Holacracy

Holacracy is often linked to a boss free work environment, a flat organisation structure,  and having the freedom to choose what to work on. The same characteristics are cited by those in favour and against the concept of holacracy. To me those characteristics sound good, I like having autonomy at work. When I studied organisational design we talked about entrepreneurial organisations, machine bureaucracies and ad-hocracies according to Mintzberg’s model. At that point Holacracy hadn’t been invented, but some of the ideas around self-management were evolving.

What is Holacracy?

Holacracy is a system of company governance that enables colleagues to self-organise around the work. There is still an organisational structure, but now it’s based on circles of work rather than a hierarchy. Roles are defined, and a person may have be part of more than one circle and fulfil a different role in each. The specific system was developed by HolacracyOne, and has been adopted by around 300, mostly small, organisations.

As with any new idea there’s a fair amount of hype, with supporters and detractors talking about it in equal amounts. There are numerous articles, explaining how it works,

it gets a fair amount of hyper and an equal amount of detractors.

There is a decrease in the bureaucracy of planning and approvals that you see in a standard hierarchy, instead there are monthly governance meetings and processes specific to maintain the holacracy.

Who is it for?

Every company sits somewhere on a continuum from reliability to adaptability. Holacracy enables faster decisions to be made closer to the customer, as a system it is probably going to work best in younger, smaller, creative companies at the adaptability end of that scale. Of course older, larger, regulated companies can (and do) adapt the ideas of self-management into their teams but I think would struggle to deploy a full holacracy at scale.

Advantages and Disadvantages.

Companies have reported specific quantifiable benefits from using various systems of self-managed teams; FedEx cut service errors by 13% in 1989 for example. But strong results on holacracy are harder to find, that’s partly because it’s early days – we’ve had a hundred years or more of business hierarchies, it’ll take a while to figure this out. Even one of the founders, Brian Robertson, predicts that it will take a few years for a company to embed the Holacracy system and move into working within it in a stream-lined way.

Benefits cited are; increased employee engagement, increased adaptability, decreased office politics (although one article regarding Zappos casts some doubt), increased transparency, increased focus on organising around work.

It also sounds good, so what’s the downside?

Medium moved away from holacracy earlier this year, and while they still embrace the principles behind holacracy they found that “the system had begun to exert a small but persistent tax on both our effectiveness, and our sense of connection to each other.”

HBR published an excellent article “Beyond the Holacracy Hype“, and they point to downsides relating to increased complexity particularly around doing work – if an employee is in multiple roles each with a set of responsibilities then it becomes hard to know where to focus their effort, Zappos went some way to solve this by evolving a “marketplace” that assigned points for work allowing the company to set priorities via the Lead Links (team leads).

When someone has multiple roles compensation becomes more complex, as does hiring – including internal hiring.

It becomes hard to scale up to complete initiatives that would go across several circles – it’s also hard to do this across departments in a traditional organisation, but it seems the effort of co-ordinating this becomes even steeper in a fully self-managed environment.

Who is using it?

The Holacracy site claims that over three-hundred organisations currently use their system, of the four on the front page the largest is Zappos – and they are now moving on to become a Teal Organization.

Given that both Zappos and Medium have moved away from using Holacracy, but still maintain the principles of self-management, I wonder whether the full Holacracy model will be seen as a stepping stone in the future, a transition to go through as you redesign your company or whether companies will evolve their own systems of self-management without spending time in a rigid holacracy

What’s the future?

The principles of self-management are good; positive for employees which has to benefit customers and the company. Holacracy as a system embeds transparency and forces a focus on the work, but seems to place a burden on the company in terms of added complexity, and it may limit scaling – or need to evolve to enable scaling.

However even large, older, regulated, dinosaur companies have been borrowing what makes sense for them and creating hybrids of hierarchy and self-management. It may be a slower track to the company of the future but they’re benefitting from the experiment as well.

Image: I made it