Holacracy: An Emerging Role in Management

In addition to lower illegitimate tasks that function as stressors, there is also a higher level of appreciation that functions as a resource. Appreciation was shown to buffer the link between illegitimate tasks and well-being (Stocker et al., 2010). Supervisors often assign illegitimate tasks and are criticised for expressing sparse appreciation to followers (Kottwitz et al., 2019). Future studies should locate the sources of illegitimate tasks and appreciation in holacracy because there are fewer or no supervisors (Robertson, 2007).

A holacracy is a governance structure characterized by a distribution of power among self-organizing groups, rather than the top-down authority in the typical hierarchical corporate culture model. Consider a large consumer packaged goods company like PepsiCo. Suppose it is deciding whether to shift the ingredient mix of a product made for a certain market in response to consumer demand for fewer artificial sweeteners. The people who touch the decision get together, evaluate the opportunity, sort out the practical details (for example, discontinuing the use of certain suppliers), and then make it happen, all without interference from above. We’ve traditionally romanticized our leaders as scouts with keen vision who monitor the horizon for developments that deserve the attention of the organization and its people. And thanks to increasingly advanced analytics, leaders’ observations have become far more precise.

How does holacracy work?

The results of the first and second hypotheses indicate that in holacarcy companies, working conditions are to the advantage of employees. Higher perceived appreciation and less illegitimate tasks could therefore have a positive impact on employees’ performance and thereby on the economic success of the company. Better working conditions and thereby a better performance of the employees may be a potential explanation for this. The fact that the working conditions in holocratical companies seem to be better than in traditional companies is also interesting, because in the past the attempt to hand over power to the employees has already failed. Here, the introduction of self-management had rather negative effects, as there was a clash of interests between the organisation and the employees and, in some cases, exploitation of the employees (Koyama, 2013). In a rapidly changing work environment, deficits in job design are a frequent reason why employees sometimes must complete tasks that are perceived as unnecessary or unreasonable because the tasks do not fit to their occupational role.

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Teams are the structure.

As a last limitation, it should be mentioned that the results of hypotheses 1 and 2, which examined the differences between holacratic and traditional companies, could be explained by more room to manoeuver. However, holacracy is still partly structured by the constitution and other further rules. Future studies should include room to maneuver as a control variable. Accordingly, the assumption of this holacracy meaning study is that holacracy, with all its facets, requires self-regulatory characteristics that are bound to personality and decide the fit between employee and organisation. The goal is to find what kind of personality fits the holacracy approach and leads to satisfaction with this model, as there is no hierarchy in holacracy anymore. In a holacratic system, every person is focused on a specific purpose.

Some tech companies that adopted holacracy later abandoned it. For example, Medium, a blogging site that adopted holacracy in 2013, ended its experiment three years later. In a blog post, the company said that holacracy «was getting in the way of work.» Zappos.com, with 1,500 employees, is the largest company to adopt Holacracy.

Translations for holacracy

Self-managed organizations strip away much of this ability to prescribe, using structuring processes (rather than a fixed structure) to maintain order and clarity. In Holacracy, a “circle” is a container for organizing roles and policies around a common purpose. There is no distinction between teams, departments, communities, or business units. They are all circles, and the circle concept makes the organization super-flexible. In addition to common values, we have determined the principles on which we want to build our work. This process began with a workshop where we met in virtual cafes and in groups discussed topics related to conflict resolution, feedback, decision-making and our transformation.

Other organizations have decided it’s just too consuming to go all in. Medium, a social media company that recently dropped holacracy, found that “it was difficult to coordinate efforts at scale,” Andy Doyle, the head of operations, explained in a blog post about the change. Using self-management across an entire enterprise to determine what should be done, who should do it, and how people will be rewarded is hard, uncertain work, and in many environments it won’t pay off. So we’ll also look at circumstances in which it makes sense to blend the newer approaches with traditional models. With holacracy organizational structure, managers empower their followers to take on roles and responsibilities without needing constant supervision.

3. Person–organisation fit in holacracy

Having to handle too many tasks at the same time, people disperse their energy and perform less well on each goal. For example, at Zappos, an individual, on average, fills 7.4 roles, each of which contains 3.47 responsibilities. As a result, an individual has to deal with more than 25 responsibilities.

All other roles are appointed by the person holding the team’s Lead Link role. (See Holacracy’s constitution for a detailed description of the process). Designing a new organizational structure for the company was probably the biggest challenge of the whole process. Interviews with people from the team were conducted alongside the workshops. We wanted to know whether people were enjoying working for us, how they perceive SYNETECH, whether they are satisfied and what they would like to change. It was clear to us that someone from outside had to ask these questions.

Disseminates authority to people doing the work

These outline responsibilities, activities, and overall goals and contain highly detailed metrics for evaluating performance. CLOUs are essentially contracts that articulate employees’ work commitments to the organization—like annual performance previews that let your colleagues know what they can count on you to accomplish. The terms are renegotiated formally every year but can be changed at any point to reflect new work requirements and individuals’ evolving skills and interests. To be effective on the job, people must have a stable working environment, access to critical resources, and clear goals and responsibilities. But they must also have leeway to adapt to changing conditions and make the right decisions in the moment—and managerial hierarchies often don’t provide that flexibility and discretion.