What Is Holacracy?
Holacracy is a system of corporate governance where members of a team or business form distinct, autonomous, yet symbiotic teams to accomplish tasks and achieve company goals. The conventional concept of a corporate hierarchy is replaced by a fluid organizational structure, enabling employees to make key decisions within their own area of authority.
Key Takeaways
- Holacracy is a system of self-management wherein leadership roles do not follow a traditional hierarchy of command.
- Instead of having a static job description, individuals in a holacracy assume multiple roles, each associated with a purpose, domain, and accountabilities.
- Individuals in a holacracy possess broad authority to make decisions within their role, provided they do not contravene any prior rule in doing so.
- Any issues arising within the organization are addressed in periodic governance meetings.
How Holacracy Works
Holacracy seeks to replace the rigidity of traditional command structures with a system of flexible roles, each having wide authority within their specific area of responsibility. Rather than a traditional pyramid-shaped structure, a holacracy is depicted as a series of nested circles, each symbolizing autonomous teams with multiple roles.
Instead of fixed job responsibilities, individuals function in multiple roles within a holacracy, each with a specific purpose, one or more ‘domains,’ and ‘accountabilities.’ Consequently, it is possible for the CEO to lead one team and play a subordinate role in another. Conflicts are resolved in periodic governance meetings within each circle.
Role leads have the authority to make key decisions without referring to the management chain of command. This approach follows the ‘golden rule’ of holacracy: ‘To fulfill your role, you have the full authority to make any decision or take any action, as long as there is no rule against it.’ Holacracy aims to eliminate top-down management, giving more control to individuals and teams over processes.
Origin of Holacracy
Arthur Koestler, author of the 1967 book ‘The Ghost in the Machine,’ coined the term holarchy to describe organizational connections between holons (from the Greek word for ‘whole’), which are units that act independently but also form parts of a larger entity. Brian Robertson developed the concept and dynamics of holacracy while managing Ternary Software in the early 2000s. In 2007, he and Tom Thomison established HolacracyOne and published the Holacracy Constitution three years later. Major companies, including Zappos.com, have publicly adopted Holacracy.
Inspiring Examples of Holacracy
The largest company to adopt holacracy in its management practices is Zappos.com, an online retailer for clothing, shoes, handbags, and other accessories, with over 1,500 employees. According to Zappos, holacracy enables every employee to promptly address and act on customer feedback.
HolacracyOne lists around 185 organizations that have publicly embraced holacracy principles. Apart from Zappos, other notable examples include Liip, a digital agency in Switzerland, Springest, a Dutch company producing learning software, and Mercedes-benz.io, the online arm of the auto manufacturer.
Considerations and Critiques
Critics have described holacracy as ‘hype’ or just another tech-sector buzzword. When Zappos integrated holacracy into its management practices, nearly one in five employees opted for a severance rather than continuing with the company, many attributing their departure to holacracy.
Some tech firms initially adopted holacracy only to abandon it later. For instance, Medium, a blogging site that implemented holacracy in 2013, concluded its experiment three years later, citing that holacracy ‘was getting in the way of work’ in a blog post.
Related Terms: Corporate Governance, Organizational Structure, Autonomous Teams, Self-Organizing Teams.
References
- HolacracyOne. “Holacracy Constitution v. 5.0”.
- YouTube. “Holacracy Intro Webinar With Q&A”, 18:45.
- Holacracy.com. “History of Holacracy”.
- Holacracy.com. “Holacracy Constitution”.
- Zappos. “How We Work”.
- Holacracy.com. “Holacracy Practitioner Stories”.
- Zappos Insights. “Holacracy and Self-Organization”.
- HolacracyOne. “Holacracy Practitioner Stories”.
- Harvard Business Review. “Beyond the Holacracy Hype”.
- Medium. “Management and Organization at Medium”.
