In 2007, entrepreneur Brian Robertson introduced the concept of holacracy, a business management philosophy that deviates from traditional organizational hierarchy by implementing self-managed circles within a company. What distinguishes a holacracy from traditional hierarchies is that no one individual has more authority than another. Every role encompasses unique responsibilities that evolve and grow along with the circle’s and the company’s needs.
We’ll explore how a holacratic workplace functions to help you determine if this management model would benefit your company.
What is a holacratic workplace?
Holacracy is a system of business governance using team circles that function autonomously while working with other teams in the organization. Some misunderstand holacracy and see it as a chaotic situation. In reality, it is indeed an organized system complete with a constitution that defines the rules and processes that allow it to run smoothly.
The constitution explains that former job titles are now transitioned into ever-changing roles. While everyone has the authority to act and propose ideas, everyone is also held accountable.
In a holacracy, people can’t hide behind decision-making superiors. Instead, they must accept responsibility for their actions and ideas, whether those are successful or not.
According to Holacracy.org, over 200 organizations globally currently use a holacratic structure.
Did you know? In a holacracy, each circle (team) holds its own tactical in-person or online meetings regularly.
What are the benefits of a holacratic workplace?
Here are some key benefits of a holacratic workplace:
- Holacracy fosters creative solutions. Circles, and the roles within them, share the authority to organize and reorganize themselves internally to achieve their goals. This freedom means circles or teams can (ideally) work more efficiently to develop creative solutions without the bureaucratic red tape that would typically slow them down. Without needing to answer to one person at the top, circle members focus their strengths on problem-solving; they can streamline their efforts to set and track goals without waiting for approval from a superior.
- Holacracy prioritizes rules transparency. Another key factor of holacracy is its rules transparency. When everyone is bound to the same rules under the holacracy constitution, typical office politics are eliminated. Everyone understands who owns what, what decisions they can make within their circle, and who is accountable for which functions.
- Holacracy improves productivity and innovation. The holacratic workplace claims to increase productivity and innovation within an organization.
- Holacracy’s lack of bosses boosts accountability. In a holacracy, everyone shares decision accountability, reducing the burden on leaders to make every final decision.
- Holacracy eliminates manager babysitting. Robertson, holacracy’s creator, says eliminating the top-down management structure also ends the babysitting tendencies of people management positions. Former managers no longer need to dole out daily tasks and micromanage. Everyone can execute their role within their circle without fear of overstepping their position within the company.
- Holacracy means people work together more. Holacracy creates an environment where people work together while being free to focus on their specific roles.
What are the disadvantages of a holacratic workplace?
A holacratic workplace isn’t for everyone, particularly those interested in conventional career path mobility. Zappos was one of the first companies to shift to a holacratic workplace. Realizing that taking away job titles and managerial positions that many people worked years to obtain could create tension, the CEO offered a severance package for those who did not wish to participate.
Employees were given a deadline to decide whether they would accept the changes or choose to leave. When the deadline arrived, 18% of the company (260 employees), including 20 former managers, took the CEO’s offer. Those who left might have seen the shift to a holacratic workplace as career suicide if they chose to remain with the company.
Hiring managers look for upward movement on a resume when hiring job candidates for a cultural fit within their company. In a flat workplace environment, there is no upward movement.
Some fear that the holacratic experience on their resumes will hold them back by not properly displaying their achievements and experience.
These are other disadvantages of a holacratic workplace:
- Holacracy is challenging to implement in a large organization. In a big company, retraining teams to follow a holacratic structure can be a logistical nightmare. Additionally, managers steeped in traditional workplace practices may find the changes difficult to adapt to.
- Holacracy may decrease accountability. Some proponents feel holacracy increases accountability because everyone is accountable for their performance. However, others see the loosely defined rules as a disadvantage.
- Holacracy may impede focus. Because everyone is dedicated to teamwork, individuals’ time and focus may be hindered by constant debates, discussions and input about the task at hand.
Did you know? A holacratic workplace typically won’t engage in performance management practices like year-end performance reviews.
Can the shift to an equal-workplace environment succeed?
Holacracy is a fairly new concept with few examples of successful adoption. That means it’s a challenge to determine whether or not it can be more successful than traditional workplace models.
A holacratic workplace isn’t suitable for every company. The model works best for the following groups.
- Businesses that must deal with rapid change amid ongoing feedback: In a holacracy, tasks can be accomplished much faster because circles don’t need to wait for approval on each new idea.
- Smaller companies and startups: Experts agree that holacracy’s self-management aspect lends itself better to smaller companies or startups instead of large companies with thousands of employees. More employees tend to need more structure to coordinate responsibilities and workflow efficiently. Larger companies tend to rely on their org chart to know what’s going on, who’s in charge, and who to blame when something goes wrong.
- It’s still unclear whether holacracy creates a more successful and agile workplace than the traditional top-down hierarchy. Time will tell as more companies adopt this system and show results.
Kimberlee Leonard contributed to the reporting and writing in this article.