What is holacracy and should your company adopt it?

Tired of stuffy job titles and office politics? A flatter organisational structure could be the answer.

by Jack Torrance
Last Updated: 31 Aug 2017

Most of today’s companies would be unrecognisable to those Victorian captains of industry that dominated the economy more than a century ago. Dress codes are absent of bowler hats. Few of us are expected to call our boss sir (or indeed, ma'am). Flexible hours and remote working are increasingly commonplace. The fruits of our labour aren’t just salaries but pensions, holidays and maternity leave too.

And yet the structure of most organisations remains the same, with policies and strategy developed among an executive team, disseminated by however many levels of middle management and enacted by those on the front line. There’s a lot to be said for this model, which is partly responsible for western capitalism as we know it. But some feel a flatter structure is the best way to get the most out of a workforce.

That includes proponents of holacracy, an organisational model developed by tech entrepreneur Brian Robertson, who founded Ternary Software. In his words, holacracy ‘gives us a system of rules, a framework, to get order without bosses.’ The system he developed has four main features:

1. Roles, not job titles. Any one person can have more than one role, and these are constantly updated to reflect changes in what the organisation does and how it decides to function.

2. Distributed authority. Rather than having a strict hierarchy where each level of bosses answers to their managers and commands their underlings, a system of holacracy gives employees and teams autonomy to make their own decisions. While goals are still set by a leadership team, workers are free to achieve them as they see fit.

3. ‘Rapid iterations.’ The company’s structure is changed much more regularly than in most organisations. In theory this helps it respond better to new challenges and make the most the most of new opportunities as quickly as possible.

4. Transparent rules. Proponents of holacracy disdain the phrase ‘that’s how we’ve always done it.’ Everybody from the CEO to the most inexperienced hire is bound by the same rules, and these are set out clearly in a ‘holacracy constitution’. This supposedly makes it easier to establish who is responsible for what and precisely what decisions any individual is free to make.

Robertson likes to use the analogy of a city to explain why he thinks holacracy works. Most cities function in an orderly manner, but they’re not controlled by an autocratic ruler with authority over every aspect of their citizens’ lives. In 2007 he founded HolacracyOne, a company that promotes the idea and trains bosses to use it. The system has a few high-profile adherents, most notably the online shoe retailer Zappos (now part of Amazon). But last year the blogging website Medium said it was 'moving beyond holacracy' because it was 'getting in the way of the work.'   


Read more: Would a world without managers work?


It does have its shortcomings. While there are benefits to giving staff autonomy, there are also benefits to maintaining control – especially if the proverbial hits the fan and you need to make changes fast, rather than by committee.

Holacracy requires employee buy in – many workers would sooner turn up at work and get on with their job than have to spend lots of time thinking about how their role could be improved and how the company’s structure should change.

While it might work for a cultish software start-up, it’s harder to see it being effective in a retail or hospitality company. Nonetheless its principles - transparency, autonomy, responsiveness to change - should give every manager food for thought. 

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