Holacracy: Pros and Cons of the Organizational Structure

Holacracy is a type of autonomous company organization that divides leadership responsibilities and decision-making among all team members. Software development entrepreneur Brian Robertson outlined the holarchy template, developing the circle structure of management for both nonprofit and for-profit organizations.

This form of decentralized management is different from traditional corporate management structures that concentrate power within a hierarchical arrangement. In a holacratic organization, individual team members have more agency as they work on projects that achieve the organization’s mission.

Three main elements comprise the basis of holacracy:

1. 1. Circular teams: Holacracy uses a circular structure to organize teams. Each circle has a group of roles that function under a set of rules, list of goals, and method of achieving those goals. While different circles vary and work independently, two roles, the lead link and rep link, connect all the circles. Team members who hold these roles join governance meetings with other circle members to collaborate and ensure everyone is working toward the organization’s purpose.
2. 2. Dispersed authority: One of the main features of holacracy work is a dispersed management system. Instead of creating a traditional, high-level leadership group, holacracy gives every team member the power and authority to contribute to decision-making. This fluid style of management and integrative decision-making process gives employees a sense of purpose and promotes teamwork throughout the organization.
3. 3. Role fluidity: In a holacracy, employees do not have assigned positions and job titles. Team members have the opportunity to work independently on projects that spark their interest and support the organization’s vision. This type of role fluidity and self-organization provides team members with the ability to move freely between roles and apply their skills to different departments at the same time.

Below are some benefits of the holacracy methodologies:

1. 1. Encourages innovation. Since team members are not limited by singular job descriptions, they have the freedom to explore different creative outlets and projects. This level of flexibility encourages unique ideas and innovation.
2. 2. Promotes employee engagement. Removing management hierarchical structures and including all team members in the decision-making process promotes a stronger sense of employee engagement. When team members have the opportunity to discuss aspects of the organization, they’re more likely to feel committed to the organization’s growth and development.
3. 3. Supports transparency. Another benefit of the integrative decision-making process is transparency. Without higher levels of management, it’s easier to set clear expectations. Holacratic organizations do not have to cross the red tape barriers of top-down corporations to share operational updates, performance metrics, and organization values.

While holacracy practices offer advantages, these methods do not suit all companies. Consider the following disadvantages of holacracy before implementing it into your organization:

1. 1. Lack of accountability. Due to the absence of higher management, it can be challenging holding team members accountable in a holacratic organization. Employee mobility within roles also makes measuring performance and accountability more difficult.
2. 2. Meetings can waste time. Tactical meetings are an important part of the holacracy organization structure. Each circle has its own set of routine meetings, so team members can update one another on new ideas and project timelines. Since employees work within numerous circles at once, the number of meetings add up and distract team members from more important initiatives.
   
3. 3. Relies on self-management. Self-governing is an advantage and disadvantage in a holacratic environment. While self-management provides team members with creative opportunities, it can feel overwhelming and inhibiting for employees accustomed to guidance and instructions from senior managers.

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