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Holacracy: Managing without managers

Peter Crush

Imagine your organisation without anyone in charge – employees don’t report to a manager, have targets to meet or PDRs to fill in – in fact, they don’t even a job title. That’s the basic concept behind holacracy, an idea taking increasing hold in US companies – but can it ever really work? Peter Crush reports

Julian Wilson, director of Poole based aerospace company Matt Black Systems, has a problem – and it’s called leadership (traditional leadership at least). “The more leadership you have, the more you need followership,” asserts Wilson, who since 2008, has dedicated himself to studying why traditional down-top systems no longer work, including (believe it or not) studying how the Spanish Inquisition dealt with dissidents. “It became abundantly clear that staff responsibility cannot come from a set of people called leaders; it comes from individuals themselves,”

What has followed has been the development of a system of work where no-one in the business has a ‘boss’, no-one is set targets, but everyone instead operates as a single-person ‘cell’, responsible for their own P&L. Staff lease software, space and even training from a budget they’re given, and after that they’re left to just get on with it. In fact the only time Wilson says he even sees his staff is every six weeks or so [“otherwise I’d get in the way,” he says].

The principles Wilson is following are those Forbes is branding ‘the hottest trend of 2014’ – a system called ‘Holacracy’ (holon, Greek for ‘a whole that’s part of a greater whole’). It’s a concept barely heard of here, but it’s nothing short of a total transformation of what the concept of ‘work’ is. Formal job titles, managers and traditional hierarchy are ditched. Work is instead organised into either separate or overlapping circles. Staff are invited to join or leave according to what relevant skill they can bring and (in theory) transparency is unavoidable because staff are held accountable to all their co-workers. Like all new trends holacracy hit the mainstream when Tony Hsieh, CEO of 1,500 strong Las Vegas-based apparel retailer Zappos (part of Amazon), announced he too would be running his business like this for all staff by the end of 2014. 

Variations of this idea have been kicking around for some time. MIT’s Sloan School of Management coined ‘self management’ and ‘autonomous work teams’ in the 1980s, but holacracy is new in the sense it is a trademarked programme invented by Brian Robertson in 2007. It builds on notions that individual responsibility drives people and at Matt Black, (where staff have a profit share option on any product they decide to develop), since holacracy was introduced five years ago, productivity is now 300% higher while profit margins are up 10%. Says Wilson: “As soon as organisations realise they sell outcomes not roles, it’s obvious the whole role matrix has to be re-translated back into £s with rewards distributed in an equitable way.” He adds: “Holacracy resolves a traditional system which is broken and has out lived its usefulness.”

 

Goodbye leadership?


It’s not difficult to see why holacracy (interesting word, but even more interesting sounding ramifications for business leadership), is starting to capture attention. On paper it spells the end of leadership as we know it. Present the concept to some, and it instantly turns their stomachs. “Proprietary ideas are by definition off-the-shelf, and the reality of life is that tasks are not as predictable as the model wants,” suggests Martin Newman, founder of The Leadership Council. “I’m not an enemy of models per-se, but I struggle to see this as a panacea. I see how balance needs to be struck between formal and informal leadership, and there threads too of distributed leadership. But the idea staff donate ideas to others for apparently little gain does not make sense.” He says: “Work is an ‘exchange’ – we give in exchange for money and advancement; leaders worth their salt will know they simply need to talk to people not defer to a model that says they don’t exist.”

So who’s right? Should leaders really feel threatened their days are numbered, or is holacracy really the way work and leadership is likely to go? 

To be clear holacracy isn’t about people running around doing their own thing without direction. Ultimately it still requires and an overseeing structure, with people who do this. Where some see problems however, is where Wilson argues that for holacracy to truly exist, leaders must only responsible for the existence of a company, and not for influencing its people. “Using people management to get other people (front-line staff) to follow a process seems a rather short-sighted approach,” he says. “It assumes front-line staff can’t follow process themselves. The basis of how we work is that front-line staff self-align in pursuit of their own goals. In a sense, everyone is a leader; there can be no hierarchy of control and command.”

It suggests leaders have no role setting culture – but is this really the case, even at companies like Zappos? Nic Marks, director of the movement Happiness at Work, perhaps knows this better than most, by actually knowing Hsieh. He says: “There’s certainly only two rules there – that you should be yourself, and that you use you own judgement.” He adds: “At Zappos holacracy creates a business that is not consensus based, but ideas based – where it allows for both ideas and conflict rather than procrastination.” He argues: “Situational leadership follows. People only look for what skills other people bring. It sort of has a self-organising purpose.”

But while it might work at Matt Black, and it’s a cool story for firms like Zappos, commentators argue this simply cannot catch on. “Not everyone likes to work in this self-determined way; financial markets demand accountability; while staff still need direction from above because they don’t want everything to be their fault,” says Chris Ford, researcher, Lancaster University Business School. He says: “Hierarchy is something people don’t like, but it’s still arguably what’s needed.” Adds Ksenia Zheltoukhova, research associate studying leadership at the CIPD: “You can't really use holacracy if an organisation is going through change, which is the 'new normal'.” She says: “In times of crisis directive hierarchical leadership is proven to be most effective. Equally, the only way people can get a promotion is by taking positions of authority over one another.”

These are all valid reasons. But the biggest reason some say holacracy is just a fad is for much a simpler (albeit controversial) one than this: that the status quo won’t let it develop: “If you empower staff, give them autonomy, and delegate 99% of responsibility then the extension of this is that you don’t need managers,” says Peter Thomson, co-author of ‘Future Work’. “I think the real reason it’s not yet debated by the HR or management community is because they’d all be out of a job. Why would management schools – which exist to sell management theory – or HRDs – which exist to control staff – want to engineer their own dispersal? I think there’s a lot of vested interest in management circles that want us all to stick to 20th century working practices despite us being in the 21st century.”

He says this with regret because in his opinion, holacracy actually has a lot to offer. “There’s a hell of a lot of room for this,” he argues. “I see work as increasingly about a collection of individuals collaborating in order to get a job done, where ‘managers’ only coordinate where necessary.”

Seen like this, holacracy, argue some, actually uncovers a very real need for a new, and just-as-important form of leadership – as Dave Coplin, chief envisioning officer explains at Microsoft UK explains: 

“Companies still require someone with vision,” he says. “Vision may not need to come solely from the top, but it still needs to be facilitated by the top. Every single person still needs to know what the outcome, or purpose, of the company is, and that can be the new job of leaders in holacratic organisations.” He says: “Leaders need to swap managing people, for empowering people and visioning. Yes, the leader will still need to be there to be responsible for the entity of the company, but it doesn't need to dictate how, when and where people do their work.” He adds: “It’s a big culture shift, and it relies on trust, but it’s very win-win.”
Seen this way, holacracy makes a lot more sense. Marks argues Zappos’s Hsieh describes himself as “the ‘irrigator’ of a greenhouse – the gardener that tends the plants, rather than being the biggest plant there.” 

Marks’ own view is that while pure holacracy may not spread quickly, workplaces will gradually (and naturally) borrow the best bits from holacracy, and leadership styles will adapt accordingly. He says: “Delegating power, joint decision making, and a shared sense of purpose are all things we’re seeing discussed more in the workplace.” In fact he goes further: “Staff being free and getting back to a sense of ‘themself’ at work is very pertinent. Holacracy is the articulation of what is already happening.”

It’s for this very reason that some argue that as destructive as it initially sounds, holacracy could be the business model that ‘saves’ leadership – because at least it attempts to keep people together, under one roof; collaborating at a time when futurologists predict companies will become ever more decentralised, comprising project-based people selling their skills, or working for more than one employer at a time.  

“We’re now largely in a knowledge society, which creates more permeable perimeters,” says Kai Peters, CEO Ashrigde Business School. Peters adds: “I think a holacracy is simply an experiment at bringing people together into village- sized units which is inherently human.” Adds Ford: “With people already working remotely, it’s possible we’ve already moved even beyond holacracy altogether, but maybe that’s why leaders are all trying to work out what the acceptable half-way house is. People want autonomy, they resist leadership, but people aren’t as self-determining as they think, so leaders are needed. It’s a fascinating time right now.”

All of which suggests that while the word holacracy it not yet commonly known, the concepts and challenges it seeks to understand are very real, and are being discussed by CEOs up and down the country. 

“I hadn’t heard of the term till now,” confesses Yvonne Sell, author of book, Leadership 2030, “but the theory very much aligns with where I think the future of work is going – more fluid structures, agile organisations.”

And this, she argues, means the lessons for leaders are very clear: “If people are going to be working this way, they need to express even greater clarity of vision. They need to know how to be ‘altru-centric’ rather than ‘ego-centric’ - that is more ‘what do staff need from me?’ rather than ‘what can I get from staff?’” She adds: “Leadership should be worrying less about people’s work – they’ll just get on with it. What they do need to be aware of is how they maintain relations, to ensure people will want you in their circle. It’s about being able to zoom in and zoom out. Process and policy will still be needed; it’s just the proportions will change. I can’t wait to see what happens.”

“I run my business based on holacracy’

Entrepreneur, and founder of volunteering organisation, Give What You’re Good At, Ami Bloomer, has been operating under a halocracy management model since 2013. “To be honest, I didn’t have the money for line managers,” recalls Bloomer, who first heard about the concept at a conference last year. “But when I learned about this organic, self-managing structure it immediately appealed to me.” 

Holacracy was introduced into the business immediately afterwards, and all 40 staff adhere to it principles. She says: “Typically, we hire people for key skills – like logistics – and because we work on rotating projects, people with the skills we need simply dive in and out.”

Bloomer says she doesn’t specifically recruit for leadership skills; they tend to emerge over time. “Each project still has a leader, and they also act as their coach,” she explains. “It takes a lot of time and resources to allow someone’s natural leadership to evolve and flourish, but we’d rather do it like this, because our own culture stresses the importance of making a difference.” She adds: “Politics are still unavoidable – sometimes people will want to lead projects, but there are others with more skills that are more suited – but overall it works. Staff continually share the career aspirations with us, so while we don’t really do job titles, they can present why they think they deserve pay rises. 

Bloomer says she sees her leadership role as being “inspirational and keeping people motivated, as well as giving people purpose and mastery of their role.” She adds: “I’m trying to say to people that they can show up as they are, but this honesty has to be given to them from a position of safety. I think more businesses need to wake up to this model. It takes a lot of energy for staff to show up for work pretending to be someone they’re not.”


Holacracy – What do you think?

Dr Deborah Benson, MD, Leaders for Leadership: 
“Leadership and followership are instinctive behaviours. Evolution is about surviving and prospering, so it’s not leadership that is the problem – it’s how leadership is delivered and what the motivations are behind it. Perhaps the concept of self governing teams offers a different way to conceptualise leadership.”

Chris Adcock, MD, Ecovision: 

“As a leader within an entrepreneurial organisation, the balance of judgement, as to whether this is a vacuous management fad or a way to better performance, is weighted entirely on the doubtful side of the scales.”

Simon Fowler, learning specialist, The Forum Corporation: 
“Leaders will emerge and be identified by what they do and not by a title. Their actions will earn the respect of their team and further experience points.”




    Comments

  • Nick Osborne

    Thanks for this, good article. There is, as you say much interest and potential in Holacracy, but it is still little understood. There is an organisation in the UK which is catalysing a community of interest, practice and expertise in Holacracy at http://agileorganisation.org.uk. We run Holacracy Introductory Workshops and have a growing list of all the organisations that have publicly adopted Holacracy. The next workshop is London 20 May http://www.eventbrite.co.uk/e/holacracy-introductory-workshop-london-registration-5850307427?aff=eorg


  • Katherine McAleer

    FOI Officer

    This is a glorious concept.  It brings to mind Toronto's public bus system, whereby the rider is responsible for their own fare, and this is only managed by random checks.  The most frustrating part of management is when your staff respect you only for your position and have difficulty 'managing up'.  I look forward to seeing this cost-saving, employee-empowering concept take hold.

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