Holacracy Is All About the Benjamins

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.

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