Resource group hierarchical tree goes away after enabling this setting !

Resource group hierarchical tree goes away after enabling this setting !

Hi
After enabling "Allow all admin users to manipulate the entire explorer tree" in general setting of PMP the hierarchical structure of resource groups goes away and all group in the hierarchy  show up next to each other and can not specify a parent group for new groups too.
Is that a bug in the system or it there is a important reason for PMP to be designed this way?

And also when adding new resource group, the drop down menu in "Subgroup of" section is very small it's hard to select desired group when the hierarchy grows. It can be redesigned for easier group selection.
Regards