Holacracy = An organizational governance system developed by Brian Robertson through incremental testing in his software company Ternary Software, in the early 2000's. Holacracy was influenced by many methods such as agile software development, Getting Things Done, Sociocracy, and several others.
Some critics from sociocracy assert that Holacracy is simply a re-branding of Sociocracy, and point to the re-introduction of hierarchical elements within the process.
All the rules of Holacracy are clearly laid out in a document, the Holacracy Constitution. A brief overview of each of holacracy’s structural elements and key practices:
The organization is built as a holarchy of semi-autonomous, self-organizing circles. Each circle is given a purpose by its higher-level circle, and has the authority and responsibility to execute, measure, and control its own processes to move towards that purpose.
A lower circle is always linked to the circle above it via at least two roles that belong to and take part in the decision making of both the higher circle and the lower circle. One of these links has overall accountability for the lower-level circle’s results - "Lead Link" - and the other is a representative elected from within the lower-level circle - "Rep Link".
Acting from their roles, individuals may take any action needed to best express their role's purpose, within the constraints of existing 'scopes' and 'policies'. If such action goes against existing policies, it is considered an "individual action": the individual may take the action anyway if more harm would be done by not taking it than by taking it. After the fact, the individual must explain his action and take whatever next action is necessary to improve the situation, so that s/he will not need to take the same individual action again. The individual brings the need for the action to a circle meeting so the system can learn and adapt by evolving policies and structures in light of the new information.
There are two main types of meetings in Holacracy: Tactical (frequent) and Governance (less frequent) meetings.
Tactical meetings are all about bringing visibility to the current situation of the circle (review of checklists, metrics, projects) and triaging tactical issues: circle members determine new projects and next actions needed to move forward.
Governance meetings are designed to translate the learning from doing the work into organizational evolution. Circle members bring proposals to create, modify or remove roles and policies within the circle. Any circle member may bring proposals, and a structured process - "Integrative Decision Making" - ensures that 1) all proposals are equally processed, yet that 2) no one person can dominate the process, so that 3) accepted proposals don't harm the circle, and therefore the organization.
Holacracy transcends predict-and-control steering with dynamic steering. All policies and decisions are made based on present understanding and refined as new information emerges. thus, improvements are incremental, never looking for the "best solution" but for a fast, workable solution to move forward.
People are elected to key roles through an integrative election process after open discussion.
When accountabilities are dropped or individual action leads to harm, balance is reestablished through a restorative justice system rather than a punitive one. First, all individuals involved "look in the mirror" to find their contribution to the situation, and take restorative action to bring the system back into balance. The extent of their restorative action is commensurate with their contribution, as measured by the relevant circle. Once restorative action is underway, the circles involved use the situation to learn and adapt, by defining or evolving accountabilities, limits, measurements, and policies to transcend the need for the injustice in the first place. (http://holacracy.org/how-it-works)
" the key tenets that Medium (holacracy using company) embraces:
- No people managers. Maximum autonomy.
- Organic expansion. When a job gets too big, hire another person.
- Tension resolution. Identify issues people are facing, write them down, and resolve them systematically.
- Make everything explicit – from vacation policies to decision makers in each area.
- Distribute decision-making power and discourage consensus seeking.
- Eliminate all the extraneous factors that worry people so they can focus on work.
Holacracy goes open source
"The developer of Holacracy Brian Robertson used a global webinar to announce coming shift to a ‘free culture’ Creative Commons open source licence for the Holacracy Constitution – which a growing number of organizations use to guide their self-managed ‘operating system’." (http://www.enliveningedge.org/news/holacracy-makes-the-leap-to-open-source-and-zaps-the-painful-legalese/)
Holacracy is actually very hierarchical
"Holacracy is non-hierarchical?
The first nonsense in this discussion is the notion that holacracy is non-hierachical. Holacracy, a management practice developed by the entrepreneur, Brian Robertson, in his firm Ternary Software and introduced to the world in a 2007 article, puts a lot of emphasis on consensual, democratic decision-making and getting everyone’s opinion. At the same time, holacracy is explicitly and strongly hierarchical. If you read the introductory article or the Holacracy Constitution 4.0 (2013), you will see that holacracy is hierarchy on steroids: the hierarchy is spelled out in more detail than in any conventional organization you have ever seen.
Basically, in holacracy, there is a hierarchy of circles, which are to be run according to detailed democratic procedures. At the same time, each circle operates within the hierarchy. Each higher circle tells its lower circle (or circles), what its purpose is and what is expected of it. It can do anything to the lower circle—change it, re-staff it, abolish it—if it doesn’t perform according to the higher circle’s expectations. The word “customer” or a reference to any feedback mechanism from the customer don’t appear even once in the Holacracy Constitution. The arrangements are purely inward-looking and vertical.
In holacracy, each circle must meet the purpose as defined by its higher circle. That purpose could be to delight customers or it could be to make as much money as possible by taking advantage of customers with “bad profits”: the Holacracy Constitution is silent on what the purpose is. Brian Robertson has expressed the personal hope that the chosen purpose will be noble. But the Holacracy Constitution doesn’t make that hope explicit. Holacracy is neutral on the choice of purpose: neither the customer nor feedback from the customer figure in the Constitution at all.
Holacracy is essentially a set of inward-looking hierarchical mechanisms that connect the circles. Each circle is required to be run democratically and openly, with exhaustively detailed procedures on how things like meetings are to be managed and how decisions are to be made. For those interested, there are even more detailed sets of procedures for other kinds of issues. But each circle, however democratic it is, works within a vertical hierarchy and is required to look upwards for instructions as to its purpose and guidance on how it is doing in response to that purpose. The emphasis on vertical hierarchy should be no surprise because the concept of holacracy is based on the explicitly hierarchical thinking of the authors, Arthur Koestler and Ken Wilber." (http://www.forbes.com/sites/stevedenning/2014/01/15/making-sense-of-zappos-and-holacracy/)
Critique: a missing piece
"“In theory, Holacratic systems should scale much better than traditional organizations because circles can expand and divide infinitely based solely on the work that needs to get done,” Stirman says, acknowledging that this is indeed, just a theory, as Medium is only at 40 people right now.
In fact, the Medium team has already discovered something missing from the system: praise and feedback. “Managers are usually responsible for giving people feedback, directing them, telling them good jobs, and all of these things are super important to a healthy environment. You need someone to call you out or validate you when you’ve worked hard,” Stirman says.
Even so, the founding team at Medium decided to take a Holacratic approach to the problem. “We created a few roles responsible for giving people regular feedback,” he explained. “This is where we’re starting to skirt the lines of having people managers, because it certainly sounds managerial, but these roles aren’t responsible for people’s work. It’s more of a mentor relationship than a managerial relationship.”
These roles are called ‘Domain Leads’ and are filled by experienced members of various circles like design and engineering. In addition to mentoring, they’re also largely responsible for hiring and firing. They work closely with the ‘Lead Links’ who define and fill roles in their circles to assess performance. “Domain leads are responsible for the people, not the work,” Stirman says. “It’s something we’re trying out.”
To supplement this tactic on the positive end, the company also introduced a ‘High Five Machine’ – a dashboard where anyone can write in and praise a co-worker, streaming throughout the office. It’s an invention borne out of Holacracy, spun out of the unique needs this kind of system creates." (http://firstround.com/article/How-Medium-is-building-a-new-kind-of-company-with-no-managers)
The use of Holacracy at Medium:
" there’s a focus on roles. Each circle has a ‘Lead Link’ who determines what roles the circle needs and how they get assigned. In fact, one person can hold multiple roles if their bandwidth and expertise allows. Stirman is both the People Operations lead and Word Master (which comes with final say on punctuation and capitalization, among other word-based dilemmas). This way, people can build versatile roles for themselves that speak to their whole skill sets - not just a single ability.
This role-centric organization also optimizes for number of ideas and strategies tried, while also keeping a tight grip on what gets shipped live. For example, there’s a single role titled 'Product Strategy', currently filled by Ev Williams himself, which decides which features go public. But, teams like RAD get to decide which ideas actually get prototyped and built.
Once there’s too much work for a particular role, it can evolve into a circle with multiple members to shoulder the load. “In a traditional company, the structure doesn’t change based on the work,” Stirman says. “You see a lot of companies trying to force the work they have into their existing structure, and that can get messy.”
This emphasis on organic growth has a side benefit of distributing authority. In Holacratic systems, individuals operate without managers because many of them have decision-making power in a particular area. And since everything is made as explicitly as possible, everyone in the organization knows who has authority over what. “It’s much better to have power distributed as widely as possible so more people can make more decisions to move forward,” Stirman explains. “This structure leads more toward moving fast, trying new things, and adjusting as needed. You don’t have to wait for everyone up a ladder to sign off. This can take weeks or months, when Holacracy says, ‘You know what, we’re going to hire the best people we know and trust them to make decisions for us.’ All day people make decisions, own parts of the company, and act on them. The momentum this creates far outweighs someone making a bad decision. You also have the momentum to change course quickly.”
Decision-making is further aided and hastened by airing ‘tensions’ in meetings. Stirman defines this use of tension broadly, calling it “any difference between what is and what could be.” In this sense, tensions can be negative (e.g. I don’t have time for that project, my chair isn’t ergonomic, etc.) or positive (e.g. I have a vision for a feature we should create). Tensions are resolved in tactical meetings where every attendee either shares a tension or passes. This way, everyone is encouraged to speak up if they have a problem or see an opportunity.
“The difference between Holacracy and traditional management is that when you have people at the bottom and people at the top, it’s always the people at the top trying to figure out their tensions, then they have the people at the bottom resolve them,” Stirman says. “No one takes into account the tensions, ideas, issues felt by the people at the bottom. They spend their days resolving tensions they don’t have and may not even understand.”
In tactical meetings, a trained facilitator builds a list of tensions that people throw out to the group, and the remaining time is used to resolve them as much as possible. This doesn’t mean solving major problems. It’s about identifying the next right step to a solution. “If I’m a guy who says a button should be green instead of red, in a typical meeting, that conversation could go on for hours, days, weeks without clear action,” Stirman says. “A small workable solution would be for me to schedule a meeting with our visual designer.”
For Stirman, even before he heard of Holacracy, tensions were always easy to identify, but not easy to solve. “Once you identify what a tension is, you can feel it in your shoulders, in your ears. You know you’re worried about something. Now, when I identify a tension, I jot it down. If I can’t resolve it by myself, I bring it to my circle’s next tactical meeting. With these meetings, you’re always making things a little bit better.”
How to think Holacratic
There’s a lot to like about Holacracy when you compare it to classic management frameworks, Stirman argues. He has firsthand experience. “When I think about my role at Twitter as a manager, I had tensions all the time. And my team didn’t even have that many problems,” he says. “Still, between all the teams he oversaw, my manager was constantly putting out fires. No one had the time or interest to resolve my tensions. Now, the way we use Holacracy, people are genuinely happier, they feel listened to, and connected with the organization.”
For companies looking to reap these benefits by injecting the spirit of Holacracy into their existing format, Stirman has a few key suggestions:
His focus on hearing people out about their personal lives and problems at Twitter is a prime example. It closely resembles a safe space to air tensions. In fact, he wishes he would have formalized his more personal, human approach so that people would have known they could share freely instead of carrying their issues around.
Holacracy encourages people to work out their tensions and issues one-on-one or outside of meetings if possible. Given the rampant explosion of meetings in corporate environments (so much so that there are meetings about having too many meetings), this is an increasingly important tip. Tension meetings are defined as opportunities to air issues that couldn’t be resolved elsewhere. People should only address the group with topics that actually need others to weigh in or help find a path forward.
Establishing mutual accountability can make a highly tiered workplace feel flatter, and more engaging. In addition to informing his reports about what was going on throughout the company, Stirman wishes he would have shared his own list of tasks and concerns with the people on his team. That way he would have been accountable to them too and made them feel less managed. “At Twitter, there was this common power dynamic where my reports felt accountable to me to get their work done and I felt accountable to the guy above me. It would have been good to be more forthcoming."
Most of the time, you know your manager’s responsible for firing you and how much you get paid. I wish I would have sat down with my reports and said, “You know what, here’s what being a manager at Twitter actually means, and here’s a list of the decisions I have the authority to make. I wish I would have broken that power dynamic, and been a better leader as a result."
Hand in hand with this, it’s a great idea to run some of your own problems by your reports to see if they can weigh in. “At Twitter, I was constantly burdened by my team’s problems, and I think most managers are,” Stirman says. “I wish I had empowered my team to solve their own problems, and mine. I wish I would’ve asked them more questions, been more creative about surfacing problems for them to solve to make our work better. I found myself scared to tell my reports ‘I don’t know’ whenever they asked me something, and in hindsight, I had this awesome team of smart, capable people who were energized by solving problems. Turns out individual contributors love to be asked for help. A lot of them want to take that buzzer beating shot. They want to be the last guy up at the plate. It gives them a chance to be a hero and to flex their muscles. And in the end, it builds more trust in me as a leader because I’m not filtering out questions I can’t answer.”
Hiring in Holacracy
Given the decision-making power of the average employee in Holacracy, you’d think the interview process would be fairly unique, or at least intense. But Stirman says it doesn’t have to be that much different than average – making it possible for more typical companies to hire in Holacratic fashion.
“When you interview someone, it’s pretty easy to tease out if they take the initiative to solve problems or take on projects – or if they’re simply better at being told what to do. Both are great kinds of people, but I’ve found most fall into one category or the other,” says Stirman. “I generally ask, ‘Tell me about a project you’re really excited about.’ The self-starters will talk about a problem they found and how they solved it. The people who aren’t will say, ‘My manager came to me and said can you build…?’ Right away you can tell. And for our kind of organization, having to be told what to do just isn’t a great fit.”
Don’t underestimate culture fit in hiring. This is something Stirman can’t emphasize enough, especially if you’re looking to adopt a more Holacratic mindset. “You want to make sure you hire only people you wouldn’t mind getting stuck in an airport with,” he says. “So many people fall into this trap of hiring highly skilled people who are bad culture fits. And I’d argue that’s the worst kind of hire – even worse than a poorly skilled person. If they’re as skilled as you think they are, they’ll gain power, influence and get more deeply enrooted in your technology, process and product." (http://firstround.com/article/How-Medium-is-building-a-new-kind-of-company-with-no-managers)
- Whitepaper at http://www.holacracy.org/whitepaper
- introduction to Holocracy Webinar ; https://www.youtube.com/watch?v=PH4RVc4F-_E&index=73&list=WLyqnJp6BgT07hbMGTuNIvUA
- short text about the different elements of Holacracy. http://holacracy.org/how-it-works
- Holacracy Constitution 4.1 on Github (where practitioners can suggest improvements): https://github.com/holacracyone/Holacracy-Constitution
- Constitution 4.1 webinar: http://www.holacracy.org/open-source
- Holacrcy.org apps (includes App design toolkit): http://www.holacracy.org/apps
- Holacracy – how it works page: http://www.holacracy.org/how-it-works/
- A comparison between holacracy and sociocracy: