Holacracy
Holacracy is a business management practice that redefines traditional hierarchies by enabling workers to fill various roles rather than fixed jobs, granting them the authority to manage their responsibilities autonomously. In a holacratic structure, employees are organized into teams, known as circles, which are responsible for specific purposes and report to higher circles. This approach promotes flexibility, allowing for rapid changes in response to evolving business needs. Proponents highlight the increased innovation and job satisfaction that can result from this self-management system, as employees have more control over their work and opportunities for skill development.
However, critics argue that holacracy can lead to increased stress for employees who may feel overwhelmed by multiple responsibilities and the complexities of merit-based compensation. Companies implementing this model, such as Zappos, have provided options for employees to opt out during transitions, recognizing that not everyone thrives in such an environment. Ultimately, while holacracy can enhance organizational adaptability and employee engagement, it may not suit all individuals, particularly those who prefer more structured roles.
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Holacracy
Holacracy is a business organization practice. It emphasizes having workers fill roles instead of specific jobs and empowers workers with the authority to carry out their responsibilities in their own ways. Workers within the hierarchy are organized in teams that allow for greater flexibility in reassigning roles. Rules are clearly stated and rigorously followed at all levels of the company.
Proponents say that this system of self-management allows companies to change more rapidly in response to business needs and enables employees to be more innovative and grow in their roles. Critics say it can create stress for individual employees who may have more responsibilities than under a traditional management system and that it complicates hiring and calculating appropriate merit-based compensation.
Background
The holacracy concept originated in a book entitled The Ghost in the Machine, published in 1967 by Hungarian-born British writer Arthur Koestler. Koestler's book called attention to the vast number of hierarchies in the world. Hierarchies can be found in science and nature, in language, and in human social, political, and cultural interactions. Koestler called the hierarchy levels "holons." He noted that holons look to the next higher level for direction and definition of function according to the strict rules, flexible plans, and means of gathering feedback within each individual level. Koestler maintained that understanding hierarchies was essential to understanding many aspects of life.
American philosopher and writer Ken Wilber also explored hierarchies in two of his books: A Theory of Everything: An Integral Vision for Business, Politics, Science, and Spirituality (2000) and Sex, Ecology, Spirituality: The Spirit of Evolution (1995). In an attempt to counter the negative association of the concept of hierarchy with repressive forms of governance, Wilber took Koestler's word holon and created the word holacracy as a more neutral version of the hierarchy concept. However, he considered the words to be interchangeable in their meaning.
In the early twenty-first century, entrepreneurial businessman Brian Robertson took the concept of holacracy and created a management practice for his company, Ternary Software. In 2007, he published an article that described the hierarchical structure where employees had greater flexibility in their roles and both a voice in and responsibility for the outcome. Robertson developed the system because he was frustrated with the difficulty of making changes in companies where he worked. He formed Ternary Software specifically to find a way to run businesses that allowed for greater worker input and better methods to affect changes when needs were identified.
In 2007, Robertson and a partner, Tom Thomison, formed HolacracyOne a registered trademarked organization to help companies implement a holacratic business model. While the business model is available to anyone, the company Robertson and Thomison formed provides resources, training, and other tools to help companies move to or establish a holacratic model. In 2015, Robertson published a book, Holacracy: The Revolutionary Management System That Abolishes Hierarchy to share his ideas.
Overview
Although Robertson's book title implies holacracy and hierarchy are in opposition, the holacratic management system does include various levels of employees, including a president or chief operating officer (COO), managers and supervisors, and rank-and-file employees. The difference in a holacracy is in how the authority is distributed and how groups of workers are organized. There is also a more democratic approach to decision making, with employees having more options for choosing responsibilities and enacting changes.
Employee groups in a holacracy are organized in circles. Each circle, or team, is responsible for a specific purpose or purposes determined by the circle above it. Each circle reports to the circle above it, and the higher circle can make whatever changes it desires to the lower circle up to and including dissolving the lower circle if it does not adequately fulfill its purpose.
Within each circle, however, the group has a lot of latitude and authority to function as it works to fulfill its purpose. The holacracy business model includes long lists of rules and procedures to guide group members' actions as they self-manage, but the group members are responsible for deciding how they will complete their work and accomplish their purpose. This allows decisions to be made closer to where the work is actually done. It also provides greater flexibility in workflow and usually means that a company does not have to make sweeping modifications to its structure to accommodate necessary change. Each circle can decide what needs to be changed in its specific area for the group to function more effectively and take steps to initiate its own changes.
Employees known as links often connect these circles laterally. Links are staff members who have job functions that cross areas of responsibility. For example, a person responsible for written communications may serve as a link among circles tasked with addressing sales functions, customer service functions, and employee education functions. These links help provide continuity between the areas and help to ensure that the individual circles are continuing to work toward the overall goals of the company.
Companies run under the holacratic model often provide opportunities for employees to learn tasks in new areas while continuing to work in their existing jobs. Companies that do this post tasks that need to be completed along with the estimated percent of a person's work time it will take and the minimum skills required to be considered for the task. Individuals can then offer to take on those tasks in addition to their usual responsibilities. This system allows employees to gain experience and provides a way for employees to develop skills that will allow them to move to other areas.
The holacratic model provides a number of advantages for companies. Many companies undergo several expensive and time-consuming restructurings during their lifetime. Proponents of the holacracy model say that once a company adopts this system then it will never have to make wholesale changes to its structure again. Theoretically, the model also makes companies more flexible and able to respond more quickly to changes in market demand, customer concerns, and other areas. It can also lead to greater employee satisfaction because employees enjoy more autonomy and have more control over their opportunities for job change or advancement.
The model also presents some challenges. It is difficult to describe and compensate job positions that cross so many areas of function. In addition, some employees are overwhelmed by the need to juggle tasks and priorities for different areas. Zappos, an online shoe seller that implemented a holacratic system in 2013, gave their employees the option of a severance package during the transition in recognition that the fluid nature of holocracy does not work with every individual's work style. This eventually saw around 15 percent of its staff take severance packages because of the change. However, offering this option ensured that employees who were firmly agianst the model had a choice to leave rather than remain with the company, potentially leading to low employee job satisfaction and turnover. Despite some success in specific companies, critics argue that the model fails to recognize the diversity of the American workforce. Employees with specific personality traits and workplace strengths have shown better rates of success in a holacratic environment. Individuals with high autonomy, self-management, and intrinsic motivation are more likely to confidently take on new roles. Additionally, employees who are confident in their decision-making skills can better navigate the ambiguity that often accompanies holacracy.
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