Holacratic Organizational Structure: With Examples

One of the key differences between companies is in the organizational structure. Some companies have one guy in charge of everything. There are also companies where the responsibility for leading the teams is divided into leaders, but everything gets reported back to the head.

No matter which one it is, the organizational structure is specific to that company. But today we’re not talking about any common organizational structures that you already know about. Today we’re going to discuss holacratic structure.

The holacratic organizational structure is for companies that want to be as agile and adaptable as possible. In this article, we’ll take a look at what the holacratic structure is and whether or not it will apply to your company. Let’s begin.

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What is Holacratic Structure?

So, what is a holacratic structure exactly? It’s a business structure that strays away from the traditional management-based organizational structure. Under the holacratic organizational structure, an organization is divided into smaller teams that are autonomous.

These teams work separately as their own little companies of sorts. These smaller teams have their own separate goals that play into the grand scheme of their company’s business.

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The main aim of a holacratic structure is to divide decision-making authority between teams. This innovation process flows smoothly because of the inputs of every employee.

There are set guidelines as to how holacracy works in a company. We will be talking about that in the next section.

How Holacracy Works

Before explaining how a holacratic business structure works, let’s briefly look back at traditional companies and how they function. In a normal organization, a worker as a job title and he/she is responsible for one role. In most cases this role is fixed and does not change much.

But under a holacratic business structure, a single employee can have multiple roles and multiple duties. Remember how we mentioned businesses that follow a holacratic structure are adaptable? This is the adaptability that we were talking about.

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The authority of each team is separate. Teams are called “circles” in the holacratic business structure. And although there is much freedom in how jobs are handled, it really is a chaotic way to run a business.

If you’re thinking of adopting it, ask yourself the question that what is a holacratic business structure going to do for your business? Think about its impact on your employees. If your employees are not capable of handling multiple responsibilities, then maybe it’s not the right structure for your company.

But if you’re employees are dedicated and manage their time for your company accordingly, then adopting a holacratic business structure might not be the worst thing in the world.

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Holacratic Organizational Structure

Now let’s delve further into the holacratic structure to understand it from within. Because of the way it’s structured, employees have far more breathing room than they would in traditional bureaucratic structures.

Here are some of the key features of what is a holacratic organizational structure truly like.

Diverse size, nature, and scope

There’s no fixed size or purpose for any circles in a holacratic structure. It can be small, medium or large. It will all depend on the needs of the company and the adaptability of the employees. More capable employees will mean smaller teams and vice versa.

It will all come down to the scale of your business. Depending on how big or small your entire operation is, you should divide the teams accordingly. You can also prioritize the teams based on the work that they’re going to be doing.

Give Authority to Employees

Since there’s no single head honcho in a holacratic business structure, that responsibility is given to the employees. Employees are in charge of their own work. This added freedom inspires innovation and streamlines the working process. No one has to deal with a bad boss.

No employee will work well under pressure. Maybe it’s better for a company to keep the pressure on. But if hard-working employees are given a little breathing room to set their own schedules, then they can be so much more productive.

Teams Are a Culmination of Goals

The circles in a holacratic structure have different purposes. And every employee in the circle shares the same goal. It’s the objective that the team needs to complete. This team objective will not overlap with the other teams. But it will all come together in the end.

Since a holacratic structure divides the work into smaller teams, they all have to share a common purpose. It’s a large target that needs to be filled with contributions from each of the teams.

Without the complete cooperation of each member of each circle, a holacratic company can’t reach its goals. Each team needs to complete their set of responsibilities. There’s no blaming game in an holacratic business structure.

Innovation

Since the task is divided into teams, everything moves faster and more efficiently. This leaves the door open for innovation in a holacratic structure. As there are no hierarchical politics, no one’s going to shut down an employee’s idea, be it good or bad.

That’s why you will hear great stories about companies who have shifted to using a holacratic structure for their business. But for that, you need like-minded individuals who’re ready to step up to the challenge.

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Examples of Holacratic Structure in Companies

Let us now take a look at holacratic structure examples. After seeing these examples, you should be able to tell whether or not, it’s going to work for your company. Let’s start.

In Project Management

A project in a holacratic business structure is really unique. This is because there’s no one that needs to be reported to. As we mentioned, holacratic business structure allows for autonomous teams. But no one is in charge in every circle.

But there is one employee who will have a separate role. That is the “project governance” role. And although this sounds like a management position, it’s quite the opposite. The role of a project governor is just to keep track of the procedures. This is done to record the progress of completing the company’s goals.

To say that there’s no project manager would be wrong. But it’s not the project manager that you see in other institutions. The job of this manager is to create a clear vision for their circle. And they can delegate the task to anyone capable.

However, that doesn’t give them power over the people working. They only use delegation and motivate their team. The managers don’t command the employees. Instead, every employee is responsible for their own work.

Actual Companies Adopting Holacratic Structure

At the time of writing this article, Zappos.com is still the largest company that has taken up a holacratic business structure. Zappos.com is an online retailer shop for clothes, shoes, and handbags.

With over 1500 employees, this company is charging ahead in the industry with their holacratic organizational structure. According to the company, their business structure allows them to act quickly on customer feedback further improving the customer experience.

Other companies that use a holacratic structure are Liip, a digital agency in Switzerland. There’s also Mercedez-benz.io which is the online part of the auto manufacturer.

Holacratic Structure Advantages and Disadvantages

Now let’s talk about the pros and cons of holacracy. It wouldn’t be a real business structure if we only mentioned the good parts and why we’re including all of it.

Pros of Holacracy

The first and foremost thing that we need to say is holacracy inspires innovation in employees. Since there’s no one to scold them, they can let their ideas flow freely without any hesitation. Team autonomy also plays an important part in that as well.

Being able to discuss ideas freely in the team is one of the perks that come with a holacratic structure. And in most cases, these are ideas that benefit the organization.

Holacracy business structure also has harder working employees. But they are also compensated fairly. Although it might not be for everyone, people who can adapt to holacracy enjoy it very much.

And since there are fewer layers of bureaucracy in this structure, it lets employees deal directly with customers. By responding to their feedback, employees can improve the customer experience even further.

Cons of Holacracy

Since teams are autonomous, there’s no leader. This means there’s no accountability and this is where the chaos ensues. If no one steps up to their responsibilities, then that can mean bad things for the company.

Another problem also comes up in a holacratic structure. Since everyone is responsible for their own work, they like to take credit for the positive ideas and that’s appreciated. But in case of failure, no one will step up. And they don’t have to since there are no fixed roles.

And you can’t just think about adopting holacracy and expect it to start working instantly. For this kind of structure to work, the employees are the most important factor. If they’re not fit to adapt to the holacratic workstyle, then sadly it’s not the right choice for your company.

And if you still decide to stick to holacracy, it might cost you your business. Employees following holacratic are paid handsomely for the wide variety of roles that they undertake. But if they are not capable of giving every role 100% then it’s not going to work out at all.

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FAQ

What is a Holacratic organizational structure?

A Holacratic structure is a business structure where there’s no management or authority that has power over the employees. Every team or “circle” has its own set of responsibilities. To reach the company’s goals, every circle needs to do their part. One of the many features of a Holacratic structure is that no one can be held accountable.

What are the advantages of a Holacratic Organizational Structure?

Holacratic organizational structure increases productivity in employees by giving them freedom from a bad boss. Innovation increases, and employees are more hard-working because they are rewarded handsomely. Employees are also able to deal directly with customers and improve user experience efficiently. The fewer layers of bureaucracy help out a lot.

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What businesses use a Holacratic structure?

Businesses that are regularly dealing with customers are the ones that mostly use Holacratic structure. Employees strive to use their full potential in the roles they are given to serve customers. Customer experience is also something that’s really improved in Holacratic businesses.