No job titles and blurred lines of responsibility. Might holacracy catch on?

It has been around since at least 2007, and the principles underpinning it date back to the 1960s, but it has only now hit the big time. Holacracy is a theory of organisations that does away with job titles and instead distributes responsibility among self-governing circles. The Amazon-owned online retailer Zappos recently became the largest company to switch to the system. Its 1,500 people will complete the transition by December 2014.

Behind holacracy is the idea that work should be organised around tasks, rather than around the functions within a company. The best way to get tasks done is to trust teams to organise in the way that suits them best. Tasks are delegated to “circles” of people, which are free to self-govern – as long as they get the work done and fulfil the requirements of the upper circle that delegated it to them.

Holacracy has been codified by US software entrepreneur Brian Robertson. The rules are set out in a Holacracy constitution that purports to be written in plain English but reads otherwise, advising, for example: “A Linked Entity may add to or amend its Cross Link Role through its own due governance process, and such Role shall further inherit any Accountabilities required on such a Role by a Policy duly operating upon the Linked Entity.”

Nick Osborne, a certified holacracy practitioner at Agile Organisation in the UK, says that in a holacratic organisation “the power is in the rules of the constitution” rather than in the hands of individuals. Holacracy is a “third way” between a hierarchical structure and a flat structure. It can in principle be scaled to any size of organisation and makes life more interesting for employees because they can “switch in and out of roles more flexibly”.

More productive?

According to Zappos, productivity should rise because holacracy “enables employees to act more like entrepreneurs and self-direct their work, instead of reporting to a manager who tells them what to do”. Osborne cautions, however, that transition to holacracy is not easy. Companies should expect to lose some workers who find “it doesn’t work for them” – giving up on a hard-earned job title can be tough.

The system has also been criticised as too inward-looking. Removing job titles and giving more flexibility might be great for internal morale, but it could also make it harder for customers to know whom they should speak to. Osborne says that to counter this, holacratic companies can publish a roll-call of responsibilities, with details of to whom tasks have been assigned at any one time.

Steve Denning, a consultant and author on organisations, says the risk for a holacracy is that it becomes “an inwardly focused, but transparent, organisation” that leaves it to the customer to find out who has a particular responsibility. If the self-governance system turns into death by committee, “the combination of inward-focus plus complete transparency may thus be fairly lethal, as customers will be able to see very clearly that their needs, wants and whims are not being systematically attended to, and will move their business to a firm that is more responsive”.

Fortunately for companies everywhere, Zappos has volunteered to be the holacracy guinea pig. Its experience will enable the system’s effectiveness to be judged.

business strategy  CR Strategy  governance  holacracy  social strategy