This document provides an overview of Holacracy, an alternative organizational structure to the traditional management hierarchy. It distributes authority and decision-making throughout self-organizing teams rather than centralizing it at the top. The document discusses the history and principles of Holacracy, provides two case studies of companies that adopted it (David Allen Company and Zappos), and discusses advantages and disadvantages.
2. What is Holacracy?
Holacracy is a system of flat organisational governance, in
which authority and decision making are distributed
throughout a ‘holarchy’ of self-organising teams, rather
than being vested in a management hierarchy. It creates a
company where everyone has greater clarity, autonomy
and empowerment and the organisational structure is
continually evolving to meet the needs of the business.
3. History & Origin
Brian Robertson of Ternary Software, had been experimenting with
alternative approaches to managing the organisation, borrowing
elements from multiple existing models of organisational behaviour.
In 2007, he teamed up with Tom Thomison and founded Holacracy
One - the company which developed holacracy.
The term ‘Holacracy’ is derived from the terms ‘holon’ and
‘holarchy’ coined by Arthur Koestler in his book ‘The Ghost in the
Machine’. A ‘holon’ is a ‘whole’ that is a part of a larger ‘whole’-
like a cell of the human body which is a self-contained unit in itself,
and at the same time is a part of an organ.
4.
5. Constitution of Holacracy
Article I: Energizing Roles
A role is Holacracy’s core building block for organizational structure. It involves the basic
authorities and duties conveyed to a partner filling a role.
Article II: Circle Structure
A circle contains and integrates many roles. It describes how a circle is structured, and how
the roles within it are assigned, elected, or formed into further sub-circles.
Article III: Governance Process
It defines the governance process and the ground rules for proposing changes or objecting
to proposals.
Article IV: Operational Process
The circle members rely on each other to help get their operational work done. It covers
their duties with respect to supporting one another, and how tactical meetings work.
Article V: Adoption Matters
It deals with the transition from pre-Holacracy to operating under the Constitution, and
provides rules when adopting Holacracy within a board structure with a group of
representatives in lieu of a single Lead Link.
6. Hierarchy
Job Description: Each person has
exactly one job. Job descriptions
are imprecise, rarely updated, and
often irrelevant.
Delegated Authority: Managers
loosely delegate authority.
Ultimately, their decision always
trumps others.
Big Re-Orgs: The org structure is
rarely revisited, mandated from the
top.
Office Politics: Implicit rules slow
down change and favour people ‘in
the know’.
Holarchy
Roles: Roles are defined around the
work, not people, and are updated
regularly. People fill several roles.
Distributed Authority: Authority
is truly distributed to teams and
roles. Decisions are made locally.
Rapid Iterations: The org
structure is regularly updated via
small iterations. Every team self-
organizes.
Transparent Rules: Everyone is
bound by the same rules, CEO
included. Rules are visible to all.
7.
8. Case Study 1
David Allen Company(DAC)
CEO: Mike Williams
Location: California
Category: Productivity Training & Consulting
Employees: 50
Founded: 1996
Website: http://www.davidco.com
9. Why Holacracy?
From 2006 – 2010, DAC was going through
a transition as a small company trying to
grow. Around 2010 David Allen was trying
to redefine its vision of success. He then
met Brian Robertson at a conference and
immediately struck a chord with each other.
David saw within Holacracy a system that
would allow people to have authority, make
decisions, and act on their own accord to do
what is right for the business and the
customer. In June, 2011 they became a
practicing Holacracy organization.
10. Transition
For adopting Holacracy, there was a bit of deprogramming required to
encourage people to step into their accountabilities at the DAC. Employees
were used to the pattern of being told what to do, and they suddenly heard,
“Now it’s up to you to consult, analyse, and execute - it’s your authority,
and as a sensor of the company we expect that of you.”
There was a conscious change in behaviour that needed to become less
hidden and more explicit. There was a transition period that people had to
work through. In the older system of organisation, work was not flowing.
It was ping-ponging off the different departments. The organisation was
restructured into three value streams with a clear customer at the end of
each. The structure is now used to help push work through the value
streams to get to the customer with fewer handoffs and touch points.
11. Impact
Holacracy brought rhythm and structure to DAC. Practicing within a solid
framework and consistency at every level people were able to work in a more
disciplined and organised manner.
Work was done with the input of the whole team and employees could integrate
tensions, thus helping them solve issues more efficiently.
Holacracy unleashed far greater creativity to serve the organisation’s purpose as
there was no pressure of having to ask for permission for every little thing that
employees had to do.
Holacracy made individuals more responsible for their own thoughts and actions.
The approach encouraged individual team members to take initiative and gave
them a process in which their concerns or ideas could be addressed.
The system of distributed authority reduced the burden on leaders at DAC to
make every decision.
12. Case Study 2
Zappos
CEO: Tom Hsieh
Location: Las Vegas
Category: Online Retail Store
Employees: 1500+
Founded: 1999
Website: http://www.zappos.com
13. Why Holacracy?
Through Zappos, Hsieh wanted to develop
a company where the culture would be a
differentiating factor and a competitive
advantage. He wanted to build a team of
like-minded people who would enjoy
working together and also hang out
together. According to Hsieh, apart from
factors like salary, other aspects like role,
kind of work, growth, learning, and fun
were also important to keep the employees
motivated and to achieve long-term
commitment.
14. Transition
Hsieh announced the creation of a new circle called ‘reinventing
yourself’ to help managers assume new roles. However, Hsieh felt
that the management transition was going too slowly and asked the
staff to get on board or take a severance package. Media outlets
derided the ‘radical management experiment’ as overly complicated
and confusing. The employees probably hesitated too long.
15. Impact
As a result of Hsieh’s offer, 18% of employees (more than 250 people)
left Zappos – that’s on top of the company’s normal attrition rate of
12%. In total, Zappos lost 30% of its workforce in 2015 alone.
As a result of a lot of people leaving the organisation, the remaining
workforce was too scared to speak up, hence the company was unable
to improve, iterate and grow.
Morale has been pretty low since the severance offer came out and it
seems like they are just trying to distract current employees with
random events and perks that don’t make up for the fact that the
company structure or lack thereof only seems to promote favouritism
and unhealthy competitive drives.
16. Advantages of Holacracy
Holacracy reduces politics and makes restructuring more smooth and
efficient.
Holacracy is a meta-structure that provides a stable rhythm and
framework in which to evolve the organization while getting work
done.
Aligns with GTD – Holacracy’s Tactical Meetings enable the
organization’s roles to sync up and collectively review lists and
projects, as GTD does at the individual level.
Holacracy is a tool; it can be used in strategic or non-strategic ways. It’s
not magic — it simply processes what we throw at it.
Holacracy potentiates maximum clarity around decision-making, and
provides a process to specify precisely where authority is held in the
organization.
17. Disadvantages of Holacracy
It is hard to adapt from old management model to Holacracy. Companies have
to spend more resources on training and on-boarding. It is not just different
meeting practices, but companies need to change peoples habits and some
basic assumptions.
In the beginning those who learn faster and like playing “the Holacracy game”
gain more power over those that are slow to learn or do not invest time on it.
Organizations that value intuition over reasoning and always work with a lot of
consensus have to drop those traits.
It messes with people professional identity, because you have to say good bye
to job titles and makes some perks seems more unjust than ever. So some
people during the transition are bound to have a hard time and leave the
company.
