What are the benefits and challenges of using a holacracy model for organizational structure?

Organizational structure is the way a company or a group of people arranges its roles, responsibilities, and relationships. There are different types of organizational structures, such as hierarchical, flat, matrix, network, and holacracy. In this article, we will focus on holacracy, a decentralized and self-managed approach that aims to empower employees and foster agility and innovation.

1 What is holacracy?

Holacracy is a system of governance that replaces the traditional top-down hierarchy with a network of self-organizing teams or circles. Each circle has a clear purpose, accountabilities, and authority to make decisions within its domain. Circles are connected by roles that link them to other circles and the broader organization. Holacracy also uses a set of rules and processes to facilitate transparent communication, conflict resolution, and continuous adaptation.

Add your perspective

2 Why use holacracy?

Holacracy can offer several potential benefits to organizations that want to embrace complexity and change. It can increase employee engagement and autonomy by enabling them to select roles, projects, and goals based on their skills and interests. Furthermore, it can foster collaboration and innovation by allowing cross-functional teams to work together and share ideas. Additionally, Holacracy can enhance adaptability and responsiveness by allowing teams to modify their structure and strategy in accordance with changing needs. Finally, it can reduce bureaucracy and inefficiency by eliminating superfluous layers of management and approval.

Add your perspective

Andrea Hill

Removes the barriers to business growth.
Report contribution
In this era of tight labor, holocracy — if well-implemented — can provide meaningful competitive labor advantage. Especially for smaller businesses that don't have the management layers to offer a career ladder to climb, working in a holocracy can offer a highly satisfying experience of professional and personal development that serves the most motivated employees' need for autonomy, meaningful contribution, diversity and ongoing challenges in their work.

Like

3 What are the challenges of holacracy?

Holacracy is not a one-size-fits-all solution for organizational success, and it comes with its own set of challenges. It requires a major cultural shift and mindset change from leaders and employees, who must be willing to let go of traditional roles, titles, and power structures. Everyone involved must also be highly committed to learning and following the rules and processes of holacracy, attending regular meetings, and contributing to collective decision-making and governance. Additionally, those used to more clarity and direction may find the complexity and dynamism of holacracy confusing and ambiguous. In addition, organizations with specific legal, regulatory, or contractual requirements may not be able to take full advantage of holacracy's flexibility and autonomy. Finally, in times of crisis or emergency, more centralized coordination and control may be necessary.

Add your perspective

Andrea Hill

Removes the barriers to business growth.
Report contribution
One significant challenge to holacracy is that even well-meaning teams can undermine each other due to lack of clear shared purpose. Too often, what passes for shared purpose is a 10,000 foot view, which is too vague to provide the guidance teams in a holacracy require. Another challenge of holacracy is that it can become the focus of an organization, rather than means to an end. Teams can get very caught up in the the work of creating and maintaining a holacracy (which is very fun, intellectually stimulating, and creative), which can distract from the fact that their real purpose isn't the organizational structure, but using the organizational structure as a way to more effectively achieve the strategic goals of the company.

Like

4 How to implement holacracy?

Implementing holacracy is not a one-time event, but rather a gradual and ongoing process that requires dedication. To start, educate yourself and your team about the principles and practices of holacracy by reading books, articles, blogs, or watching videos. You can also consult with experts or coaches who have experience with holacracy. Additionally, define your organizational purpose and vision to help align circles and roles with overall goals and values. Create your initial circle structure and roles, starting with a pilot project or small team and scaling up as you gain confidence and competence. Utilize tools and software such as GlassFrog or Holaspirit to support holacracy. Furthermore, conduct regular governance and tactical meetings using the holacracy constitution as a guide for agendas and protocols. Lastly, evaluate and improve performance outcomes using feedback, data, metrics, retrospectives, reviews, and learning sessions to identify any issues or gaps.

Add your perspective

Andrea Hill

Removes the barriers to business growth.
Report contribution
In my experience of running a holacracy of 500+ employees, we became truly effective when we implemented an integrated metrics system. We used The Balanced Scorecard (BSC), but other systems could work. The BSC aligned each team's goals and metrics with the corporate scorecard and with each other. Finally, all our arrows were pointing in the same direction. This solved the problem of teams suboptimizing one another. It also solved the problem of focusing on holocracy for holacracy's sake, as the goals and KPIs kept the teams focused on the the business goals. Any implementation of holocracy without an integrated system of goals and metrics will struggle to achieve its objectives.

Like

5 What are some examples of holacratic organizations?

Holacracy is not a widely adopted model of organizational structure, though there are some organizations that have implemented it or experimented with it. For example, Zappos, an online shoe and clothing retailer, adopted holacracy in 2013 to foster a culture of innovation and customer service. They claim it has improved employee engagement, customer satisfaction, and revenue growth. Additionally, Medium, an online publishing platform, adopted holacracy in 2012 to create a more agile and collaborative environment for its writers and editors. However, they abandoned it in 2016 due to its rigidity. Lastly, Buffer, a social media management tool, adopted holacracy in 2015 to empower its remote and distributed team. They say it has increased their transparency, accountability, and happiness.

Add your perspective

What are the benefits and challenges of using a holacracy model for organizational structure?

1

2

3

4

5

1 What is holacracy?

2 Why use holacracy?

3 What are the challenges of holacracy?

4 How to implement holacracy?

5 What are some examples of holacratic organizations?

Organizational Structure

Rate this article

Thanks for your feedback

More articles on Organizational Structure

More relevant reading