I was searching the internet for new trends in business management a while ago. And, as often is the case, my search turned up a few good reads.
But nothing caught my attention as much as the story about a few companies that have embraced or plan to embrace a system of ‘management’ that discards the role of ‘managers.’
Initially, it all sounded very ludicrous. However, as I learned more about this approach, ludicrousness quickly faded. In fact, I started thinking that “this might actually work.”
Contrary to my expectation, this approach was not the spur of the moment thought of a bored company executive. Rather, it is already quite established, with its own name (Holacracy), a dedicated website, and a few companies that have implemented it. Plus, they apparently have a lot of good things to say about it.
Zappos, one of the listed companies, made the headlines recently. It was when they told their employees to go Holacratic, or go home.
The shoe retailing company has been experimenting with the holacratic system of management for some time now. And since April 30th, has apparently adopted it as a companywide system.
What is Holacracy?
Here is the following definition directly from the Website
“Holacracy is a new way of running an organization that removes power from a management hierarchy and distributes it across clear roles, which can then be executed autonomously, without a micromanaging boss. The work is actually more structured than in a conventional company, just differently so. With Holacracy, there is a clear set of rules and processes for how a team breaks up its work, and defines its roles with clear responsibilities and expectations.”
Frankly, this sounds interesting, but it also raises some questions. Most of them are related to the very foundation of this system – the absence of managers.For example, among many other duties, managers are there to ensure the people working under them are putting in their best.
Zappos’ CEO, Tony Hsieh Offers a Solution
With self-management, there is the tendency that workers may not perform as well as they should. However, Zappos’ CEO, Tony Hsieh already has his eyes fixed on solutions to this potential problem.
Hsieh Says:
“I was on a Skype call with Frederic Laloux, the author of Reinventing Organizations. During our call, he said …………… we need to figure out what the antibodies are for when a small number [of] employees take advantage of the freedom gained from being in a no-manager organization, or else it will demoralize the other employees. He said that in general, research has shown that peer-pressure based systems work the best. For certain types of job functions where there are easy metrics to measure performance, a public leaderboard ranking will naturally create peer pressure by showing which teams are performing and which aren’t.”
Zappos is being proactive as they implement this new, not fully tested approach for company management using competency management software to clearly define roles and expectations. They are also exploring employee tracking software to monitor performance transparently in this manager-less environment.
How self-management will turn out for the handful of companies who have implemented it, we cannot really say for now. But with the proactive, problem solving approach with which Zappos is taking this on, it will not be surprising if it actually turns out to be the gold standard for them, and for other companies who may then decide to put on their ‘shoes.’ Stay tuned for new trends in business management.
FAQ
What is holacracy in business management?
Holacracy is a management system that removes power from a traditional hierarchy and distributes it across clearly defined roles that are executed autonomously. Work is still structured, but through transparent rules and processes rather than through a chain of managers.
Which companies have adopted holacracy successfully?
Zappos is the most prominent example, having experimented with holacracy before adopting it company-wide. Several other companies have also implemented the system and reported positive outcomes. The approach has its own dedicated organization and framework.
How does holacracy handle employee accountability without managers?
Peer-pressure-based systems have proven most effective. For roles with measurable metrics, public leaderboards create natural accountability by showing which teams are performing well. The transparency replaces the oversight function that managers traditionally provide.
What are the risks of removing managers from organizations?
The primary risk is that some employees may take advantage of the freedom and underperform, which demoralizes their peers. Without proactive systems like performance transparency and peer accountability, a manager-less structure can erode team productivity and morale.
Is self-management a viable alternative to traditional hierarchy?
It can be, but it requires deliberate systems to replace the functions managers serve. Clear role definitions, performance transparency, and peer accountability mechanisms are essential. Companies like Zappos have shown it is workable when implemented with proactive problem-solving.
How does holacracy define roles and responsibilities?
Holacracy uses a clear set of rules and processes for breaking up work and defining roles with explicit responsibilities and expectations. Unlike traditional hierarchies where managers assign tasks, roles in holacracy are self-directed within their defined scope.
What role does competency management play in self-managed organizations?
Competency management software becomes even more important without traditional managers. It provides the structure to clearly define roles, set performance expectations, and track capabilities, ensuring that autonomy does not come at the cost of organizational clarity.
Can holacracy work for large organizations at scale?
Zappos, with thousands of employees, is the largest test case. The results are still evolving. Success at scale depends on strong systems for role clarity, performance measurement, and peer accountability that can replace the coordination functions managers traditionally handle.