Is Holacracy Good for Your Business?

Imagine your company doesn’t have any bosses or managers – everyone is equal to everyone else and organized into autonomous teams that are responsible for the development of the company. This kind of company management isn’t fiction, it’s reality and we call it holacracy. Do you think it would be a suitable solution for your business?

Many online companies, such as Zappos and Medium, are known for adopting this style of management. Smaller companies in the U.S. and other parts of the world have adopted it as well.

Holacracy, creative team
No bosses, only teamwork – that’s the basis of holacracy.

Cells in an Organism

The word holacracy comes of the Greek word holons, which means ‘whole’. It was first used in 2007 by Brian Robertson, the founder of the startup company Ternary Software, which became an experimental laboratory for this new free company management idea. Robertson compared holacracy to a human body, where the employees represent cells with their own specific functions that are required for the organism to work correctly.

Managing Relations

The main goal of holacracy is to rid the company structure of unnecessary bureaucracy and politics. There is no vertical structure of relations, where the managers are higher up than everyone else – quite the opposite, every employee is equal to everyone else. They work in teams which are organized based on the task at hand.

Different Kind of Leadership

At first glance, it may seem like holacracy is the best way to lose control of your own company but according those who actively practice it, the result is the exact opposite. Of course, holacracy also requires a certain amount of leadership, just not in the way we are commonly used to. The executive employees who are in charge of the individual projects still need to make sure everything runs smoothly. The difference is that they check the progress of the project itself instead of controlling the people on the team.

Holacracy, leadership management
A holacracy organizes people into autonomous teams.

Employees as Partners

One of the main principles of holacracy is taking responsibility for one’s work – every team member can see their own personal contribution to the success of the entire project and of the company itself. In this way, each employee behaves like a businessperson in their own right. This system of management seems to be very transparent in terms of relations, accounting, and employee benefits, so it creates very few conflicts in the workplace. People who share the same values have the potential to work together better than completely different people under one dominant leader.

Meetings Instead of Inspections

In a holacracy, nobody can command another person or give them tasks to complete. Meetings are very important and they usually take place on a daily to yearly basis. During these meetings, members of the team divide tasks among each other, agree on key goals, and evaluate the overall progress of the company. Advocates of holacracy claim that this kind of company ‘management’ helps companies become more effective and gives them the flexibility needed to react to sudden changes.

Hierarchy vs. Holacracy

  • In a hierarchical system, where different people have different levels of power, it’s hard to push forward ideas that come from those ‘on the bottom’ of the pyramid. A free system gives everyone the opportunity to speak, which brings forward new ideas and new opportunities.
  • In a regular company, employees work individually, for the most part, which can decrease their involvement and interest. A holacracy aims to bring together people with a common interest to make the company grow.
  • A hierarchical system is less flexible and can’t make sudden changes in the organization of the workflow. This translates into the inability to react to outside changes as fast as the holacratic model can.
Holacracy, meeting
Meetings are the only form of control. They take place daily to yearly, depending on the need.

The Limitations of Holacracy

Growing Company

The holacratic model has proven successful mainly with small (startup) and medium-sized companies. Experts pose the question of how a company without a single leader could cope once it begins growing – how would it handle the challenges of a larger company, such as a fluctuating number of employees or searching for external financing options? There are reasonable doubts that this system would work with large companies.

Tolerating Differences?

Working in a company that’s based on a holacratic system requires that people are capable of individual thinking and management, especially when it comes to themselves. Of course, not everyone fits this profile which leads to the question how to handle the diverse personalities of a company’s employees?

Keeping Talented People Interested

The holacratic system ensures that everyone is equal to everyone else. This also means that there is no room for career growth or special bonuses for exceptional employees. This gives no motivation to the really good members of the team. Why should they be exceptional if they get the same as everyone else? There’s also a high chance that, when crossing over to the holacratic system, the people in high positions in the company won’t want to give up their hard-earned spot on the pyramid.

Can a Company Survive the Change?

A change to the holacratic system can be problematic. Companies and people are used to working a certain way and a radical change can disturb the established routine. Especially when the team isn’t ready for such a change.

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