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An alternative to Holacracy management

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One management trend that’s caught my attention recently is the Holacracy management system. Holacracy, as defined on their website, is a “complete system for self-organization” that looks to create a replacement for organizing work. Much has been written on the subject, with viewpoints ranging from it’s destroying companies (here, here and here) to it being a corporate saviour in a world where hierarchies are killing innovation and stemming employee motivation (here, here and here). A recent article in the Harvard Business Review summarized Holacracy quite nicely and identified a number of drivers towards this form of self management that center on a desire for greater organizational adaptability. What’s important for executives to understand is that many of the desired benefits of Holacracy can be achieved without having to radically change the way an organization is designed or operated. This article will discuss the three drivers towards self management identified in the HBR article, and present ways to achieve the desired outcomes in an optimal, less disruptive, way.

Design roles that match individual capabilities and goals.

One of the major selling points of Holacracy is the ability for an employee to naturally gravitate to a role that fits their interests. In Zappos, for example, an employee may have 7.4 roles on average, with the likelihood that they’re often unique and independent (i.e. customer service and sales forecasting roles). This allows employees to play to their strengths and interests. Conversely, it can create problems of people being stretched too thin or being inundated with numerous meeting requests; as well it may lack economies of scale that come from a more focused position. What more traditional organization can learn from this is that positions should be designed to fulfill this need for self discovery and development. This may mean creating career paths that encourage lateral movement as well as vertical movement (career lattice vs. ladder), allotting position capacity for employees to provide cross-functional support and be involved with special project teams (google does a great job of this!), or mid-career internships and rotation programs that help employees discover new passions. Traditional organizations should also have an ongoing matching process when selecting people for specific positions, that involves informed judgment supported by evidence based practices – for example, we recommend using time span analysis and information processing capability to better defined required work / positions and better match employees to these requirements.

Make decisions closer to the work.

The speed of decisions is a major complaint in large organizations, specifically as it relates to bureaucratic red tape. Fixing the problem isn’t easy, but it certainly doesn’t require a system of self-management. Where organizations fall short is aligning the proper authorities at the appropriate organizational level. For example, as a relationship manager you may need to make a quick decision regarding a customer complaint – but in order to fix the issue you need approvals two levels up the organization. This additional time may be necessary in limited situations from a control standpoint (i.e. approval for a major cost overrun etc.), but is often merely a result of improperly aligned authorities. One great example of a company appropriately aligning authorities is New Seasons – a grocery chain based in Portland, Ore that was recently featured in Forbes. The company focuses on empowering their front line staff to provide excellent customer service, and gives them the authority to make quick point of sale decisions. This alignment of authority has helped to build a loyal customer following, contributing to New Season’s rapid corporate growth in a highly competitive market. Delegating appropriate authorities to better meeting requirements should be standard practice in any organization.

Fast response to needs in the market.

The idea that teams can be quickly formed and dismantled in a self management system and that decision makers are closer to the customer are principle reasons behind the belief that Holacracy enables a faster response. We certainly agree that there are situations in which setting up a team for a special purpose is a good idea. Such teams can be created and disbanded as required. However, it doesn’t require Holacracy to do so. This should be part of the ongoing practices of well designed organizations. We believe that it is important to link these teams to requirements and specific needs. We would certainly agree that faster response to needs in the market is critical in most situations. If this is not happening, there is something fundamentally wrong with the organization design. This can then be augmented with strong feedback channels – now made easier with the introduction of online tool (e.g. slack, hppy, 15five) – that enable employees closer to the customer to quickly communicate with others in the organization.

Organization need to design roles that match individual capabilities and goals; ensure that decisions are made closer to the work; and provide faster response to needs in the market. If your organization isn’t doing that, it is time to review your practices and improve them. You can enhance these by optimizing your organization design using evidence based practices…rather than radically altering the way your organization is designed and operated.

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