formally delegated but informally controlled, frustration increases—and decisions become even slower.

Culture change initiatives that ignore structural realities are doomed to fail. Structure determines what behavior is possible.

Beyond Either-Or

The latest research recommends no radical extremes, but hybrid approaches:⁵

• Operational decisions: Decentralize (where knowledge and context reside)
• Crisis decisions: Provide clear escalation paths
• Strategic decisions: Moderate in a structured way

The question is not “hierarchy or flat?” but “which structure for which decision types?”

If your organization regularly suffers from slow decisions, the cause rarely lies with individuals. It lies in how authority is distributed—and that’s a structural question, not a cultural one.

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Research Methodology

This analysis is based on peer-reviewed academic studies on organizational structures and decision processes. The cited studies include case studies (Mercedes-Benz), comparative analyses (81 citations on the “Flat Startup” study), and current crisis management research (2025).

Disclosure

SI Labs has practiced Holacracy as an organizational model for over 10 years and has its own experience with distributed decision-making. This perspective informs our analysis but does not influence the presentation of research, which documents both advantages and limitations of distributed authority.

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Sources

Footnotes

1. Velinov, E., and Vassilev, V. “Change the way of working. Ways into self-organization with the use of Holacracy: An empirical investigation.” European Management Review (2021). DOI: 10.1111/emre.12457 ↩

2. Sharma, R. “Holacracy: redefining organizational ontology and epistemology.” International Journal of Organizational Analysis (2024). DOI: 10.1108/ijoa-07-2024-4630 ↩

3. Velinov, E. et al. “How Mercedes-Benz addresses digital transformation using Holacracy.” Journal of Organizational Change Management (2021). DOI: 10.1108/jocm-12-2020-0395 ↩

4. Doblinger, M. “Autonomy and engagement in self-managing organizations.” Frontiers in Psychology (2023). DOI: 10.3389/fpsyg.2023.1198196 ↩

5. “Decision-making in organizational crisis in traditional and self-managed organizations: toward a hybrid approach.” Strategic HR Review (2025). DOI: 10.1108/shr-04-2025-0041 ↩ ↩²

6. Burton, M.D., and Radzik, T. “The myth of the flat start-up: Reconsidering the organizational structure of start-ups.” Strategic Management Journal (2021). DOI: 10.1002/smj.3234 ↩

7. “Respect my authority: spiritual self-managed teams and holacracy.” Management Research: Journal of the Iberoamerican Academy of Management (2023). DOI: 10.1108/mrjiam-11-2022-1360 ↩