Holacracy: A Dynamic Corporate Structure for the New World of Work

1. What is Holacracy anyway? 
2. Where did the idea of Holacracy come from?
3. How does Holacracy work?
4. How can Holacracy be introduced to your companies?
5. What are the advantages of introducing a holacratic structure?
6. What are the disadvantages of holacratic structures?
7. Examples of how Holacracy can be implemented in the company
8. What tools help us with holacratic cooperation?
9. So far, holacracy has worked for us

A study by the Institute for German Economy examined the culture of trust in companies. The results clearly showed that trust from superiors to employees has fundamental effects. The employees are more satisfied and productive when they feel trusted. This gives trust in their own team a competitive advantage for the employers in the job market.

So how should a company structure be designed today that promotes the independence and responsibility of each individual? How do you create real employee satisfaction? How do you promote individual development? How do you create trust? These questions are relevant when you deal with collaboration in your company.

The structural conversion to a holacratic organizational form can take collaboration and cohesion in your companies to a whole new level.

What is Holacracy anyway? 

Similar to the approach and the implementation of New-Leadership, Holacracy aims to reduce rigid hierarchies and integrate employees into decision-making. Power is distributed decentrally to self-organized units. This modern management system enables companies in the new, digitized world of work to react faster and more flexibly to (market) changes.

Where did the idea of Holacracy come from?

The American Brian J. Robertson originally developed Holacracy as an organizational form for his software company. He first experimented with various democratic models and approaches within his company Ternary Software. Over time, he balanced out the structure that emerged and gave it the name Holacracy. In 2010 he finally published the Holacracy constitution. The Holacracy Bible contains detailed principles and examples of a holacratic organization.

Holacracy is based on the concept of Sociocracy. The word comes from Latin and Greek and stands for socius = companion and kratein = rule. So it means: "We decide together.” Thus the equality of all participants is paramount.

How does Holacracy work?

Holacracy is done with classical hierarchical company structures. The usual pyramid with a management at the top and subordinate departments is abandoned.

The company is divided into circles. These work independently, but are still in relationship and dependence on each other. Each circle includes various roles that do not correspond to the actual job title.

This separation of person and role allows tasks to be distributed and processed more dynamically. Also, the market can react more flexibly to changes. The respective role has decision-making authority for its area of expertise. She has the authority and responsibility to act and is independent of any management.

To understand this a little better, we will show you the difference between hierarchy and Holacracy in a graphic:

Hierarchy with different roles and levels

Holacracy with sub-circles and roles

Communication in Holacracy

Communication is an essential component for a functioning Holacracy. Within each circle, one or more people are sent as representatives to the other circles to ensure communication between the circles. These representatives share information and represent interests from their circle. The aim is to prevent working past each other, among other things.

Making decisions in Holacracy

Decision-making processes do not proceed in the usual way in Holacracy. Decisions are made through integrative decision-making. The aim is not to find the only perfect solution, but a practical one. The proposed solution must therefore prove itself and can be changed at any time by the roles in the relevant circle. By making integrative decisions, solution options are developed more quickly and can be developed further if necessary. Different viewpoints and potential objections are integrated until a usable result is achieved in the end. The process only ends when all potential objections have been taken into account and the result is safe enough to be tested.

Meeting structures in Holacracy

In holacratically structured companies, there are usually two different types of meetings within individual circles: Control and operational meetings. Operational meetings address the activities of daily business, for example, project updates are given. On the other hand, control meetings discuss strategies and ideas. Here it is also about collaborations and new role distributions that are relevant to the respective circle. Meetings that are relevant for all circles are strategic meetings. Representatives of individual circles meet here and discuss important company decisions.

Thus, Holacracy attempts to provide an answer to constantly changing contexts. Holacracy enables dynamic and quick action and decision making within roles.

How can Holacracy be introduced to your companies?

The restructuring from a hierarchy to a holacracy is a significant change. Of course, this cannot happen overnight. Here are four tips that should help you introduce Holacracy to your company:

1. Take your time and be patient.
   The changeover takes enough time. On the one hand, fundamental changes are made in the company structure and on the other hand, the employees must internalize the new system with new rules. It is not uncommon for such a conversion to take several years.
2. Just give it a try. Holacracy is not ideal for every company. But before you leave it untried, first try it out in smaller teams and get a first insight into changed structures of cooperation.
3. Get the help you need. Such a change should in most cases be professionally accompanied and guided. Experts from change management are suitable for this.
4. Adapt the structure to your conditions. There is not THE structure. Holacracy is aiming of finding what is the most suitable solution for your company. Roles and strategies can at any time be adjusted as they work best for you and your team.

What are the advantages of introducing a holacratic structure?

A transition to a holacratic organization offers some advantages. Due to the barely existing hierarchy, your employees have much bigger, individual decision-making autonomy and freedom of action. The individual can get more involved and realize themselves in the company. The identification potential with the company also increases. At the same time, the increased individual responsibility promotes the entrepreneurial thinking of your employees and strengthens the innovation power of your company.

Teams organized in a holacratic way also work more efficiently. This way, decisions are made faster. The superiors' superiors do not need to be asked for decision-making. Rather, the circles decide, based on their roles and expertise. In addition, in this decision-making process, the teams are more flexible and dynamically positioned. Project results are therefore often available in a shorter time.

Last but definitely not least: You motivate your employees and give them trust. They are not bound to their job description specified in the employment contract, rather they work in suitable roles for the success of the entire company. This role distribution is not rigid and can be redistributed, divided or further developed at any time and as needed. Thus, you give everyone in your team the opportunity to get involved in different areas. The role-based working meets the heterogeneity of most teams much stronger.

What are the disadvantages of holacratic structures?

All this sounds great? We think so too, however, there are a few things to consider before you plunge into the holacratic restructuring. The whole thing cannot be simply introduced on the side. The system must first be understood and internalized by everyone in the team. And since humans are simply human, it simply takes time before changes can really be lived. Most new employees will also need a lot more time to settle in, especially if they come from traditionally structured companies.

With an increased responsibility of the individual, of course, the desire to take on responsibility must also go hand in hand. One or the other will not necessarily be directly excited by this idea and accordingly needs more guidance and time to feel safe in the new roles and responsibilities.

By abolishing traditional hierarchies, interpersonal conflicts (which already exist anyway) become more visible. This is because autonomous teams are more likely to address problems amongst themselves. In the best case, of course, they should also solve them.

And even the management needs to learn and be willing to let go in a holacratic system. Because of this organizational form, there is simply no longer a single person who makes all the decisions at the end (or can). Decision-making processes initially run in front of the management, although it is of course still involved in fundamental decisions.

Examples of how Holacracy can be implemented in the company

A field report: Holacracy in a creative agency

2 years ago we started introducing Holacracy to our agency. It quickly became clear: we will have to change a lot if we want to live this way of working. We embarked on this journey together through various workshops with the entire team. First, we asked ourselves which roles exist in our company and which ones might still be needed. With this list of roles, we started to fill our circles with life.

• Today we have over 50 different roles in a total of 9 circles:

• Creation

• Strategy

• Project Management

• Finances

• Marketing

• New Business

• People & Culture

• Workplace

• Sustainability

What does a circle look like for us?

Members of our entire team take on a variety of roles within these circles. The circle of sustainability can best be explained by way of example. The basic goal of this circle is to promote sustainability in the agency. To do this, the circle is supposed to develop measures, control the introduction of these measures, and monitor compliance. Accordingly, the roles in this circle are now also defined. We then looked for team members in our team who would like to dedicate part of their working time to exactly these roles. And so employees were found who were situated as project managers, creative working students and management according to their contracts.

What does a role look like in concrete terms? Three examples from our agency:

Conceptomaniac, Creation Circle

Purpose: Our visual solutions are based on strategically thought-out, innovative and creative concepts.

Responsibilities:  

• Researches customers and brands and familiarizes itself with the target groups and the goals of the measure.
• Develops concept ideas on this basis, alone or in a team (brainstorming).
• Directs the visual preparation of the concept for the team and the customer or prepares it themselves.

Network Octopus, New Business Circle

Purpose: The agency is well networked in the industry and maintains good relationships with existing/potential customers and other agencies.

Responsibilities:

• Represents the agency externally and expands our network.
• Makes alliances with other agencies through proactive contact or active participation in network events and actions.
• Maintains a good relationship with existing customers in the form of business lunches, common leisure events, etc.

Confidant - People & Culture Circle

Purpose: Everyone in the team can turn to this role for personal concerns, as the chosen person of trust and independent of the management. This person is elected every 2 years at team days.

Responsibilities:

• serves as a person of trust for all team members
• Keeps an eye on the team's mood, counteracts bad vibes if necessary

The circles with their different roles have replaced and supplemented certain departments. In addition to role-based working, tension-based working has been integrated into our everyday work. In this, any form of positive and negative impulses (tensions) are communicated quickly and directly to the corresponding person or people. To solve this tension quickly and directly with each other.

What tools help us with holacratic cooperation?

We would like to give you some tools at this point that we use to work holacratically.

• Slack we use for communication within our circles. This tool is especially useful for synchronous and short-term communication, i.e., when it needs to be quick.
• Asana is a project management tool that simplifies work through a clear structure. Here we get an overview of our projects (including specific to-do’s). This tool allows us to work more efficiently and faster. At the same time, we also use Asana to structure our meetings and set up an agenda in advance.
• From Google Workspacewe use several apps like Google Calendar and Google Presentations. These tools have proven themselves for us as they simplify our collaboration. With the integrated calendar, individual or agency-wide booking appointments can be made quickly and easily. With the help of Google Presentations, we can work on slides in parallel.
• We use Zoom for our external and internal (from 4 people) meetings. This tool offers video conferences in HD quality, the function of screen sharing, and much more.
• Important for our structured collaboration is Notion. This tool contains versatile uses. We use it as a reference book for internal matters (e.g. How does our time recording work or what should be considered in a workation). It also contains a detailed overview of all circles and roles and who currently fills them with us.

So far, holacracy has worked for us

The agency business is incredibly fast-paced. So it was clear to us that as a growing company we cannot and do not want to take the traditional path. In order to be dynamically and flexibly set up for the future, we dared to try Holacracy. And we have not regretted that step to this day.

The restructuring takes time and even after two years we still have to constantly improve the structures. Nevertheless, the restructuring and rethinking has more than paid off. Our team is able to act independently and competently, the mutual trust in each other is great and employee satisfaction is very high. The fact that you have read up to this point shows that you are also open to new things. Dare to bring the idea of Holacracy into your companies.