I love shoes. So it goes without saying that I’m a fan of Zappos. In fact, a few years ago, I interviewed CEO Tony Hsieh here on HR Bartender. You can check it out here.
Zappos has been in the news recently for their decision to move toward a flatter organizational hierarchy termed “Holacracy”. Honestly, I hadn’t heard the term before so I looked it up on Wikipedia. It’s defined as “a social technology or system of organizational governance in which authority and decision-making are distributed throughout a fractal holarchy of self-organizing teams rather than being vested at the top of a hierarchy.”
Now I could be wrong, but I interpreted this as “self-directed or self-managed work teams”.
Zappos has also said they are eliminating job titles as part of their restructuring. So, no hierarchy and no job titles. There are other companies who are trying the concept of Holacracy out – Medium is another one that comes to mind.
I’m not ready to say whether this shift to manager-less companies is a good thing or not. In my experience, it starts out as a breath of fresh air and before you know it, those old practices like job titles and organizational charts start creeping back in. Maybe businesses today are ready for less structure. Maybe we need less structure. However, one thing is certain, any organization exploring Holacracy has some considerations:
Autonomy requires training. It’s very easy to tell people “Poof! You’re a self-managing team.” Truth be told, people don’t know what do to with that. If you truly want your team to self-manage, the company needs to give them the tools to deal with self-awareness, conflict management, problem solving, self-learning and change management.
Everyone in the organization needs leadership training. Right now, most companies reserve leadership training for a certain level of the organization. I’m not saying that’s a good idea…but realistically, that’s what happens. With Holacracy, everyone has the potential to lead and should be given leadership training.
Accountability must be established. Currently, accountability for certain tasks within the company belong to specific jobs. In companies with no managers and flatter structures, people must learn to hold themselves accountable for outcomes. And peer accountability must be cultivated within the corporate culture.
Recognition and compensation is redefined. Some organizational rewards are based upon your job title. In an organization with no titles, rewards and recognition have to be bestowed based upon different criteria. Same with compensation. Our pay is often based upon market data for similar positions. Flatter structures create different types of jobs and the organization will need a new method of evaluation.
That being said, creating a self-managing work structure can be done and it does have tremendous benefits:
- Encourages collaboration and teamwork
- Reduces organizational bureaucracy
- Increases innovation
It will be interesting to watch Zappos, Medium, and other companies as they bring Holacracy into their organizations. It’s no easy task to implement or maintain. The real success will be in the bottom-line. Holacracy will be declared a success if customers are happy, spend more money, and the company generates more profit benjamins.
Image courtesy of HR Bartender at the Cosmopolitan Casino, Las Vegas
Olivier Compagne says
Hi Sharlyn, Holacracy is not what you think. You might be interested in this article: “What is Holacracy? Neither bossless, nor flat; a simple explanation of this new way of working” https://medium.com/p/f50cca674f0c
Sharlyn Lauby says
Thanks for the comment Olivier. I understand the Holacracy is focused on process. But what I see companies doing is eliminating structure (i.e. hierarchy, job titles) because they say it will streamline processes…and calling it Holacracy. While it might not be the purist definition of the word, the concepts certainly appear to have become intertwined. My good friend Rick over at Flip Chart Fairy Tales has also waded into the Holacracy discussion with a terrific post.
Olivier Compagne says
Yes I agree there’s bit quite a bit of confusion about what Holacracy means. I wouldn’t call it a “purist” definition though — Holacracy® is a trademarked brand for a very specific model. A model with very specific rules defined in the Holacracy Constitution: http://holacracy.org/constitution
Zappos is using Holacracy, as well as Medium. But most other companies “without bosses” are not — they’re using their own systems that have nothing to do with Holacracy (e.g. GitHub, W.L. Gore, Valve, etc.). It’d be an error to think that all non-conventional systems are similar — they’re quite different.
Confusing Holacracy for a struture-less and boss-less system leads to completely misunderstand how it actually functions. Rick’s article at Flip Chart Fairy Tales is an example of such misunderstanding, unfortunately.
If you want to understand what Holacracy is, I invite you to read the blog post I linked to in my previous comment. If that’s enough to get you intrigued, check out http://holacracy.org/intro
Hope that clarifies things a bit 🙂
Olivier Compagne says
Oh and in case it’s useful, here is another article written by someone at DevBootCamp. He shares his experience of Holacracy and how little it has to do with what the press has been talking about: http://nuts.redsquirrel.com/post/81646923806/dispelling-mythical-holacracy