Following In Zappos Footsteps: Is it Time to Shift to the Holacratic Workplace?

Business.com / Managing / Last Modified: February 22, 2017

Experts agree that the self-management aspect of Holacracy lends itself better to small companies or start-ups rather than large companies.

Not having a boss may sound like an unattainable utopia version of the conventional workplace, but major companies like Zappos, an online retail company, are attempting this self-management organization called "Holacracy."

In a Holacratic workplace, no one has a boss and everyone is able to define their own jobs.

Holacracy, a system developed by Philadelphia entrepreneur Brian Robertson, seeks to move beyond the standard implementation of a management hierarchy and move towards a variety of “circles."

The key difference in these circular roles versus traditional job descriptions is that no one role has more authority than the other.

Each role simply has a different responsibility that evolves and grows with the needs of their specific circle and the company as a whole.

Zappos CEO, Tony Hsieh, introduced the concept of a Holacratic workplace in March 2015 in an extensive memo sent to his 1,500 employees, in which he outlined his reasons for the change.

Contrary to some misunderstanding, Holacracy is indeed a 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 now has the authority to act and propose ideas, everyone is also held accountable.

People are no longer able to hide behind their once decision-making superiors, but accept responsibility for their actions and ideas whether they’re successful or not.

According to Structure Process, approximately 67 known companies are currently using a Holacratic structure.­­­

Related Article: Turning the Ship Around: A Guide to Changing Workplace Culture

Are People More Comfortable With a Traditional Workplace?

Realizing that taking away job titles and managerial positions that many people worked years to obtain would create tension, Hsieh 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 percent of the company (260 employees), including 20 former managers, had taken Hsieh’s offer.

It’s very possible that many of the 260 employees who left Zappos saw 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 deciding if a job candidate is a good fit for their company. In a flat workplace environment, there is no upward movement.

Some employees who left Zappos may have decided that working in a flat workplace culture would make them appear unfit for other workplace cultures.

How many of us have heard, “You just weren’t a good fit for the culture” when told a different applicant was chosen for a job?

What some people are saying about the hierarchy workplace structure:

  • The stress of belonging to hierarchies itself is linked to disease and death. One study showed that, "The lower someone’s rank in a hierarchy, the higher their chances of cardiovascular disease and death from heart attacks.” - Harvard Business Review
  • In a hierarchy, it quickly becomes apparent who gets access to whom, which positions are coveted because they come with better pay and status, and so forth. Take away all the levels, and things get more interesting, albeit more confusing. As [Larissa ] Tiedens puts it, equality "can be messy, and hierarchy is conceptually cleaner." – Inc.com
  • The foundations of freedom and responsibility, not having a lot of rules, not having policies, not using sort of bureaucracy or hierarchy to govern, but instead really providing context to folks and giving them all the freedom to do their job and all the responsibility... has increased over time i­nstead of decreased, and continues to work. – Huffington Post

What Are the Benefits of a Holacratic Workplace?

Circles, and the roles within them, share the authority to organize and re-organize themselves internally to achieve their goals.

Given this freedom, circles or teams are supposedly able to work more efficiently to come up with creative solutions without going through the bureaucratic red-tape that would normally slow down the entire process.

Without having to answer to one person at the top, the various circles of people are able to focus their strengths on solving a problem and streamlining their efforts to complete a goal without waiting for approval from a superior.

Danielle Kelly, whose former position as call center manager at Zappos, is now the lead link within her circle.

Within the Holacratic system, Kelly is part of the “Teal Kit” circle which strives to create self-management tools to aid in the adoption of Holacracy. Kelly’s new role places emphasis on managing the work rather than the people.

Another key factor in this system is the transparency of its rules. This aspect eliminates the office politics because everyone is bound to the same rules provided by the Holacracy constitution.

Related Article: 5 Innovative Ways to Improve Employee Engagement for Millennials

This helps everyone understand who owns what, what decisions they can make within their circle, and who is held accountable for which functions.

The Holacratic workplace claims to increase the efficiency, transparency, innovation, and accountability within a company while reducing the burden on leaders to make every final decision.

Robertson, Holacracy’s creator, believes that eliminating the top-down structure also ends the “babysitting” tendencies of management positions.

Former managers no longer need to dole out daily tasks and micromanage. This allows everyone to execute their role within their circle without the fear of overstepping their position within the company.

It also creates an environment where people are working together, while possessing the freedom to focus on their own specific role.

What some people are saying about the flat workplace structure:

  • Critics say that flat organizations can conceal power structures and shield individuals from accountability. – Wired.com
  • "It’s actually easier [to communicate] if people have very rigid job descriptions," explains [Deborah] Ancona, "whereas when you start loosening those job descriptions, it gets a little unclear." - FastCompany
  • Human Capitalist warns that flat structures may not work for companies that require strict policies and controls, such as airlines and hospitals. If your organization relies heavily on each team member doing their own job, then it may be critical to have a well-established hierarchy. - FastBusiness

So, Can the Shift to an Equal Workplace Environment Be Successful?

With a new strategy and concept like Holacracy, and relatively few companies adopting it, this makes it difficult to determine whether it has potential to be more successful than traditional workplace models.

This system allows for things to get accomplished much faster because there is no waiting to get approval for each new idea within one’s circle.

Hsieh makes the point that a Holacratic workplace is not for every company, but works best for business that “need to deal with rapid change and ongoing feedback.”

Experts agree that the self-management aspect of Holacracy lends itself better to smaller companies or start-ups rather than large companies with thousands of employees.

With more employees, more structure is needed in order to efficiently coordinate responsibilities and work flow.

Larger companies tend to rely on their org chart to know what’s going on, who’s in charge, and yes, who to blame when something goes wrong.

Robertson himself believes that Holacracy can make Zappos “more agile and thus more profitable.”

Related Article: Creating An Employee-Centric Company Culture Will Not Be The Death Of Your Business

However, it may be too early to judge whether Holacracy creates a more successful workplace than the traditional top-down hierarchy, but with Zappos as the largest company to adopt this system, they may be the company to watch for insight into this boss-less new frontier.  

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