Human social hierarchy has the unique characteristic of existing in two forms. Firstly, as an informal hierarchy where leaders and followers are implicitly defined by their personal characteristics, and secondly, as an institutional hierarchy where leaders and followers are explicitly appointed by group decision. Although both forms can reduce the time spent in organising collective tasks, institutional hierarchy imposes additional costs. It is therefore natural to question why it emerges at all. The key difference lies in the fact that institutions can create hierarchy with only a single leader, which is unlikely to occur in unregulated informal hierarchy. To investigate if this difference can affect group decision-making and explain the evolution of institutional hierarchy, we first build an opinion-formation model that simulates group decision making. We show that in comparison to informal hierarchy, a single-leader hierarchy reduces (i) the time a group spends to reach consensus, (ii) the variation in consensus time, and (iii) the rate of increase in consensus time as group size increases. We then use this model to simulate the cost of organising a collective action which produces resources, and integrate this into an evolutionary model where individuals can choose between informal or institutional hierarchy. Our results demonstrate that groups evolve preferences towards institutional hierarchy, despite the cost of creating an institution, as it provides a greater organisational advantage which is less affected by group size and inequality.