Tag Archives: Circular Organization

The Six Problems With Holacracy, and Others

William TinCup on the Fist Full of Talent website
William TinCup on the Fist Full of Talent website

My disclaimer… (1) I am NOT an expert in holacracy, (2) I love new stuff, and (3) I absolutely love people and concepts that challenge the status quo. That’s that.

Why am I discussing a commentary on Zappos adoption of holacracy that begins with that particular picture of the author and that particular quote from the author? Because the picture is fun and the comments are good. When he says he knows nothing he means nothing more than he has read at the Holacracy, “Holacracy” at Wikipedia, and the Medium websites. And then to watch this video of Brian Robertson explaining Holacracy. While this isn’t direct experience and Tincup hasn’t become a HolacracyOne graduate, that is pretty much all there is to know. I encourage you to read them too.

What Tincup does is present the confused response to the issues that Holacracy, sociocracy, dynamic governance, and other forms of circular organization will have to conquer before they will be accepted. Every governance method has to address these misunderstandings and prove itself capable of addressing, even democracy.

What happens when things go badly? To quote Tincup, The answer to all these questions is… a resounding… I don’t freaking know… and neither does anyone else. And that should terrify you.”

My response is “the same thing they do everyday.” Making decisions is hard even when things are going right—everyone has to make choices. The same people make decisions in “bad” times as in good times.

Who will and won’t thrive in Holacracy? “(1) people that have a problem with authority, (2) people that can consume ambiguity, and (3) independent thinkers and doers.”

This is nowhere indicated except in the headlines saying there will be no bosses. Circular organizations are very structured and in particular have feedback loops that guarantee that everyone stays on target, even the Board.

Holacracy has well-defined roles. Sociocracy has log books for each member of the organization with job descriptions; circle responsibilities; vision, mission, aim statements; organizational charts, notes of circle meetings, etc. Ackoff’s Circular Organization is well-charted and clear.

“A clever attempt to create homogeneity—likeness… and I’m not talking about white people. I mean people that are really similar to one another. They will argue that it’s an efficient system, a lean system, and it will be at the expense of diversity.”

No sure why this would be true except that people tend to hire people like themselves. If a central authority were hiring everyone would tend to be like them. Instead, the understanding that poor performance affects the outcome of everyone else’s work the more likely scenario is that the circle would understand that they need someone different from themselves to bring a broader perspective and complement, not duplicate, their own strengths. This leads to diversity, not homogeneity.

What happened to my values—our values? “They have been replaced by holacracy. That’s the value system. That’s the code. Kind of seems cultish, right?…Again for holacracy to have a fighting chance, you have to hire to it, fire to it, live it… each and every day. Bye bye values.”

There are times when any new method of any kind sounds like a cult, but to say that an organization has to abandon its values in order to reorganize is rather strange. The Vision, Mission, and Aim statements express the unique values of an organization. Those are unaffected by holacracy.

How will it scale? “At the end of the day, holacracy might be great for 20 programmers in Silicon Valley. But will it work in retail in Tampa? Will it thrive at a hospital in Duluth? Light manufacturing in South Texas?”

Circular organization methods similar to holacracy are currently work in hundreds of organizations and businesses around the world. Some are very large and others very small. Ackoff become famous when he implemented one at Anheuser Busch in the late 1970s, a rather large and complex organization. Sociocracy is being used in a large agricultural firm in Brazil. Semco, also in Brazil uses a similar system in several factories. Many organizations in Europe and the United States use sociocracy including small businesses, corporations, university departments, housing complexes, healthcare facilities, and schools. There are many companies using part or all of the principles and methods and they have been doing so for decades.

How do I manage my career? “Wait, the churched up version of that is a term called career pathing. Holacracy is about flatness What I do know is that we all—all as in every single one of us—think about the next thing. So, in an extremely flat organization… What the hell is next? Darkness floats about.”

Here I have to resort to my knowledge of sociocracy. Salaries are set by the market for particular skills. From hiring on they are determined by across the board increases and performance increases, just like other organizations. To remain competitive salaries also have to compete. There are many jobs within the organization. The janitors are unlikely to be paid the same salary as the software programmers. One can develop new skills, assume a higher level of responsibility, etc. In holacracy, these are defined as “roles” and each role has a job description that won’t be the same as another person’s. That all jobs are the same is not what “flat” means.

How will they manage bad apples? “How will they identify these rotten apples and, more importantly, get rid of said apples? Group think? Call a tribal council meeting? Sounds bureaucratic and slow. If you are thinking of adopting holacracy, dig in and ask tough questions regarding the treatment of bad apples.”

My experience it is that management rarely gets rid of bad apples and they are totally unreliable in their judgement of who is a bad apple. Management wants to avoid the issue as long as they aren’t drowning in low performance. Even then they are more likely to reorganize than get rid of people.

“Make no mistake about it, this is a new religion.… If you understand what holacracy is all about, then you are one of us. If you don’t then, re-join the cavemen and cavewomen.”

I agree that some of the literature and speeches on this do sound messianic but so does campaign literature, school brochures, promises for every new diet, mouthwash ads, etc. It’s enthusiasm for something the speaker has mastered or is selling plus a good deal of marketing. That doesn’t mean it doesn’t work.

It also doesn’t mean it’s based on blind faith. There is good research and demonstrated performance data on the principles and methods of sociocracy. Holacracy is much newer but to the extent that it has incorporated the principles and methods of sociocracy, and uses them appropriately, it is based on the same research and demonstrated performance.

Circular organizations have a clear performance path since the 1960s in businesses and decades old performance paths in community organizations.

Oh, and the marketing of holacracy is about to take over our HR worlds.

This is certainly true. Brian Robertson is an expert in marketing but that isn’t necessarily bad. If he has all his T’s crossed and his I’s dotted, he can take the pressure. He’s done a professional job of developing, teaching, and promoting his specific application of sociocracy and the concepts of a circular organization.

Consent

The issue that Tincup didn’t discuss is the guarantee of consent decision-making. This is essential if all members of the organization—not just the managers—have control over their working conditions. In sociocracy, each circle has a defined domain, or in holacracy a role. Within that domain, their area of responsibility, everyone must be equivalent. If a decision is being considered that will affect their ability to do their job, to fulfill their responsibility, they have the right to object. Their objection must be resolved before the proposal can be implemented.

This is a very important assurance when people are expected to take on the responsibility of self-organization. How can I do a good job if decisions are made that screw up my ability to do that job? I would rather have a manager responsible in that situation. I would become much more passive and resistant, as many or most workers are.

The original Tincup post is here:  Six Problems With Holacracy, and Other

WILLIAM TINCUP, SPHR, is the CEO of HR consultancy Tincup & Co and one of the country’s leading thinkers on social media application for human resources, an expert on adoption of and HR technology. He has been blogging about HR related issues since 2007. He’s a contributor to Fistful of Talent, HRTechEurope andHRExaminer and co-hosts a daily HR podcast called DriveThruHR. Tweet him@williamtincup and check him out on Facebook and LinkedIn. He serves on the Board of Advisors for InsynctiveCausecastWork4Labs,PeopleReport, Jurify, TrackMavenSocialEarsAppLearn, StrengthsInsight, The Workforce Institute,PeopleMatterSmartRecruitersAjax Workforce Marketing and is a 2013 Council Member for The Candidate Experience Awards. He also serves on the Board of Directors for Chequed and is a startup mentor for Acceleprise. Tincup is a graduate of the University of Alabama of Birmingham with a BA in Art History. He also earned a MA from the University of Arizona and a MBA from Case Western Reserve University.

Zappos Goes Democratic

An article by Jena McGregor In her column, “On Leadership,” appeared in the Washington Post today on Brian Robertson’s contract with Zappo’s, “Zappos Says Goodbye to Bosses.” Zappos is owned by Amazon but runs independently and has long been known for its unusual employee-responsive culture.

The unusual approach is called a “holacracy.” Developed by a former software entrepreneur, the idea is to replace the traditional corporate chain of command with a series of overlapping, self-governing “circles.” In theory, this gives employees more of a voice in the way the company is run.

John Bunch, Zappos “As we scaled, we noticed that the bureaucracy we were all used to was getting in the way of adaptability,” says Zappos’s John Bunch, who is leading the transition.

The article is not particularly clear in explaining holacracy and doesn’t make the connection to sociocracy or other egalitarian organizational methods like Ackoff’s circular organization or  Semler’s round pyramid. McGregor is also confusing when explaining the change from “managers” to “lead-links.” Holacracy’s lead-links are described very much like managers. No mention of policy setting by all members of the circle to guide the actions of the lead-link.

The article reports that “Twitter cofounder Evan Williams uses it at his new company, Medium, and time management guru David Allen uses it run his firm — but Zappos is by far the largest company to adopt the idea.”

Robertson began his first company, Ternary Software in Exton PA, in 2001 based on the unique model of forming partnerships with many of the companies for which it developed software. This gave Ternary a vested interest in the performance of the software they designed and allowed promising but still developing companies to access to quality software. In 2006 and 2007, Robertson published two articles on his use of sociocracy at Ternary: “The Sociocratic Method,” in the 2006 strategy+business issue of Booz Allen Hamilton’s internal newsletter,  and in 2007 in the Wall Street Journal, “Can a Company Be Run as a Democracy?”.