Holacracy or Anarchy: 4 Strategies to Let Go of Organizational Hierarchy

Holacracy or Anarchy: 4 Strategies to Let Go of Organizational Hierarchy

This article was updated on August 29, 2018.

When Zappos famously gave their employees an ultimatum to embrace holacracy or leave, the HR and business worlds took notice. One of the retail industry's most successful players was embracing a somewhat radical HR notion: the idea of dismantling departments and empowering employees to self-manage. The organization believed that more relaxed management structures could generate better business results and better fit workers' desire for a more flexible environment.

According to the ADP Research Institute® study, The Evolution of Work: The Changing Nature of the Global Workplace, 64 percent of workers felt positively about less structured work environments. There's an increasing expectation of self-sufficiency, as well, with 72 percent of employees believing they'll solve problems with self-service. At the same time, employees want more freedom: 78 percent of employees want to control their own schedules, and 81 percent want to work from anywhere in the world.

What do HR executives need to consider when thinking about whether this move is right for their organizations?

What Is Holacracy? Understanding the "Freedom at Work" Movement

The idea of empowering employees to make decisions and self-manage is becoming increasingly popular. One of the biggest names in the space is Holacracy. Holacracy's founder, Brian Robertson, describes the system as, "a new way of running an organization that removes power from a management hierarchy and distributes it across clear roles. The work can then be executed autonomously, without micromanagement."

Another player in the space is WorldBlu, the team behind the Freedom at Work movement. Their clients include the WD-40 Company and DaVita. The organization's research states that over a three-year period, organizations that embrace this style of workplace design and organizational leadership achieve significantly higher revenue growth than the S&P.

For HR leaders evaluating whether a freedom-centered workplace design is right for them, there are a number of factors to consider.

Introducing Simplicity Is Actually Quite Complex

One of the first things to grasp about introducing holacracy or any work-centered and freedom-oriented leadership design is that it's actually quite complex. Organizations don't just tell everyone to manage themselves. Instead, organizations have to evaluate their goals, work culture and long-term plans — and then choose a system that's right for them.

Developing a customized plan to make the transition, communicate with employees and then implement the plan can take years of dedicated effort. HR leaders should approach the process with the understanding that it's a massive undertaking and dedicate the time and resources necessary to fully explore various possibilities.

Recognize the Human Obstacles

People have been trained to work in hierarchical environments. Employees are used to having specific job descriptions, managers to oversee their work, teams to supervise and general authority structures. Shifting away from that could be perceived as a welcome change — but not always. Managers can become frustrated at losing the perceived authority that goes with an important title, while workers can become concerned about how a lack of structure will impact their job security, career trajectory and compensation.

Simply grasping the key concepts can be difficult. As Holacracy's founder said in a recent interview with Fast Company, "If you've ever learned to play a complex board game, all you see are a bunch of rules. That said, if you play the game with people who have played it before they walk you through it, eventually the rules totally fade to the background."

Be prepared for extensive training, one-on-one mentoring, some employee attrition and a steep learning curve.

Don't Go It Alone

Organizations rarely make the transition to holacracy or another system alone. Instead, they rely on expert trainers, consultants and ongoing relationships with experts to help get teams up to speed, customize their own solutions and implement them. If you're a CHRO who is curious about learning more or seriously considering the transition, start a dialogue with professionals early in your process.

Workers are eager for more freedom. Yet for HR leaders, there's a wide landscape to evaluate and determine how best to incorporate that into the workplace. While big names are embracing movements like Holacracy and Freedom at Work, these are major changes from the traditional work environment. If you're ready to learn more, do your research, be clear about your goals and consult with system experts early on to determine whether a less-structured approach will be the right fit for your organization.