In the early 1950s, as Britain was recovering from the Second World War, coal miners in South Yorkshire began experimenting with new ways of extracting ore.

Up until then, the scientific management principles of Taylorism ruled: like a cog in a vast machine, each miner performed only one of a number of essential functions involved in extracting coal.

With management support, the miners reorganized themselves into self-managing teams that performed all the necessary jobs. It turned out to be a productivity boon, as it allowed the mine to operate 24 hours a day.

Tipped off about the innovation, Eric Trist, a rising organizational theorist, visited the mine and was amazed at what he saw. Trist would go on to popularize the concept of self-managing teams — groups of workers that pursue collective goals with a high degree of autonomy.

At a time when “hierarchy” is considered a bad word, self-managing teams are now common in most industries. In fact, we have moved beyond self-managing teams; the buzz today is about self-managing organizations.

Say hello to Holacracy, Teal, and pod structures.

But does the evidence match the hype? Are self-managing teams really so much more effective than traditional hierarchical groups? Although results have been inconsistent, most studies indicate yes.

Employees have a greater sense of ownership and responsibility. As a result, they are more motivated to allocate resources effectively and contribute to collective goals.

But there is reason for caution. A recent study based on self-managing teams at a chain of beauty shops uncovered a problem involving pay equity.

The chain allowed members of self-managing teams to decide among themselves how to split up commissions from the sale of prepaid gift cards. On the surface it made sense: the workers themselves should know best who deserved the most credit for a sale.

But at the beauty shops, the largest commissions did not go to the top salespeople. Female employees, who made up nearly half the chain’s workforce, earned 24 percent less than their male colleagues even though they were more productive.

Diversity and Self-Managing Teams

And then there is question of diversity. Most management advice today is to embrace a diverse workforce in order to benefit from the wisdom of multiple perspectives. One of the challenges of diversity is aligning all those perspectives to an overarching goal.

New research shows how a certain form of diversity, one that’s not so easy to spot, can undermine the performance of self-managing teams.

The study was one of the first to actually compare self-managing teams to teams with traditional hierarchical leadership. It looked at what happens when team members have differing goal orientations — these are mental models that reflect how people approach task goals.

There are two types of mental models: one that focuses on learning and development and another on demonstrating competence.

Learners like to get feedback, are persistent and proactive, and take time to understand tasks. Performers care less about developing their skills and more about showing high performance, particularly on tasks that are visible and that come with recognition.

Can the diversity in values, beliefs, and goal orientations over time influence how well self-managed teams perform? Apparently so.

The study put 57 five-person teams through a dynamic computer simulation. It showed that self-management only pays off for teams with members who share the same goal orientation.

In those cases, they tended to approach the task in similar ways and shared information, and alignment was fairly easy to reach.

But when teams were diverse in goal orientation, self-management was more damaging than useful. Information did not flow nearly as well and it was more difficult to get on the same page. In these cases, having a conventional leader proved more effective.

With one recognized leader, it was easier to co-ordinate efforts and focus on the same target.

The researchers conclude that organizations keen to reap the benefits of self-managing teams should be highly selective in how and when they are applied.

They should look at the characteristics of team members and introduce self-management in teams with similar goal orientations and use centralized leadership in teams diverse in goal orientation.

Unfortunately for leaders, trying to stack the deck with employees of similar approaches to work is easier said than done. Goal orientation is notoriously difficult to identify, and employee surveys can be misleading.

“People overestimate their learning goal orientation and underestimate their performance goal orientation,” says Matthias Spitzmuller, an organizational behaviour researcher from Queen’s University’s Smith School of Business.

“People think they’re all about the long-term improvement but if you observe them they don’t like to look stupid in front of others as they’re taking risks. That’s why it’s not that easy to identify a person’s goal orientation. The best indicator is past behaviour.”

For organizations committed to using self-managed teams, leaders should create powerful experiences that engender an esprit de corps among team members, a feeling that we’re going through a journey together.

These experiences can stand in for traditional centralized leadership.

Spitzmuller’s previous study looked at the success of another form of self-managing teams — terrorist cells. These shadowy groups have no formal leadership and operate in highly chaotic circumstances, yet they can be grimly successful. They work because they view the world the same way.

They grew up together and have similar experiences. In the case of terrorist cells, members all feel the sting of living in the margins of society, which creates a feeling of “being in this together.”

In some ways, this could describe the cohesive community of South Yorkshire coal miners that Eric Trist met 70 years ago. But it doesn’t describe the vast majority of teams in modern organizations.

With today’s diverse workforces, it is fair to wonder if traditional hierarchical leadership has been getting a bum rap. In more diverse societies and organizations, do we need more hierarchy, not less; a stronger leadership presence, not weaker?