The challenge faced by managers is how to restrict great amounts of upward communication that may result in overload, and at the same time ensure that relevant and accurate information is transmitted up the hierarchy.

If intelligence is lodged at the top, too few officials and experts with too little accurate and relevant information are too far out of touch and too overloaded to cope. On the other hand, if intelligence is scattered in many subordinate units, too many officials and experts with too much specialized information may engage in dysfunctional competition, may delay decisions while they warily consult each other, and may distort information as they pass it up…

“Structural secrecy” refers to the way division of labor, hierarchy and specialization segregate knowledge…Structural secrecy implies that (a) information and knowledge will always be partial and incomplete, (b) the potential for things to go wrong increases when tasks or information cross internal boundaries, and (c) segregated knowledge minimizes the ability to detect and stave off activities that deviate from normative standards and expectations.