What Is Holacracy in Manufacturing?

Created by former programmer Brian Robertson in 2007, Holacracy is a system of management that offers an alternative organizational structure that removes the traditional hierarchy in the workplace, creating a more efficient business.  

Rather than a traditional “top-down” hierarchical structure, a Holacracy sees team members move organically into self-governing circles. Each employee takes on a level of distributed decision-making authority. Individuals work together to define roles within each circle, leaving them responsible for making decisions that affect their work.

Holacracy: The Self-Governing Approach

Removing a complex management hierarchy where supervisors need to authorize every decision means that teams can choose the best way to proceed, eliminating friction, reducing wasted time, and speeding up many business processes considerably.

Proponents of Holacracy view this concept of distributed authority as the future of work. It provides flexibility, the freedom to innovate, and increased employee engagement. However, if you’ve only experienced more traditional management methods, implementing a system of self-government can sound like an impossible pipe dream.

To understand how this approach works, let’s look at the origins of Holacracy and the core principles that provide the guard rails for a harmonious “flat” work environment.

“Our research and experience tell us that elements of self-organization will become valuable tools for companies of all kinds.”

HBR

Where Did the Term Holacracy Come From?

Arthur Koestler coined the words “holon” and “holarchy,” in the 1960s in his novel, The Ghost and the Machine. A Hungarian-born author and journalist, Koestler drew on his political and philosophical experiences growing up in Austria, where he penned this book. It explores collective vs. individual functioning and the origins of human conflict.

He used the term holon to describe self-regulating, open systems, and holarchy to describe holons arranged in a system of communication and control.

This concept was later adopted by philosopher Ken Wilber, inspiring HolacracyOne co-founder Brian Robertson to bring the approach to corporations.

“Holacracy seeks to replace the rigidity of a traditional command structure with a system of flexible roles, each with broad authority within their specific area of responsibility. Instead of a traditional pyramid-shaped structure, a holacracy is described as a series of nested circles, each representing autonomous teams with many roles.”

Investopedia

How Does Holacracy Work?

Holacracy works through a system of flexible, independent roles instead of job descriptions, in which one employee can take on multiple roles.

This can be a challenge when advertising for new employees. But, flexible roles can help cut hiring costs by employing an individual who can take on several roles.

New hires join circles that are autonomous groups of people functioning within an overall ecosystem. The circles each follow a single vision and set of guidelines. Holacracy starts with the company’s constitution and vision.

The Holacracy Constitution

A Holacracy aims to create a purposeful, agile workforce where each employee understands what is expected from them and has the power to get things done. But, of course, giving every team member free rein would be chaos without a set of rules to govern how to make good decisions.

This is where the Holacracy Constitution comes into play. The constitution documents the fundamental rules, organizational structure, and processes. Holacratic organizations view this constitution as the operating system by which they run their businesses, providing concrete processes for all to follow.

Organizational Purpose

Power is distributed through transparent rules and roles, all guided by the organization’s purpose. As a result, everyone is free to do their best work while staying aligned with the big picture.

Circles

One of Holacracy’s core principles is using independent teams to remove the need for a “heroic leader.” Circles of employees work based on prescribed goals, frameworks, and a vision. However, they are also free to make their own decisions for the good of the business and the customer. Execution is determined by employees who can be part of single or overlapping circles. Each circle takes care of a specific business area.

Governance Meetings

Holacratic Circles run governance meetings when modifications to the structure of the circle are required. Practitioners can also use these meetings to evolve the structure of their organization, with each circle running its own meetings.

Companies Using Holacracy to Work Effectively: Zappos

Countless entrepreneurs and startups like Blinkist and Medium have adopted Holacracy as their preferred management model. However, US retailer Zappos is perhaps the most well-known organization to implement this self-management system.

Former Zappos CEO Tony Hsieh identified Holacracy as a way to counter the unfortunate trend that as companies grow, their productivity declines, primarily due to increased complexity and red tape.

A management system that gave employees the autonomy to manage their own work seemed like an ideal solution. However, the implementation was fraught with challenges.

Zappos is still successfully using Holacracy today. However, the 1500-strong company lost a large percentage of its workforce in the process.

Eventually, Zappos adapted the methodology to focus more on the people. The company has layered its culture, core values, and its focus on human resources into the system. Now, its Holacracy is customized to its organizational needs.

Despite losing many employees, Zappos has revitalized its culture and continues with healthy expansion, becoming one of Holacracy’s success stories.

Is Holacracy Just a Fad?

Some critics have described Holacracy as “hype,” citing Zappo’s growing pains and Medium’s abandonment of Holacracy as failures. Medium adopted the methodology in 2013. However, it switched back to a traditional model three years later, noting that holacracy “was getting in the way of work.”

Video game giant Valve is another follower of the “non-leadership” approach. After working at Microsoft for 13 years, founder Gabe Newell wanted to create a company without bosses.

Valve is now renowned for its radical approach to self-governance. The company moved away from Holacracy into a new, individualized system of self-organizing teams. The vision was noble. Although the company continues to thrive, several former employees have spoken out about the reality of life in a flat organization.

A Harvard Business Review article provides a balanced view, stating that a “Goldilocks” approach––not too much, not too little, but just the right amount–-iss perhaps the best way forward for organizations looking to switch to a self-management framework.

Focus on the True Goal: Efficiency

There are many benefits to removing unnecessary bloat in your business. However, there are other avenues to investigate before you turn your organization entirely inside out.

Switching to a Holacracy can enable companies to adapt quickly, with agile employees who are dedicated and motivated.

However, it can be challenging to execute new initiatives in large organizations when a vast amount of re-training and change management is required. In addition, accountability and performance standards can take time to track.

Many of your best employees may simply have skill sets or personalities that will not thrive in this environment.

If you don’t feel Holacracy is the right fit for you, substantial efficiency gains and improvements in employee engagement can be had by exploring lean manufacturing principles.

By using simple systems and encouraging both managers and employees to work towards continuous improvement, you can counter the decline in productivity that comes with rapid growth.

MaintainX and Efficiency

From the beginning, MaintainX has sought to increase the power and efficiency of deskless workers.

MaintainX is a user-friendly CMMS solution available on the web and as a mobile application. You can easily create work orders, assign tasks, and streamline your operations from the palm of your hand.

Organizations can enhance feelings of autonomy by embracing software programs that allow deskless workers to check in, access data, and communicate via mobile devices. In addition, some facilities give deskless workers more control over their tasks by using Computerized Maintenance Management System (CMMS) and standard operating procedure (SOP) platforms.

Mobile CMMS apps allow workers to fulfill assigned work orders digitally, complete regulatory compliance checklists, and communicate with team members via instant messaging channels.

Manufacturing and maintenance workers report feeling increased job satisfaction due to feeling more in charge of their assignments via CMMS.