We’ve talked about Zappos and their unique approach to talent management and corporate culture in the past, and lately, they’ve been making headlines for another aspect of their employment structure: the implementation of a holacracy.

What Is It?

Holacracy refers to a relatively new approach to running a business at least on a large scale. At its core, it’s about taking the power away from a traditional management structure or hierarchy and instead distributing it across roles. The goal is to create a system in which the classic image of the boss is replaced by people who are working autonomously, without the need for micromanagement.

Proponents of the concept say there is still a work structure, and it’s not a free-for-all like some suggest, but it just is designed around different roles and rules.

Features include:

• In a holoacracy work defines the roles, not the people. This can mean people can fulfill several roles within their workplace. This compares to traditional structures in which every person has one job, descriptions seem to be lacking in specificity, and there are very few updates made to these roles. There’s a certain element of fluidity in the job functions that make up a holoacracy.
• One of the biggest components of this type of workplace structure is the fact that authority is distributed across teams and roles, rather than having managers who make all the decisions. This means rather than decisions being made by someone who has no real feel for job roles or what may be needed, the decision-making becomes localized.
• Transparency is essential. Based on the signature structure of a holacracy, everyone must abide by the same rules, which are made clear and are defined. Even the executives at the highest level are expected to adhere to universal workplace rules.

The Purpose of Dynamic Job Roles

As mentioned in the brief list above, dynamic job roles are a crucial tenant of a true holacracy, so what does that entail?

Well, think of it this way: in the company you work, everyone probably has a defined job description, and while the title may appear exact, there is often very little specificity that comes with the actual duties of this role. Often we find these job roles are outdated and not relevant to what it is employees are actually doing on any given day.

In a holacracy, it’s not uncommon to see a single employee with varying, fluid job roles, and multiple ones at that. These roles can be updated at any given moment to reflect the reality of what’s happening in the workplace, and there’s a greater sense of freedom and creative exploration often present in these situations.

The goal here is to not only address the practical day-to-day needs of a business, but also to give employees a sense of autonomy that leaves them free to be creative and explore their own ways of getting to a given end result. In an ideal holacracy employees also tend to be able to put their skills to work in the most advantageous possible way.

Also, since power isn’t vested in a single authority figure, decisions are made on a smaller scale and the opinion of a manager doesn’t trump the localized decisions made by team members who are actually working “on the ground.”

When decision making and all of the power lies in a higher-up authority, the decisions may not be in-line with what’s happening. Managers can be out of touch, which can lead to poor decision-making, at least from the holacracy approach.

The Downsides

While the idea of a holacracy presents some interesting methods and opportunities, it’s not without its potential downsides.

One of which is that it may not be realistic for a large organization to undertake this type of system. There wouldn’t be a centralized element of management, and that just may not work for large-scale businesses. There could be confusion and a lack of direction.

Another potential downside is that a holacracy depends on having a strong, inclusive culture, as well as employees who want to be autonomous and have the ability to manage themselves and work with an inherent sense of engagement and self-responsibility.

If your workforce doesn’t have these qualities or if you’re culture isn’t one that values inclusiveness, people could be left out of the mix. There is the potential for “cliques” to form, and what happens if not all employees are included within these groups?

Holacracy and Zappos

Zappos is one of the leaders in the holacracy movement, and it’s been part of their talent management strategy for about two years under CEO Tony Hsieh. Unfortunately, while it’s been an interesting experiment, it hasn’t been all rosy for the online mega-retailer.

The New York Times reported 18% of the company left once these changes started being implemented. Zappos announced it would offer pretty generous severance opportunities for employees who didn’t want to be part of the holacracy-based changes, and as it turns out, many workers were willing to take advantage of those opportunities to leave the company.

The team at Zappos has worked to show this isn’t a necessarily bad thing, however. They’ve done interviews with outlets like Forbes indicating they see the fact that only 18% left as a minimal amount of employees in the wake of such a large culture and organizational change. They’re working to frame the situation as 82% of employees didn’t choose to take the generous severance offer.

Zappos is also quick to point out that innovation is vital when considering the corporate structure. They see self-organized and self-managed structures as being better equipped to “stand the test of time” and with traditional companies innovation and productivity tend to decline over time. Zappos says their goal is to move toward structuring the company more like a city and less like a top-down bureaucratic organization.

They don’t see it as an experiment and instead see it as a move toward the workplace of the future.

It’s an interesting concept, and while it may not be the right fit for every business, it could be prudent to explore some of the individual elements of a holacracy to determine if taking bits and pieces from this approach could be good in your workplace.

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