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September 1, 2015

'Holacracy' and the Rise of the Boss-less Office

Posted by Richard Lobo (View Profile | View All Posts) at 7:49 AM

Inside the movement to let workers rule themselves [ Source: https://www.youtube.com/watch?v=6kRzNLZ6plQ ]

It's almost a right-of-passage among the start-ups of Silicon Valley and Bangalore. The very innovative engineers who start tech firms with their friends vow that they will never sell out to a larger company to keep the feeling of a start-up alive in the workplace.

The problem here, of course, is that some of these companies become incredibly successful overnight. Not only are they (sometimes) offered big money and stock options to 'sell out' to a large enterprise; they find that having a flat organizational structure is impossible when they grow past a certain point.

So it was with a bit of skepticism when I read that Zappos.com, the eminently successful shoe and clothing company, was introducing its employees to a self-governing system, which has received mixed reviews so far. The practice, known as a 'holacracy' among management experts, has received mixed reviews so far at the company. If there's one thing that makes it very notable, however, it's that software development models like Agile are having a tremendous influence on management practices.

In fact, holacracies have their roots in Agile software development, which we at Infosys know all too well. Agile places emphasis on teamwork, collaboration, and the fact that everyone's ideas are to be heard. Plus, in a holacracy, it's better to put forth a bad idea that can be debated by your teammates and discarded than no idea at all. That, too, is a popular feature of Agile.

But used by a shoe company? Well, yes. The holacratic method is just one of many management tools that companies are using in order to get employees to increase motivation and productivity by showing them the positive difference their work makes in the lives of others. For decades behavioral psychologists and, later, management consultants, came to know well the correlation between how a worker perceives her job and her resulting productivity. If she thinks her actions can make a positive difference in the lives of the company's customers, her productivity increases.

When clients, customers, and other end-users express feedback and appreciation, employees develop stronger beliefs in the impact and value of their work. I'm reminded of a very effective television commercial for breakfast cereal. The workers in the cereal packaging plant look into the camera and say what their company-assigned numbers are, the intent being that when you see a box of cereal in the market with that number, you know it's been packed with loving care by that actual person. That worker is in essence in the boss of her own production line and reports to you, the satisfied customer.

To be clear, however, not all 'boss-less' organizations are holacracies. The distinction is that in a holacracy, workers might not have direct supervisors, yet they are still held accountable of their work by other metrics. Because of this fact, a holacracy is nothing new but rather a neat way to attract and retain young talent that doesn't want to be in a rigidly structured, hierarchical organization. But because of metrics, their performance is still measured. So what's in a name? It's still much of the same.

That's why we would do well to remember that self-management is much different than (and should not be confused with) flat management. Even Google was "boss-less," and it worked for a time. But when the company reached a certain size, there existed pockets of disorganization. The employees themselves actually pushed for a more hierarchical system because good bosses can serve as both mentors and teachers. Without them, workers can flounder and feel that they're going nowhere within the organization.

The consultant Rod Collins, an expert on management techniques, said in a report that whatever you call self-management, they are all forms of peer-to-peer networks. Some of them have supervisors, he said, and some of them don't. Therefore it isn't necessary to eliminate supervisors altogether. But Collins said it is important for the supervisors not to have the sovereign authority that they do in top-down hierarchies. He refers to it as a 'wider band of accountability,' which makes the system highly effective.

Then again, let's remember that many Silicon Valley start-ups that have notoriously eschewed top-down hierarchies for the better part of two decades. And they invent clever titles to replace those at traditional corporations. So the head of human resources becomes the 'chief people officer.' The director of R&D is the 'head of cool ideas.' And so forth. But it's really about attracting and retaining a certain kind of employee - one who shuns wearing a suit and tie to the office, for instance.

The verdict? Holacracy or not, a public company can show how well it's working not by touting a boss-less or flat organization but by enjoying a rising stock price.

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