Holacracy - What is it? How Workforce Management Software Can Help

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Traditionally, projects have been run and governed using an authoritative, top-down management and decision-making approach. All the decision-making power sits on top, while the employees are made to follow orders.

However, times are rapidly changing and calling for changes in management approaches. The conventional work environment doesn’t suit the current business requirements. Holacracy is a new management style that seeks to replace the traditional command structure and give more power to the teams.

Join us as we discuss how holacracy might be the new way to structure teams and projects for success. Learn about the origins of holacracy, how it works, and how a resource management tool can help you build this culture.

What is Holacracy?

Holacracy is a corporate management method that is decentralized and has no hierarchy. In a holacracy, members of a team are autonomous and have decision-making authority. Teams and employees aren’t reliant on a managerial hierarchy. In a holacracy, the organizational structure is more decentralized, fluid, and autonomous.

Holacracy aims to distribute responsibility and authority amongst everyone in the organization. It breaks away from the classic top-down decision-making and management approach and instead focuses on small teams and their interconnectedness.

Origins of Holacracy

The term holacracy was derived from Arthur Koestler’s 1967 book, The Ghost in the Machine. The term refers to the connection between holons (Greek word for whole).

The concept was further developed by Brian Roberston in the early 2000s. He and Tom Thomison published the Holacracy Constitution in 2007. As per the Holacracy Constitution, people don’t hold job descriptions but have multiple different roles within an organization. These roles are created based on the company’s needs and market conditions.

They also noted that instead of having a regular, pyramid-shaped structure, the organization is built of self-managed teams or circles. The purpose of each circle is tied to the purpose of the company.

Within these circles, members have the ability to

  • define and amend rules,
  • voice their opinion,
  • negotiate roles, and
  • share their progress.

The individual circles are connected with larger circles through the group’s lead link. This person will generally sit in on the larger circles’ meetings as well and ensure alignment of goals.

How Holacracy Works

There are many companies that practice holacracy. Zappos, Mercedes-Benz, Precision Nutrition, and SmartHotels are just a few examples of companies that have adopted this management philosophy.

Here’s an example of how holacracy would play out in a company. People in the company wouldn’t have defined job titles or descriptions. Their responsibility would consist of many “roles” that would cover different domains and accountabilities. A project manager could be leading one team and also be playing the role of a member/subordinate in another team. The final decision-making would be left to the group’s lead link among the separate teams/circles.

Benefits of Holacracy

Holacracy allows for quicker decision-making. As there is no bureaucratic structure that requires endless approvals and sanctioning, members have the authority to make quick, critical decisions and take appropriate action to rectify situations. The members usually have assigned roles based on their subject-matter expertise and knowledge and therefore are the best person to make the call.

It also promotes innovation and growth as it’s an action-oriented process. It allows people to work in cross-functional teams, and choose what roles they want to take based on their interests and experience. The focus on purpose not only engages them but also propels them to be more active, experiment, and innovate.

Adaptation of holacracy also removes bureaucratic tension and puts the focus on results rather than approval. With this system, there is no constant going up the ladder for approvals and presenting work to the higher levels. The focus is again on getting work done/results. This approach removes a lot of politics and allows people to direct their energies toward the task at hand.

Holacracy also promotes communication and teamwork. The decentralized structure allows the groups to form a sense of community where they can openly discuss wins and issues. It also creates an environment where people can address tension before it escalates into full-blown conflicts.

The self-managing culture also lends itself to building more accountability. Each member is responsible for their own actions, decisions, and results. These decisions will impact everyone involved. Furthermore, there is nobody that one can hide behind or put the blame on. This increased sense of responsibility automatically makes everyone accountable.

Benefits of Holacracy
  • Promotes teamwork and communication
  • Speeds up decision-making
  • Help you adapt quickly and respond to challenges
  • Fosters innovation and growth
  • Removes hierarchies
  • Engages employees
  • Provides purpose to everyone in organization
  • Establishes loyalty
  • Builds transparency
Drawbacks of Holacracy

Each operating structure comes with its respective benefits and limitations, and there are a few drawbacks to implementing holacracy. Challenges include company fragmentation, complications in compensation, difficulty in recruiting and hiring talent, and sustaining the culture.

There is also the potential of overburdening a single employee because they have so many “roles” assigned to them.

However, there are tools that can help you overcome these hurdles. But before jumping into those, you need to assess whether holacracy would be a fit for your organization.

Is Your Organization Ready for Holacracy?

According to Zappos, holacracy allows their employees to act quickly on customer feedback and that’s one of the main reasons they adopted this self-management framework. However, just because it’s serving them well doesn’t mean the model is suited for all kinds of businesses.

You can determine if holacracy will be suited for your business by asking the following questions:

  • What is your company culture? What are the company’s goals?
  • What is your company size?
  • What is the level of trust between your employees?
  • What is the speed of decision-making in your company?
  • How are decisions traditionally taken in your firm?
  • How easily is change accepted and adapted to?
  • How will your team benefit from autonomy?

Holacracy tends to favor fast-paced work spaces, where decision-making is quick and there is strong communication and transparency present. Start-up and technology based businesses easily adopt this framework, while manufacturing and retail take longer.

Regardless of whether you deem holacracy is a fit for you or not, having the right tools by your side can make a world of difference.

How Resource Management Tools Can Help You Achieve Holacracy

Holacracy is all about breaking away from micro-management and fostering autonomy. A workforce management software does just that.

It will enable you to create and support a culture of independence, quick decision-making, and communication by providing the following features:

  • Employees can set work preferences so they are matched to the right roles that engage and excite them
  • Circle leads can assign work equally using resource utilization and capacity load metrics so nobody is overburdened
  • Entire project workflow and milestones are accessible to all stakeholders giving them insight into the role they play
  • Real-time management and financial reports ensure the organization is on track and quick decisions are made

Holacracy — Is It Right For You?

Holacracy offers several benefits to organizations. It increases employee engagement and autonomy, removes the superficial hierarchy, and promotes communication and collaboration. However, it does have some drawbacks as resources can easily become overworked.

Whether or not holacracy is right for your business comes down to your business’s needs, size, and goals. One fact that remains the same is that a resource management tool will make it easier for your company to instill and sustain holacracy principles in your workplace.

The right resource allocation software will help you identify the right talent for tasks, build transparency, and also ensure no resource is overburdened. The software will also promote transparency and quick, data-backed decision-making through its real-time financial and management reports.

eRS is a cloud-based workforce management tool that has all the features required to build a self-organized workplace. You can see how eRS can change your company’s work environment by signing up for our 14-day free trial.

CEO & Founder
Rudraksh Vyas
Rudraksh Vyas, an accomplished CEO at ENBRAUN since 2011, has a proven track record in leading and growing technology-driven businesses. His expertise lies in product development, client management, and implementing effective business strategies, ensuring robust financial and resource management. Prior to his current role, Rudraksh honed his skills in business development, where he excelled in account management and export marketing. He holds a PMP certification from the Project Management Institute and an MBA in International Business from the University of Technology Sydney. Rudraksh's journey reflects a deep commitment to excellence and innovation in the tech industry, making him a respected leader and visionary in his field.

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