What is Holacracy?
Holacracy is a self-management system developed by programmer Brian Robertson. His objective was to find a solution to what he saw as barriers to productivity, creativity and transparency. After first testing and refining the process in his own startup, he went on to create HolacracyOne, a consulting company that offers training for companies that want to implement the Holacracy system.
Holacracy is one of a wave of different attempts to rethink organizational management structures. Like other systems, its core principle is to do away with traditional top-down management and empower employees. What Holacracy offers is one of the most structured methods for achieving this goal and, unlike other systems, it does not promote a completely flat hierarchy, making it less radical than what skeptics might have you believe.
How does it work?
First, all upper management titles are abolished and power is re-distributed through the replacement of job descriptions with roles. Each role has its own accountabilities and domain of competence. The domain defines the property of the role, or the areas over which the role holder has authority. This authority allows role holders to make swift decisions over questions concerning their domain.
Teams are organized into autonomous circles that have the authority to take decisions regarding everything from small departmental changes, to rapid iterations of the circle’s structure. Decisions are made at regular moderated meetings where all participants are given the opportunity to voice their tensions, or concerns, in a structured way.
The closest positions to a manager in Holacracy are Lead Links. One is appointed to each circle with the purpose of distributing roles, allocating resources, priorities, strategies and communicating the progress of the circle to the company. Unlike managers, Lead Links do not oversee how employees carry out their roles, they merely help facilitate employees’ ability to carry out their work and provide information to the supercircle. Employees within each circle also vote for a Rep Link who represents their interests at governance meetings. In this way employees have equal representation throughout the company.
Of course no corporate democracy could be complete without a Constitution – and Robertson has created one. The Holacracy constitution is a brick of a document that extensively details the rules, processes and key terms of the system. The Constitution is not only a guide, but also represents the first step on the road to corporate democracy with CEOs being required to literally sign away their authority. According to Robertson, this is not just a symbolic gesture, but also an important step formally binding all employees, and even the CEO, to a common set of clear and transparent rules.
Benefits of Holacracy
The decision-making authority attached to each role means work is processed at a faster pace and employees are motivated through dedication and ownership of their role, rather than competition. Employees can also have multiple roles depending on their skills, meaning the talent potential of each employee can be fully utilized.
The processing of tensions through regular moderated meetings encourages all employees to voice their opinions, avoiding dominance over meetings by more extroverted personalities and ensuring the agenda is kept on track.
The election of representatives furthermore gives employees a greater hand in the decision-making process at all levels. The circle structure encourages rapid iterations allowing companies to test out new changes and evolve quickly.
Greater transparency is one of Holacracy’s foundational principles. The clear and visible rules expounded in the Holacracy Constitution serve to counter the ambiguity of traditional bureaucracy and eliminate dependency on office politics.Who is practicing Holacracy
Who is practicing Holacracy
It’s no surprise that the first to begin instituting this system included more avant-garde tech companies, with Zappos being its most famous proponent. For a full list of companies practicing Holacracy see here. As no company has passed the five-year mark, it is still too early to fully assess the system’s merits and shortcomings in practice. However, analyzing current practitioners’ reasons for adopting Holacracy and progress can be helpful when deciding if this system is right for your company. How have these companies harnessed the benefits of Holacracy to boost productivity?
Company Size: Largest company to date (around 1,500 employees)
Date: Began implementing parts of the system in 2013 until decision to go all in was made in March 2015
Reasons for implementation: For Zappos the decision to switch to Holacracy was based on the company’s growth. As CEO Tony Hsieh explained, research has shown that productivity actually decreases as companies grow. Holacracy was seen as a way to counteract this trend by giving employees greater power and autonomy to self-direct their own work. Results: After a long transition process Hsieh decided it was time to seal the deal and issued his (in)famous – depending on what side you’re on – memo. Although 14% of employees left in response to Hsieh’s message, it has not shaken his faith in the system. In fact, his reaction to the exodus was to point to the fact that 86% choose to stay. His response is indicative of Holacracy’s alternative mentality towards employer-employee expectations. In this type of organization there are no managers in the traditional sense who will oversee work and keep up with workers’ progress, so employees really have to be driven and passionate about their work to survive in this kind of system. As he says in his memo, self-management is not for everyone, but with this move Zappos has made clear what they are looking for in an employee and what they are willing to provide. Something to bear in mind is the impact Holacracy will have on a company’s recruitment and hiring process, which will be explored further in a future post.
Company size: Small (around 150 employees)
Date: Practicing Holacracy for about 2 years
Reasons for implementation: When creating Medium, Ev Williams and Jason Stirman had both experienced the pains of traditional management. For Williams, Holacracy presented a way to free up the time he spent giving approvals and making decisions as a manager and allowed him to get back to the creative work he was most passionate about. Stirman had been fed up with traditional management styles that favored withholding information and hierarchical relationships between manager and employee. He had already begun experimenting with alternative management methods at Twitter by connecting with his employees on a more personal, rather than employee-centric manner. Results: Medium found that people felt more connected to the company as they were given more decision-making power. For Naureen Manekia, Head of Human Resources at Medium, the two best things about Holacracy are the roles and meeting structures.