The majority of the companies in the world run on a hierarchical system of management wherein power is distributed from top to bottom in descending order. Top management holds the decision-making power, middle-level employees manage the ones employed under them, while the lowermost tier, essentially, holds no power at all.
Each individual is accorded a specific role and is responsible for fulfilling his responsibilities liaised under the position.
The times, however, are changing. With a new system of organization, individuals can now make independent decisions with self-organization – an idea termed as ‘holacracy’. Holacracy incorporates fluidity and flexibility in the organizational structure, with more autonomy granted to each individual in the team.
Zappos, an online shoe and clothing retailer in America, and Springest, a learning platform based in the Netherlands, are the prime examples of companies that have adopted the holacratic approach in their organizational structure.
In this article, we will walk you through the details of the structure, how it works along its pros and cons.
What Is Agile Holacracy?
Agile holacracy is a system of organization in which employees are given the freedom to self-organization. In opposition to a hierarchical system of management, holacracy relies on the decentralization of decision-making power and overall authority.
Instead of a top-down or a pyramidal structure, holacratic organizations have circles. There are no leaders or subordinates. Different circles representing different teams are enclosed in a bigger circle, representing the organization.
In each of these circles, the powers are distributed uniformly. In contrast to a position or designation, these organizations function with ‘roles.’ An organization following a holacratic structure has similar roles grouped together in a circle. The roles change within a circle.
The individuals within a circle exercise autonomy and are given decision-making powers, they self-manage their roles and responsibilities.
How Is Work Organized in Holacratic Organizational System?
It is often mistakenly perceived that a holacratic organization does not have any structure. Holacratic organizations follow one vision and are as organized as any other organization. Though employees have freedom in their roles, the boundaries of their roles are defined beforehand.
Employees can freely move in the circle and change their roles but they have to take responsibility for the work they undertake along with any mistakes they make along the way. Self-organization and self-management lie at the heart of holacracy.
There are four predefined roles in a holacratic system:
- Lead Link: Lead link prioritizes work and assigns roles to different individuals. He also acts as a link between the largest circle and the smallest.
- Representative Link: A representative has the responsibility to resolve tensions between different circles. He carries unresolvable messages within the circle and represents the circle in tactical meetings.
- Secretary: A secretary is responsible for the documentation of all the meetings and distributing the information among all the members of different circles.
- Facilitator: All the meetings are conducted under the lead of a facilitator.
All the rules and regulations of holacracy are defined in a constitution. Every employee of the organization vows to follow the rules and the rules apply to everyone working within the organization.
What Makes Agile Holacracy Work?
You might wonder how individuals in a holacratic organization work or what makes the system work in an organization. To put it simply, individuals in holacratic organizations find their motivation to work in tactical meetings.
Tactical meetings are conducted weekly or biweekly in which every individual is answerable for his role and whether he has been able to achieve his goals and if not then why?
Individuals are guided by peer pressure; they are held responsible for the task they up took. They are answerable to every member in the meeting.
A facilitator makes sure that there is no finger-pointing in the meeting and that everything is handled smoothly.
What Makes Agile Holacracy Different from Traditional Structures?
Agile holacracy is a far cry from traditional, pyramidal structures. The differences include the following:
- Roles Replace Job Titles: Traditional organizational structures allot specific job titles along with detailed job descriptions, the individual has limited autonomy and very specific duties. Holacracy, in contrast, allows its employees to be much more fluid and independent with roles. Roles are not restricted to a single person but can be changed according to the requirements of the task and the skills of the individual.
- Circular Structure Replaces Hierarchical Pyramid: In opposition to a hierarchical division of power, holacracy advocates the decentralization of powers and allows individuals to exercise decision-making powers.
- Quick Adaptations: Traditional modes of organization in a company take a lot of time adapting to changing trends, holacracy, in contrast, allows organizations to keep themselves up to date with regular tactical meetings, wherein changes are discussed and implemented much more quickly.
- Tactical Meetings: Employees have limited powers in a traditional system of organization, and the decision-making power is vested in the managers or the top management. Holacracy, however, allows individuals to make decisions and take shift responsibility within a circle.
- Transparency: Since ‘tensions’ are discussed in tactical meetings and everyone is held accountable for their roles and achievement of their goals, holacracy offers more transparency in the work processes leading to more productivity and efficiency.
Pros and Cons of A Holacratic Organizational System:
We just gave you a tour of the basics of holacracy, we will now move on to the advantages and disadvantages of holacracy.
Pros Of Holacratic Organizational System:
- Increased Employee Engagement: Holacracy increases employee engagement and motivation by giving them more autonomy.
- Goal-Oriented: The decentralization of powers makes every individual more conscious of the organizational goal in comparison with personal goals.
- Decentralization of powers: Decentralization of powers gives all individuals equal opportunities for decision-making and no one has the liberty to abuse their powers.
- Transparency: Holacracy demands accountability, which brings transparency to the work processes.
- Tensions Are Discussed and Overcome: Tensions or potential issues in work processes are discussed in tactical meetings, and probable solutions are put forth and implemented.
- More Employee Satisfaction: Each individual is given autonomy and more flexibility resulting in higher satisfaction.
- Quick Adaptability: Holacracy allows organizations and their employees to adopt changes more quickly via meetings and role changing.
- Increases Trust And Reliability: Individuals in a circle form a tight-knit bond that increases their trust and reliability in each other, creating a harmonious work environment.
Cons Of Holacratic Organizational System:
- Complex Transition: Transition from a traditional system to holacracy is not only complex but also time-consuming. Employees have to unlearn the old system and learn a completely new system of organization which can be difficult to adopt.
- Organizational Goal: Individuals may lose sight of their contribution to the organizational goal wince they will be more focused on the goal at hand and their role in its accomplishments.
- Not Suitable for Bigger Organizations: As of now, holacracy has not proved to be the best choice for bigger organizations.
- Holacratic meetings can be inefficient: With all the individuals in a circle gathered in a meeting, it can consume a lot of time with no clear outcome.
Holacracy In the Contemporary World:
Holacracy, a self-management system with more flexibility and autonomy, has its perks but the implementation and maintenance of the system require a lot of work.
Medium, a social media company dropped holacracy since it hindered coordination in the company. Moreover, Zappos is also questioning the efficiency of the system since its shifts the focus from customers to employees and the maintenance of the organizational structure within the company.
Fully adopting the principles of holacracy might not be the right approach but self-management, self-organization, and flexibility in the work environment are enticing ideas that can be extracted and adopted in organizational structures.
Since the concept is fairly new, it will probably take a while before we understand its implications.
1. What are the principles of holacracy?
It is said to increase agility, efficiency, transparency, innovation, and accountability within an organization, and to encourage individual team members to take initiative and give them a process in which their concerns or ideas can be addressed.
2. Is Holacracy a good option to go for?
Holacracy works best if you are looking to promote innovation and autonomy. You want to change the way people work and get more out of them. You need better decision-making and execution speed.
3. Does an Agile Holacracy fit any organization?
Of course, each individual, every organization, and every industry is different and special. However, Holacracy is mature enough now that you can find organizations that have worked well with it at all stages of their development, in all industries, with all sorts of people across a variety of countries.
4. What is a holacratic Organizational structure?
Holacracy is an organizational structure designed to give everyone within the company greater power, freedom, and opportunity. It is not a particular place or a division in the traditional sense. You do not become “more holacratic” as you progress through your company’s hierarchy.
5. Why is a holacratic structure important?
Holacracy replaces the management hierarchy with a way of operating that sets clear expectations and creates transparent authority at every level in the organization. This reduces inefficiencies and undercuts hidden power dynamics throughout your organization.
6. What is a holacracy in management?
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. A holacracy provides a flat management structure that distributes authority.
That’s all from our side on agile holacracy and all there is to it. We hope this article gave you insight into the concept and made you understand the fundamentals of this system of organization.
Till next time, Goodbye!
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