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The library of essays of Proakatemia

Holacracy



Kirjoittanut: Flóra Lang - tiimistä SYNTRE.

Esseen tyyppi: Yksilöessee / 2 esseepistettä.
Esseen arvioitu lukuaika on 5 minuuttia.

I am the kind of person who likes to figure out where I am in the system. That’s why I came to Finland at age of 16, to experience the best education system in the world, later applied to Proakatemia, and now writing an essay about this modern way of removing managers and even CEOs from companies’ equations to focus on people in general.

Holacracy is an organizational structure that replaces the conventional multi-level hierarchy with a flat one. (Hargrave 2021) In the conventional hierarchy (usually illustrated with a triangle or pyramid) the members are ranked and are reporting to persons in the rank above. In the flat hierarchy, the members report to each other, which encourages teamwork. Although in holacracy we can still find ranks and leaders, the distance between them, however, is smaller and there are fewer layers, so the staff of the organization is empowered to make decisions, the institution can run smoother without taking extra steps to the top of the pyramid and the workers can master self-management skills. (Holacracy 2014) In a flat hierarchy the employees are usually not hired to do one job, but to be part of a team. Within that team, one can experiment and move between different roles, which encourages self-development and increases the person’s commitment to the company. (Hargrave 2021)

Traditional hierarchy in businesses was introduced at the time of the industrial revolution. This form of organizing large workforces was and still is wildly believed to be the most productive and efficient when it comes to doing repetitive work. In spite of the world and its needs changing since the 19th century, the management style hasn’t transformed a lot until holacracy was invented by Brian J. Robertson in 2007 and although it has been around for about 15 years, most people still haven’t heard about the concept. He got the first push after his first real job and thought that system could be organized better. That is when he started to research already existing alternative management structures and puzzled the pieces, he liked together to create this new system. Robertson has written multiple books on the topic and nowadays he is the owner of HolacracyOne company which helps organizations with the transition into holacracy. (Greenfield 2015)

Although holacracy is newer, “shinier sounding”, and desired by a lot of people, there are cons to it as opposed to the previous paragraphs.

  1. The transition period can last long, especially if we look at a business with a long history behind it, and it may cost a fortune as it often requires expert guidance and can have efficiency effects during the changeover.
  2. Not all employees are ready to take on more and almost entrepreneurial-like responsibilities as well as not all managers and people in higher ranks are ready to give up their authority images.
  3. Holacracy doesn’t necessarily fit all workplaces and it is a very time, energy, -and money-consuming process to figure out if it does (however the reward is great if it does fit).
  4. In an ideal world every employee is doing their best for the company to grow, however, in practice, holacracy can be harmful to the business if the workers are not committed as supervising is not a big part of it. Holacracy relies on trust, which not everyone can live up to. That is why companies in a holacratical environment need to put more effort into recruitment and hiring to get the best matches.
  5. In a flat hierarchy there aren’t big steps up the ladder meaning promotions. Some are solely motivated by earning more, others by having better status in the company. A flat hierarchy doesn’t support vertical promotions as the workers have a lot of options to try, fail and succeed in different things within their “role”.

(Investors In People 2020; Burakova 2021; Kettering 2020)

Many companies, mostly in the IT field, are using holacracy or a structure similar to it, the biggest and most know for it is Zappos, which originated in Las Vegas. Zappos is an online retail company that started adapting to holacracy in 2014. Their way of adapting was at first closed, behind the walls, top-down starting with the CEO, and dramatic as it was mandatory. The message was clear. “Adopt holacracy or quit”. (Joost 2020; Greenfield 2015) The response during the years has been mixed, some even say that the Zapponian holacracy has failed, although the company itself never admitted that. Based on employees’ answers the change was good for the creative-minded ones but brought along difficulties for the managers who lacked self-leadership skills. (Reingold 2016)

There are some common misconceptions surrounding holacracy. They can be delusions from the management’s point of view or from an outside perspective as well.

Outsider perspective

  • Holacracy seems structureless and something that removes all corporate hierarchy. In practice, however, it is not this black and white. There is still accountability and there are still people who have more power. Holacracy refers to the overall process of getting things done, not solely on the structure.
  • There is only one way to run things-misconception. One cannot do self-management perfectly. Every company needs to find its own way, and some might realize along the way that holacracy is not their way of doing things in the long run. No one is forcing anything here; this is just one way.
  • Another outsider misconception is that a flat hierarchy is a magical solution for everything. It is not necessarily true, because one cannot stick the name onto any given system and just call it holacracy from then on. Holacracy is a mindset of a business process that needs to be adapted and then custom-tailored to the individual company’s needs. It is a long process.

Insider perspective

  • Holacracy doesn’t affect the managers and people in higher ranks-misconception. In practice, it affects everyone in the organization and can reduce the power of the managers as the company moves into a flatter structure.
  • “The end justifies the means”-misconception. From the previous example, Zappos CEO, Tony Hsieh, believed in holacracy so much that in the end, he didn’t mind how to get there. The whole “adopt holacracy or quit” scheme was an extreme use of his powers. Based on current values and posts on the website, he seems to have admitted to his mistakes and has changed his approach.

(Romme 2015; Bowers 2014)

No matter what we call it, many companies (e.g. Apple) and most if not all Proakatemia companies follow the principles of holacracy. The teams have business leaders, team leaders, and departments, but the members still work very close together. Everyone has the opportunity to try themselves out in different roles and experiment to gain new skills. Efficiency and productivity are based on self-management and teamwork. These factors are the cornerstones of holacracy. What is even more interesting is that Proakatemia teams do not transform, but start to operate in a holacracy environment from the very beginning.

Overall, I believe that holacracy or its different variations are great alternatives for a more human-centric work environment. However, the more I have read about the topic, the more I realized that my first thoughts of “everyone should be using holacracy” are changing. I realized that not everyone has the resources or the conditions (e.g. power distance is too big) to do so and that Proakatemia and other team academies are a great small-scale start towards this new way of achieving efficiency, finally leaving the 19th century behind.

 

References:

Hargrave, M. 2021. Holacracy. Read on 15.4.2022. https://www.investopedia.com/terms/h/holacracy.asp#:~:text=A%20holacracy%20is%20a%20system%20for%20managing%20a%20company%20where,with%20there%20being%20little%20hierarchy.

Holacracy. 2014. What is Holacracy? YouTube video. Published on 18.9.2014. Watched on 15.4.2022.

https://www.youtube.com/watch?v=MUHfVoQUj54

Greenfield, R. 2015. Holawhat? Meet The Alt-Management System Invented By A Programmer And Used By Zappos. Read on 15.4.2022.

https://www.fastcompany.com/3044352/the-secrets-of-holacracy#:~:text=Holacracy%20was%20invented%20by%20Brian,an%20interview%20with%20Fast%20Company.

Investors In People. 2020. Flat hierarchies: do you understand the pros and cons? Read on 17.4.2022.

https://www.investorsinpeople.com/knowledge/flat-hierarchies/

Burakova, A. 2021. Pros and Cons of Holacracy: Main Advantages and Disadvantages. Read on 17.4.2022.

https://edureviewer.com/blog/holacracy-pros-cons/

Kettering, J. 2020. Holacracy: Core Concepts, Benefits and Limitations. Read on 17.4.2022.

https://fr.holaspirit.com/blog/holacracy#limitations

Joost. 2020. Two Large-Scale Holacracy Experiments: Zappos.com vs. Bol.com. Read on 17.4.2022.

https://corporate-rebels.com/zappos-versus-bol/

Greenfield, R. 2015. Zappos CEO Tony Hsieh: Adopt Holacracy Or Leave. Read on 17.4.2022.

https://www.fastcompany.com/3044417/zappos-ceo-tony-hsieh-adopt-holacracy-or-leave

Reingold, J. 2016. How a Radical Shift Left Zappos Reeling. Read on 17.4.2022.

https://fortune.com/longform/zappos-tony-hsieh-holacracy/

Romme, G. 2015. The Big Misconceptions Holding Holacracy Back. Read on 17.4.2022.

https://hbr.org/2015/09/the-big-misconceptions-holding-holacracy-back

Bowers, A. 2014. Five Misconceptions About Holacracy®. Read on 18.4.2022.

https://blog.holacracy.org/five-misconceptions-about-holacracy-da84d8ba15e1

 

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