Holacracy 101: An Overview
Holacracy is not the only systematic change to organizational structure, but it's getting positive traction in the private sector.
Currently a few hundred companies are using it, and it's easy to see why: Holacracy provides a unique approach to distributed authority and allows employees to self-organize around the work that needs to be done. It is not a lack of structure, but instead a new way of — and different approach to — structure, and it's one that allows organizations to be more agile and more rapidly adapt to change. Its emergent organizational structure adapts as the business needs change. For organizations that adopt Holacracy, it will be a radical shift — but the benefits may outweigh the pain of the transition.
Let’s take a look at the top three ways Holacracy is different from the traditional hierarchical structure:
- Roles vs. Job Descriptions: The job description becomes obsolete in Holacracy. Instead, individuals are assigned one or more functional roles that outline their responsibilities.
- Circles vs. Departments: Departments no longer exist in Holacracy. Instead, organizational structure is built around the work that needs to be accomplished. These groupings of roles are called circles.
- Governance vs. Bureaucracy: Managers do not exist in Holacracy. Authority is distributed and built into the governance process. Governance builds in many of the responsibilities previously controlled by managers and provides a framework where every employee has the ability to propose necessary changes.
Try imagining a workplace with no managers, no job descriptions and authority that's distributed. You are probably thinking it would be utter chaos; however, this is not the case with Holacracy. Let’s take a look at each of these differences in more detail.
Let's start by throwing out the job description. (In most organizations it serves little purpose anyway; chances are you rarely look at your job description, and if you did, you would probably spend most of your time in the “other duties as assigned” category.) In Holacracy, this is addressed by separating roles from employees.
A role is a specific set of responsibilities that accomplish a set purpose. An employee can have one or multiple roles assigned to them, but the fact that they are separate provides some unique benefits.
First, a role can be easily moved from one person to another. Second, if additional responsibilities need to be assigned to a role, it is handled at the role level and not the individual level. This can reduce some of the tension that comes with assigning new responsibilities. Lastly, if a role has a responsibility that is no longer needed, it can be removed. This provides an accurate reflection of the work being done instead of the catch-all approach used in job descriptions.
There are three primary attributes assigned to each role:
- Purpose: A summary of what the role was created to achieve.
- Domains: A list or property for which the role is responsible and has authority over.
- Accountabilities: A list of responsibilities that are assigned to the role.
When we separate roles like this we can begin to see how they can easily be updated, reassigned to other employees, or even completely removed as necessary. This is powerful because it provides transparency on how work is distributed and who is accountable. You are able to see all of the accountabilities your organization has and distribute them in a way that focuses on the strengths of employees instead of their department or division.
The transition to roles allows you to break down organizational boundaries. Departments become unnecessary because people are organized around work, not a manager. However, there is still a need for some level of structure. That is where circles come in. Circles allow organizations to group roles that have a similar purpose and focus area. This may be similar to the current department structure or it may look completely different. It depends on what makes sense to each organization based on the type of work that it does.
Circles also have a few attributes associated with them:
- Purpose: The purpose for a circle is a summary of what the circle was created to achieve.
- Lead Link: The person in charge of filling its roles, making sure it is meeting its purpose, and overseeing the circle governance process.
- Policies: Constraints or guidelines placed on the circle to further clarify how it will be governed.
- Defined Roles: The roles that are inside of the circle and required to fulfill the circle's purpose.
Top-level managers that currently exist in the organization may find themselves serving as circle lead links. The lead link is responsible for circle governance and making sure all of the roles are filled. They have the ability to remove someone from a role but do not have any control over compensation or the authority to hire or fire. This is because employees may be a part of multiple circles and therefore will have many lead links.
This is a major change from traditional organizational structure. Roles provide clear expectations to employees and a high degree of transparency. Those two reasons alone are enough to keep most employees productive. When it comes to hiring and firing in Holacracy, these decisions would ideally be handled systematically.
Transitioning to Holacracy starts by adopting the Holacracy Constitution. This document outlines the governance process and provides clarity around how the organization will operate. The governance process is probably the biggest difference coming from a traditional organizational structure. It outlines how roles are created, modified and removed; how circles are formed and managed; and how policies are adopted.
When an organization first transitions to Holacracy, it creates what is called the anchor circle. This is the topmost circle in the organization where high-level strategy is set. When additional circles are created, some roles must be filled in addition to the lead link. These roles are:
- Rep Link: This individual maintains relationships across circles and between sub-circles. If there are conflicts or tensions, the rep link is in charge of seeing that they get resolved.
- Facilitator: This individual makes sure that the circle is operating in accordance with the constitution. This person also is responsible for making sure the governance process is upheld inside the circle.
- Secretary: This individual is in charge of keeping all of the records for the circle in order. He or she is also in charge of setting up circle meetings and making sure any changes made during the meeting are communicated to other circle members.
Circles conduct regular governance meetings where individuals can bring up any suggested changes they have to the circle and underlying roles. Anyone can make a proposal, which can include changing roles, updating accountabilities or adding new policies to the circle. Attendance is not required by everyone in the circle, but if they are involved in the change they should attend.