Holacracy. A strange term that made media headlines when Zappos.com announced it would adopt this supposedly “non-hierarchical” style of management. Is this a blip on the radar or an indicative trend as the notion of work continues to evolve?
While holacracy has been touted as a management structure with no managers, a closer inspection of the topic indicates a less black and white definition. While it is true that in a holacratic structure, there are no single individuals in charge of business lines or teams, this does not mean there is no responsibility assigned. Rather, it is assigned to “circles,” or teams of people, with the theory stating that rather than having ideas or changes needing to go up through a chain of command, this circle can make those changes or implement those ideas. And there is a hierarchy of circles, so an organization is not entirely flat.
The hope is this entrepreneurial approach will empower individuals to innovate and create new solutions. If there is the greater likelihood that change can be enacted within these smaller spheres of influence, and not be mired in bureaucratic red tape, more employees will choose to engage in the process.
Perhaps this idea is better served among technology companies such as Zappos and Medium, a blogging platform. Smaller, more nimble, and less likely to be entrenched in a certain way of doing things, these firms might be the right target audience for such a way of thinking. Can it work for more established companies in other industries? Forbes’s Steve Denning says no, at least not in its current iteration:
“For most organizations today, particularly big organizations, the problem is the very opposite. The organization has in place all the procedures it needs to deal with administrivia. Its central problem is the weakness of its external focus. Instead of delighting customers through continuous transformational innovation, it is focused on improving internal efficiency and meeting its quarterly targets and maximizing shareholder value. To resolve this problem, holacracy in its current form will be of no help.”
Even Zappos employees are skeptical. In 2013, CEO Tony Hsieh announced the radical organizational change, and the company has evolved its management structure. Just last month, however, Hsieh sent an email offering a severance package to any employees who do not wish to be part of the new model. 14% of the company accepted this offer. Other criticisms include unnecessary jargon, exposing weak employees in the new “circles” structure, and more meetings.
Others argue that it does achieve its aims, a more agile organization with the ability to enact change in a timely manner.
“And since everything is made as explicitly as possible, everyone in the organization knows who has authority over what. “It’s much better to have power distributed as widely as possible so more people can make more decisions to move forward,” Stirman explains. “This structure leads more toward moving fast, trying new things, and adjusting as needed. You don’t have to wait for everyone up a ladder to sign off.”
In theory, holacracy sounds appealing and with possibly positive attributes – in the correct environment. You need engaged employees who are performers and you need everyone on board – which may be why Hsieh offered severance to those Zappos employees who weren’t sold on the idea. Perhaps technology startups are the smart first adopters, but only time will tell if established corporations will follow suit.