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A big part of the movement towards reinventing organizations in the 21st century have been approaches to replace the management hierarchy with more elegant structures. Those approaches were pioneered in the 1970s in the Netherlands by Sociocracy, and in the 2010s several new players have entered the scene. One of the most radical and most visible of these has been Holacracy. Big media stories around well-known companies like Zappos implementing Holacracy have gotten a lot of attention – but they’ve also led to a lot of criticism. As the first licensed Holacracy providers in the German speaking area we’ve been part of that story from the beginning and we’re here to give you an overview over what role-based self-organization can do, based on the example of Holacracy: How it works, its strengths and weaknesses and how we actually go about implementing role-based self-organization these days. (Hint: It’s not by straight-up doing Holacracy.)
What is Holacracy?
Holacracy tries to solve the problem that many progressive organizations have encountered when trying to become less hierarchical: Suddenly everything grinds to a halt because decision-making by consensus somehow ends up as the norm. Team-members, instead of making courageous, purpose-driven decisions, delegate ever smaller and smaller decisions to the group consensus until you find yourself sitting in a circle for three hours, debating what brand of coffee to buy for your office kitchen.
That problem usually arises when you just try to get rid of hierarchy without replacing it with something better. For all its downsides, the management hierarchy has a few upsides too, otherwise it wouldn’t have been the dominant way of organizing over the last century. One of these upsides is that – at least theoretically – you always know how to get to a final decision. It’s simple: the boss decides. So whenever you have a disagreement, you know how to solve it: Let the boss decide. The downside is that now every major decision lands on the boss’s desk, leading to either decision-making bottlenecks which slow down the organization, or bad decisions made more quickly. In any case, even if you get really good at “giving back the monkey”, i.e. at handing back the implicit responsibility for solving a problem back to the person who approached you with it, it’s very hard not to get overwhelmed at the top. It’s not impossible, mind you, but it’s a constant uphill battle.
If you now remove hierarchy without having a clear system of how you get to final decisions – especially if there is disagreement – you very quickly land at the implicit agreement that you should now decide everything by consensus. It’s just safer that way. If anyone could question your decision and you have no way of telling them “no, I can make that decision”, it’s more efficient to just ask for everyone’s consensus upfront. But that dynamic quickly leads to everyone feeling they have to be involved in everything, which in turn leads to everyone becoming overwhelmed. Where with hierarchy you only had one boss, now everyone else is your boss. Where with hierarchy only a few people at the top worried about everything (and the rest were able to lean back), now everyone has to worry about everything all the time.
A Hierarchy of Roles and Circles
Holacracy tries to solve this problem in a few different ways. It creates an org chart that is based on clear role descriptions with clear purpose, accountabilities and decision making rights. Those roles can be grouped together in circles, which in turn can be grouped together in circles, creating a nested hierarchy of circles and roles, with the purpose of the organization serving as the top of that hierarchy of roles and circles.
Individuals can fill different roles in different parts of the organization, with different expectations put on them and different decision making powers invested in them – not based on their social or legal status, but based on the roles they fill. If there is no clarity around how a decision is made, the corresponding role can just decide on their own, no need to ask a boss for permission or the group for consensus.
There’s a clear consensus-ish meta-process of defining and updating those roles and decision making structures regularly, called the Governance Process. It has the upside of consensus-based decision making in that everyone can make proposals and everyone is heard in their feedback. But it avoids the downside of vetoes overruling change ideas by defining consent in a very specific way: A proposal is accepted if nobody has a clearly reasoned objection. Even if there is an objection, the objector has the duty to join the search for an integrated solution, otherwise their objection is declared as invalid. So the process – at least if done correctly – excludes the possibility of endless discussions that go nowhere, or of ego-based decision-making gridlock.
And the Governance process is only used sparingly. It’s only used for decisions about the structure, so only for defining roles and decision making authorities. All other decisions, all the operational, strategic, day-to-day-decisions are made inside those defined roles, and the standard mode of decision making there is localized autocracy: The relevant role decides. This split of making structural decisions together and, based on that jointly agreed upon structure, making operational decisions in localized autocracy is the big difference to hierarchy, where the standard mode of decision is “the boss decides”. And the big difference to consensus democracy, where everyone has to agree to everything all the time.
All those key elements are put into an explicit rule-set, the Holacracy Constitution (available in Englisch on holacracy.org). In it you find the definitions of what roles, accountabilities, domains and policies mean, how the Governance Process works and some ideas of how to steer resources and priorities in day-to-day work. It also provides some out-of-the-box decision making structures for who decides on budgets and on who fills which role, all of which can and should be adapted over time through the Governance process. In a full-on Holacracy implementation the organization’s power holders officially ratify that constitution, giving their decision making authority over into the Holacracy system (read more about an implementation in our client story about ONTEC).
You would like to learn more about self-organization?
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