Leadership. Is it really essential to have leaders in an organization? Over the past few decades, there have been companies that have removed titles. There are no CEOs, presidents or managers. In some cases, there are no individual owners. Employees own the company. In the current business model, some call it Holacracy.
Holocracy, also known in some circles as Holawhat, is a business model that flattens organizations. Holacracy was invented by Brian Robertson, a 35-year-old former programmer with hardly any management experience. He created Holacracy in 2007 because he had a “burning feeling that there has to be a better way of working together,” he said in an interview with fast company.”
Zappos is one of the companies that adopted Holacracy. Zappos CEO Tony Hseih gave all employees an ultimatum. They must embrace Holacracy or leave. He even offered three months severance pay to those who left voluntarily.
With the Holacracy they have eliminated the managers. They work in circles. Each circle is responsible for specific results. While there is a leader for each circle, they do not have a title. Also, circle members are not limited to making resource requests through their circle leader. Usually there is a leadership committee.
With 4,000 employees, Zappos is the largest company to take on Holacracy. Other companies like Medium and David Allen Company are also proponents of Holacracy.
In Sweden, there’s a 40-person company called Crisp that has invented its own version of a flat organization. Like the Holacracy concept, Crisp has structured the business with self-organizing teams. Part of that structure includes removing the CEO. After three years of implementing this structure, they have achieved great success and a huge amount of media attention.
It seems that the goal of Holacracy and organization flattening is designed to increase employee collaboration and engagement. Out of frustration, a select few companies have allegedly removed CEOs, managers and titles. A $2.6 billion construction company has even joined. The company is DPR Construction. “DPR was founded in 1990 by Doug Woods, Peter Nosler and Ron Davidowski. Today, Nosler and Davidowski sit on the company’s board, while Woods is part of a seven-person management team.”
Perhaps the real story is that command and control leadership is dead. In the past, companies grew out of an agrarian society. Other than merchants, people were not used to self-organizing teams in an industrial capacity. Therefore, managers were needed to dictate the productivity of work. Also, because people often came directly from work in the fields, they had not developed factory skills. At the very least, they had not transferred the teamwork skills they had developed working on a farm. As a result, layers of managers were needed to control labor and production.
In a knowledge society, people’s intellectual capital is part of their productivity. While people still complete work with their hands, it is their brainpower to figure out more efficient ways to produce results that has become valuable.
However, even in Holacracy or so-called flat organizations, people look for informal leaders. They need mentors and people who make the final decision when there is an impasse. They need to know your career path when it comes to raises and promotions and still seek guidance when they’re stuck. These structures are often missing or ambiguous in holocracy or flat companies. As a result, “Zappos has suffered because nearly a fifth of staff are unable or unwilling to deal with the pressures of self-management.” Holacracy seems to have been more successful with smaller businesses. The Medium company has about 90 employees. Except they haven’t generated revenue yet.
All that said, it may not be about creating complicated organizational structures. In interviews with fast company“All the confusing rules and terminology tend to scare people, but that’s intentional. The darkness, says Robertson, is part of a strategy to hook the right converts. “My sales approach is to try to dissuade people from “he says. he says. The Holacracy website doesn’t make it easy to understand what a company could be getting into. The “plain English” version of the Holacracy Constitution has several mouse scrolls.”
Maybe it’s time to start seeing companies as people. Take away the people and there are no employees or customers. Therefore, it is advisable to establish organizational structures built by people for people. As much as holocracies and flat organizations try to demonize and eliminate leaders, they have proven that they are still necessary. In some organizations they still exist, with informal titles. They still serve as the person with the most responsibility or experience. Instead of imposing complexities that no one understands, empower people to use their intellectual capital to create self-sufficient teams. Part of the way to do this is to first engage them in transformational exercises. It’s usually best to have someone from the outside to guide you through a journey that changes prevailing mindsets. With a new mindset, it becomes easier for people to make changes on their own. More importantly, if they make the changes themselves, they will take ownership of them and make them part of the corporate culture.
