THE PRIMARY PURPOSE OF THIS EXPERIMENT WAS TO DETERMINE WHETHER HIERARCHICALLY DIFFERENTIATED GROUPS WERE AS PRODUCTIVE ON PROBLEM-SOLVING TASKS AS HIERARCHICALLY UNDIFFERENTIATED GROUPS. THE EXPERIMENT ALSO INVESTIGATED THE EFFECTS OF FORMALLY BASED STATUS DIFFERENCES ON GROUP EFFICIENCY AND RISK-TAKING. TWENTY GROUPS CONTAINING FOUR SUBJECTS WERE DRAWN FROM STAFFS OF 10 ELEMENTARY SCHOOLS IN THE ST. LOUIS METROPOLITAN AREA. THE SAMPLE WAS COMPOSED OF 10 ELEMENTARY PRINCIPALS (FIVE MALE AND FIVE FEMALE) AND 70 ELEMENTARY TEACHERS (68 FEMALE AND TWO MALE). "THE DOODLEBUG PROBLEM" WAS UTILIZED IN EVALUATING THE PROBLEM-SOLVING ABILITY OF THE HIERARCHICALLY DIFFERENTIATED AND UNDIFFERENTIATED GROUPS. FINDINGS SUPPORTED THE HYPOTHESES THAT HIERARCHICALLY DIFFERENTIATED GROUPS WILL BE LESS PRODUCTIVE AND EFFICIENT AND WILL EXHIBIT LESS RISK-TAKING THAN HIERARCHICALLY UNDIFFERENTIATED GROUPS. (DG)