Holacracy in a nutshell: everything you should know if you run a company
Almost four years ago, we started our transformation to holacracy. That transformation – deliberately – is still going on today. It’s an ongoing process. In this article, we’ll cover the essentials of what holacracy is, and how we use it here at Boldare, a product design and development company. Read on to find out about roles, circles and who decides about salary increases if there are no managers around.
Table of contents
Holacracy definition
Holacracy is a way of organizing a company that sidesteps traditional, up-and-down hierarchy. In the words of Matthias Lang, of holacracy-certified dwarfs and Giants, “Holacracy is a practice which allows everyone to work together in an organization, to steer, to make decisions in a different way. It’s not following the conventional hierarchy, the conventional power structures.”
Every member of a holacracy is both follower and leader. The system is rooted in an agile mindset, being flexible and responsive to changing circumstances: holacracy is Agile applied to organizational setup.
Instead of teams and subteams, we have interlocking circles. Instead of fixed job descriptions, we have flexible roles. Instead of managers, we have… no managers.
The circle structure
The basic unit of a holacratic structure is the circle, a group of people with a shared goal, responsibility or area of interest within the organization. Independent and self-governing, each circle has a collective responsibility for its own decisions and actions. What would normally be a manager’s job is everybody’s job in a holacracy.
Each circle has a purpose, one that contributes to the wider goals of the organization, and contains a number of roles that operate to fulfil the circle’s purpose.
Each circle covers a different area of company activity – one for sales, one for PR, etc. – and can be created (and deleted) according to need. There’s no limit on the number of circles, and some circles may be contained within larger circles. It all depends on what works. At Boldare, we have a dynamic number of circles (usually in the dozens) that changes quite regularly.
If this sounds lawless and chaotic, don’t worry, it isn’t. There are a couple of fundamentals. First, there is the Anchor Circle, the broadest circle that is dedicated to the overall goal or purpose of the organization. The ‘master’ circle, if you like, everything is within the remit of the Anchor Circle. Next, within the Anchor Circle, other overarching divisions can be made.
The General Company Circle (GCC) contains the company’s value-generating functions, those activities that contribute directly to the business goals.
Circles are independent and self-governing units with clear responsibilities. Every circle has a ‘Lead Link’, a person whose role includes the circle’s overall strategy (ensuring a common alignment of purpose within the circle) and resource allocation.
Circles can be temporary or time-limited, depending on the purpose. For example, at Boldare, we create a new circle for the development of each digital product.
What does every circle contain? Every circle contains roles!
Holacratic roles
Unlike the job titles found in traditional structures, each holacracy circle contains a number of roles instead. Each role has a clear purpose and a set of specific accountabilities. The key roles in each circle include:
- Lead Link – as already mentioned, the role responsible for the circle’s overall strategy and resources.
- Rep Link – a circle member who is also a member of the higher circle which it belongs to (e.g. a Rep Link of any subcircle of the GCC will be a member of the GCC as a “representative” of their own circle) The Rep Link is elected by the other circle members.
- Secretary – Responsible for keeping circle records, managing meetings, and interpreting ‘governance’, the process of defining or amending the circle’s roles or policies. This role is also elected by the rest of the circle.
- Facilitator – Another elected role, to facilitate key circle meetings such as governance and tactical meetings (more on those later).
A few final points on roles:
- Roles are separate to employees. If a role comes to an end, nobody is fired! The employee will take on a new role or continue working in his or her other roles.
- One role may be fulfilled by several people.
- Roles (like circles) are created and deleted according to the needs of the organization.
No more managers
Holacracy has no managers in the traditional sense. Many of the responsibilities that are usually designated ‘management’ are carried out by the four elected roles: Rep Link, Secretary, Facilitator, and the Lead Link role. In this way, responsibility is distributed within the circle and not focused on a single leader. Decision making, as already mentioned, is also distributed. In our experience, this means:
- Teams are truly self-organized, able to exercise their own authority and responsibility.
- If and when the Lead Link is absent (on vacation, off sick) the work of the circle continues smoothly.
- The system of circles and elected roles is a readily understood template for all circles; i.e. responsibilities are clear and ways of working are shared. We all understand the basics of how we all work.
Who makes decisions in holacracy?
The holacratic ideal is the self-organizing circle and there are no traditional management positions. The circles decide independently how they want to organize their work on a daily basis, and exactly how it should be distributed among the roles and individuals, according to their competences and experience.
On an individual level, the holder of a role has the freedom and authority to proactively make decisions on matters in their remit; without the requirement to consult others if the issue does not affect them. The guiding principle is whether the decision is ‘safe enough to try’ – in the absence of an evidenced risk to the company, its circles or roles, the individual role-holder has the authority to make the decision.
At Boldare, the self-organizing nature of the circles means that their members support each other directly, and communally. Thanks to this openness and a policy of radical transparency, it’s easier for people to identify obstacles and risks and react earlier.
As part of our agile approach, we use the scrum framework in our work. The regular scrum daily and retrospective meetings also help by providing a system with review and continuous improvement built in – thus making the formal manager role even more redundant.
In holacracy, meetings are important
Day-to-day communication in a holacracy is largely unrestricted, with circles free to adopt whatever methods work best. At Boldare we use Slack, which helps us to keep high levels of transparency. The fundamental exceptions to this are the two types of meeting that every circle has: tactical and governance.
- Tactical meetings – These are focused on operational issues relating to assignments and projects, associated metrics, and any task-related problems that require tackling as a group.
- Governance meetings – These are to address structural issues, such as adding, removing or changing roles or accountabilities, or even circles.
Salaries reviews without managers
Anything different to the norm is a challenge. In holacracy, one of the biggest challenges for people is the issue of salary distribution – without a management role, who decides on raises and so on? Each holacratic company has its own policies regarding salaries and there’s no “golden rule” for this matter. Here’s how we do it at Boldare:
- First, the individual employee assesses the value he or she attaches to his or her own competence, using a special questionnaire with scaled evaluation criteria for evaluation and determination.
- This is then used to make the team’s initial salary proposal, with a pre-determined salary range.
- Then, to assess the skills accurately and assess professional competence, experts from the individual’s are consulted.
- On the basis of the self-assessment and the assessment by others, the salary is then calculated by a circle responsible for salary calculation using thorough analysis by means of algorithms.
Thus, the salary does not depend on the subjective opinion of a single person, but is influenced by many different factors, making the process much more objective.
Assessment of expertise and skills
The assessment process (both by the individual and their associates) focuses on more than just results-oriented performance. As well as professional skills and expertise, soft skills are also considered, for example:
- Versatility – the ability to work in a changing environment and to switch smoothly between different subjects
- Individual learning – the ability to learn independently.
We have found that this method has a positive impact on everyone’s job satisfaction and motivation. The core idea is simple: instead of striving for perfection in all conceivable criteria, each employee can focus on his or her strengths and develop what he or she does best.
The conclusion of the salary process
Aside from the calculation of salaries, the process includes opportunity for feedback. Circle members get together and give each other feedback, including sharing their experiences of working together. This often leads to new personal development goals, to be pursued individually, always taking into account the team’s strategy.
According to our internal anonymous survey, this method of salary determination and feedback has a positive influence.
- 85% of the respondents stated that the evaluation of their work by the whole team had a positive effect on their motivation.
- 61% noticed an actual change in the team’s commitment to their work
and
- 56% said that their own actions could have a direct impact on the results within the team.
The business benefits of working with holacracy
Today’s business environment requires a flexibility of approach. Rigid organizational structures with their restricted decision-making responsibilities are less and less fit for the modern VUCA world. The agility of holacracy encourages:
- Openness and transparency of communication.
- Greater empowerment of all individuals.
- Designing and organizing each circle to fit the task (e.g. forming circles that specialize in a specific stage of the full cycle development process.)
- Decisions made by those best-placed to make them, not by managers.
- More and better ideas and innovation.
- More leadership at all levels.
- Engagement of the whole workforce in the organization’s business goals.
- Easier collaboration with stakeholders.
- Job and career advancement based on pure merit, as opposed to seniority or tenure, etc.
- An organizational culture that is formed and influenced by everyone that is part of it.
Holacracy has been likened to an ‘operating system’ for organizations – a base-level framework of protocols onto which you can install specific ‘apps’ or functions – as long as they fit with the OS, they can function compatible with each other and the organization.
Summary
With holacracy, tradition is out the window. Instead, the holacratic organization can enjoy a flatter organizational structure, distributed decision-making, a genuine sharing of power and control, and an agility that is ready for change. These are benefits that Boldare and our clients continue to enjoy.
Are you curious how it feels to become a member of holacratic Boldare team? Visit our career page and check the current vacancies!
Share this article:
