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Should Your Company Implement a Holacracy Organization Model?

Deborah Sweeney
Jun 05, 2018

Here's what you need to know about the practice of Holacracy.

Millennials are pushing for it in the workplace. Companies like online shoe and apparel shop Zappos are already operating under it. Tomorrow’s working world may be run under Holacracy, but what does it change your organization to become a Holacracy? Is it simply a passing trend with businesses or does it have staying power to transform the way we work? If you’re considering operating your company as a Holacracy, here’s what you need to know about the practice.

Defining Holacracy

Holacracy, according to its website, is defined as a “self-management practice for running purpose-driven, responsive companies.”

Let’s unpack that definition. Holacracy empowers the people within a company to drive change and make major decisions under an organization where power is redistributed. In most existing job roles, individuals employed at companies have a singular job and duties that are seldom updated. As a Holacracy, employees may work in several roles and do more than what is expected of them.

The higher-ups do not control every decision made either. Rather, authority is distributed to teams and decisions are made on a local basis. Much like the updated job duties, the company’s organizational structure is routinely updated. There is also a much greater amount of transparency present in the office, with Holacracy ensuring that everyone, from the CEO to the intern, follows the same, visible rules.

What are the benefits of Holacracy?

It’s not hard to see why millennials in particular would crave a workplace built on Holacracy. The method is based on empowering everyone within an organization from day one. This helps create a democratic work environment, allowing companies to be structured less like corporations and more like cities according to Tony Hsieh, the CEO of Zappos.

When a business acts like a city, its citizens (employees) self-organize accordingly. Their behavior becomes entrepreneurial. Every employee has a chance to let their voice be heard. People feel comfortable speaking up and sharing a good idea because they know the idea may be quickly implemented instead of shut down.

There is also more control involved when it comes to the daily workload. In a Holacracy, a job title is defined around its work and is updated on a regular basis. Anyone working in this type of environment would not be handed a ton of work and expected to do it at the last minute just because they were that specific person holding that specific position. Instead, the work could be delegated to others filling those same roles which would allow them to reduce their workload and take on other tasks.

At the end of the day, Holacracy does what it set out to do at the start of the day: assert thought leadership from the very beginning. Under this kind of method, employees may no longer dream of landing a corner office or fighting their way up the career ladder. They feel connected to the business and can, and will, advance forward thanks to a fairer workplace.

Does Holacracy have any disadvantages?

Transitions of this nature don’t happen overnight and pose their share of challenges. The Harvard Business Review notes that the lack of a hierarchy doesn’t always mean an organization may run smoothly.

Reassigning work to someone else, even if they have the same role, can still be time consuming. If there are too many responsibilities assigned to each employee, they may struggle to figure out what to best prioritize. As for the role itself, this becomes difficult to integrate into the hiring process as employees may be hired to complete certain duties, but later assigned other tasks that they may or may not be adept in doing. Difficulties regarding compensation also arise. How do you establish a base salary for someone juggling dozens of duties all at once, some of which may be out of their department bracket?

Furthermore, there’s the concern about speaking up. Will every employee feel comfortable about voicing their needs? Some may, but others that are more introverted may choose not to engage as frequently.

Is a Holacracy right for my business?

Of course, I can’t speak on behalf of every business as to whether or not Holacracy is best for them. The best thing to do is reach out to the Holacracy team to see if it’s possible to attend a Holacracy experience near you or speak to one of their team members to answer any questions.

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Deborah Sweeney
Deborah Sweeney is the CEO of MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @deborahsweeney and @mycorporation.