What is Holacracy?

Zappos is at it again… First, they paid employees to leave during orientation. After that, they went and eliminated their job postings on job boards (or so they said they did), and now they have eliminated hierarchical managers. That is right, they have completely transitioned to using a new organizational structure that is “manager-free” where employees work within “task-specific circles.”

No managers. Let that sink in for a moment. Not having to answer to a boss can sound pretty nice, right? Well, it sounds pretty good until you find out that this change in structure prompted 14% of Zappos employees to quit. Queue the screeching halt. One out of every seven employees left the company completely.

Even still, Zappos CEO, Tony Hsieh is ok with it. He knows that the things he does and the way he leads his company are far from traditional and kindly encourages employees who are not on board with his experimental antics to leave if they feel it is not for them. Though, maybe this guy is on to something.

Zappos Blazin’ Trails

This type of structure is called a holacracy and it is not common yet but there is a lot of potential for it to get there. For Zappos, this complete transition was rather controversial but allows them to blaze the path for what will likely be countless companies to follow. With things like the introduction of millennials into the workforce and the continuing push of people wanting to work for themselves, this structure has the ability to allow people the best of both worlds and really set a new standard in organizational management structure.

Defining Holacracy

Traditionally and still most commonly, you find organizations that have your typical hierarchical management structure with the CEO on top and your frontline or entry level positions closer to the bottom. When it comes to management and how and organization is structured, a holacracy system is completely unlike any of your traditional structures. This is the type of structure Zappos is using.

It is “a new way of running an organization that removes power from a management hierarchy and distributes it across clear roles, which can then be executed autonomously, without a micromanaging boss.” Within a holocracy everyone knows exactly what their role is and what is expected of them. There is a very clear set of standards and rules that determine how business is to be done and keeps all of the cogs running smoothly.

Why Should I Make This Change?

You can probably look at your own organization and think of various reasons why a holacracy structure could benefit you.

  1. In an ever changing economy, the continuous introduction of new technology and so on, most every business out there has had to adjust and adapt. Your management team and business is likely familiar with risk, upheaval, and change. This is another change that can have a significant impact and really set your company apart and move you on toward further success.
  2. Time is money. A holacracy could allow you to eliminate wasted time through refined processes. In removing the management layers you can also cut down on politics that often stop up your systems.
  3. Your employees are okay with change. Change is a part of our culture and overall way of life. In most successful companies, employees have come to expect it.  If you genuinely believe that a holacracy is the right path for your organization, your companies will join you or they may choose to leave. Keep in mind that 14% of Zappos employees weren’t okay with the new program and accepted a severance package as part of the change.

Moving to holacracy will undoubtedly be a big step for any organization and it may not be the best step for every organization at this point in time. There are definitely pros and cons but the pros to seem to be more and more outweighing the cons, carefully consider if this is a good path for your organization. Try it like Zappos did before they went full scale. It could end up being just what your company needs to take it to the next level of success.

Defining Holacracy
Definiendo holacracy

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Jessica Miller-Merrell

Learn more about Jessica Miller-Merrell, SPHR, SHRM-SCP, the founder of Workology, a workplace HR resource, and the host of the Workology Podcast. More of her blogs can be found here.

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