18 Mar

Holacracy: How does it work?

Holacracy dynamic organisation

By Fabien Bataille

This article was originally published in French on Fabien’s blog Agile, Lean et Compagnie

As part of my research on new ways of working in organizations, which currently abound, I recently discovered Holacracy. It is used by Zappos, the
largest online shoes seller, in the United States
(see here [FR]). Closer to us in France “SOPRODI” (SME in industry in Clermont-Ferrand) and Antonutti-Delmas (SME transport, near Paris).

This new mode of business management, which was invented by the American company “Ternary Software”, then sold under license through the structure “HolacracyOne“, is now spreading around the world.

iGi Partners, a consulting firm specially created in France to help companies transition to Holacracy, produced a very interesting comic book on Holacracy (free access here, in French) presenting the main points of this new management method.

To begin with, the name Holacracy comes from the Greek “holon” and illustrates the fact that the organization is cellular, with small cells encompassed in larger ones.

The structure of the organization is not pyramidal! Employees are assigned to the cells, and are responsible for “roles” required by the company. They communicate directly with the other “roles” they are dealing with without going through or seeking the approval of any hierarchy (which does not exist).

Holacracy how does it work?
From pyramidal to cellular organisation. Cover of the comic book from iGi Partners

In Holacracy, the basic dynamic principle is that the organization evolves continuously according to the “tensions” felt by the employees and which prevent them from doing their job properly.

3 types of meetings planned to remove these tensions

  • A “strategy” meeting aimed at defining the company’s activity, its raison d’être and its markets.
  • A meeting of “governance” which aims at changing the organization of the company.
  • A “triage” meeting that aims at managing the day-to-day work inside the organization.

These meetings are organized periodically. They take stock of the “tensions” that employees have in their role and help to define an action plan to remove them.

This action plan is two folds:

  1. Changes in the “Accountability” of the roles assigned to employees.
    “Accountability” here meaning all the actions that the employee is responsible for in this role. An employee can have multiple roles if she is able to carry them out. If not, this will create tensions that will be managed by the governance meeting.
  2. Changes in the organization of the company by adding or removing new roles.

If modifications are necessary:

  • either the modification is internal to the cell (in this case it will mainly be a question of modifying, deleting or creating roles) and the cell reorganizes itself,
  • or the modification implies the modification, creation or deletion of other cells, and in this case it is necessary to go through the enclosing cell, and so on until we are at the right level to remove the “tension”.

Another specificity of Holacracy is the disappearance of the role of “manager” as we know it, which is replaced by two distinct roles.

The first one, called the “first link” (downlink), aims to represent the enclosing cell in the enclosed cell.

Among the accountabilities of this “first link” role, we find:

  • the assignment of people to roles,
  • the allocation of financial resources,
  • the definition of indicators and their assignment to roles,
  • and finally the definition of the strategy of the cell.

The “second link” (upstream link) in the opposite direction, aims at representing the cell encompassed roles to the encompassing cell.

The role of “second link” is attributed by the team, by election, to one of its members. It will be the duty of the “second link” to inform about the “tensions” identified in the cell back up to the enclosing cell, so that it can be dealt within.

This breakdown of the manager’s duties aims at avoiding the usual schizophrenic role of a manager who must represent and protect his team vis-à-vis the higher level, but also enforce in his team what was decided at this same higher level.

To sum up

Even if it presents the main aspects of this new approach to management, this comic book still leaves me with some questions.

  • How do we group roles in a cell? Do we group roles which are in interactions or on the contrary we group roles which have same semantics and a close way of working? Or simply by affinity between the people in the roles?
  • How to transition from a conventional management model to Holacracy?
  • How is cultural mismatch dealt with? (Going from “Command & Control” cultures to Holacracy)
  • What happens to middle management, which loose it “raison d’être”?

In any case Holacracy has the merit of blowing up the existing status-quo in companies.

Conventional companies are indeed seeing their share of disengaged employees growing day after day. They also fail to attract or retain newcomers, especially from so called “generation Y”, for whom the search for purpose takes precedence over the search for a big salary in a hierarchical conventional organization!

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