In 2013, Zappos, the US online shoe and clothes retailer, began implementing holacracy, a system designed to replace traditional managerial hierarchies with self-organising and self-governing ‘circles’. In the words of the company’s CEO Tony Hsieh, as reported by Mark McGraw in an article for HRE Daily, holacracy allows employees “to complete work in a way that increases productivity, fosters innovation and empowers [see below] anyone in the company with the ability to make decisions that push the company forward.”
At the end of April, the company took a further step towards dismantling its legacy management hierarchy by removing all of its people management roles. A radical move by any standards and one that might seem to have some parallels with conscious leadership. After all, holacracy does away with old-style, top-down, autocratic management structures. It engages people and acknowledges their capacity for autonomous decision-making. One might say that it empowers people. But there’s the problem.
Frederic Laloux, who holds an MBA from INSEAD, a degree in coaching from Newfield Network, and formerly worked as an Associate Principal with McKinsey & Company, has written: “Many leading thinkers and practitioners in the field of organizational design focus their energy today on the question of how leaders can become more conscious.”
So far, so good. However, he then goes on to say, summarising the views of Brian Robertson, the founder of holacracy: “Many organizations today claim to be empowering. But note the painful irony in that statement. If employees need to be empowered, it is because the system’s very design concentrates power at the top and makes people at the lower rungs essentially powerless, unless leaders are generous enough to share some of their power.”
In other words, for Laloux and Robertson, conscious leadership is really about trying to ‘patch up’ the problems of power inequality whereas self-management systems, like holacracy, actually transcend those problems.
That’s a big claim to make and one that is not shared by everyone. Jena McGregor in an article in The Washington Post, writes of “reports in the media that have critiqued the concept of “holacracy” as impersonal, dogmatic and comically hard to explain. Others have cited complaints by Zappos’ employees who are frustrated with the new system, which apparently includes protocol-driven meetings and a jargon so peculiar it can make other corporate lingo sound like poetry.”
Indeed, recognising that not everyone would be happy with their new working structure, Zappos offered a minimum of three months’ salary to any employee who felt unable or unwilling to adapt to this new way of working. An offer which nearly 14% of Zappos’ 1500 staff accepted.
So, does holacracy represent a bold initiative that will transform our thinking about how organisations should be structured? Or an idea that is simply too alienating to gain real traction? Time will tell.