How Decisions Get Made in Organizations Without Hierarchies

Imagine working at a company where there is no CEO. You don't have a job title or description, or a manager to whom you report. Instead, you occupy "roles" which require executing specific tasks. Multiple people can fill one role, and individuals can occupy many different roles, and every role is part of a larger group with a unique purpose within the organization.

Huh?

You're not alone if that's your response to Holacracy, a system of organizational government developed in 2007 that departs from traditional top-down corporate leadership structures. While it may sound fringe-y, it's been adopted by several companies touted for their forward-thinking policies — such as Zappos, GitHub and Medium, the publishing platform started by Twitter co-founder Evan Williams. Its proponents say it's a nimble, adaptable system that makes for happier employees and is ideally suited to today's rapid pace of change.

But it can be difficult to wrap one's head around the system's tenets — which rely on a fluid, democratic org chart that prioritizes the completion of tasks rather than a reporting structure. How do you delegate responsibilities when no one has formal titles? And more importantly, how do you make decisions in an organization without managers? We spoke to one of the movement's champions to find out.

In a traditional organization, a manager delegates responsibility to his/her subordinates but is generally charged with making decisions him or herself. The CEO's opinion usually matters most, and employees' "say" in a matter tends to diminish down the chain of command.

By contrast, in a holacratic organization, decision-making and authority are distributed across the entire team. Everyone is the architect of his/her own role, and everyone plays by the same rules, no matter if you're in a junior sales role or a senior financial role. Furthermore, each individual (not their manager) is responsible for breaking down his or her roles into smaller projects and action-items, and has complete authority over how to execute these tasks.

"The whole idea is to move fast by creating roles and making individuals accountable for different responsibilities," says Ann McGrath, founder and president of WonderWorks, a professional services firm that helps organizations implement holacracy.

Let's take the launch of a new ad campaign for example. In a traditional organization, a manager would convene his/her team, describe the assignment, delegate tasks and explain how he or she wants the project to be completed.

In a holacracy, however, a "circle" (or task-oriented group) would assemble when any team member comes to the table with a proposal for a new campaign. The rest of the circle would then be given the opportunity to ask questions about the proposal, and if there are no objections, the project would get the green light — and the group would divide necessary tasks among itself. Each individual is then empowered to break up his/her assignment into smaller action items and complete his/her task autonomously.

If you're thinking this would be a recipe for disaster in your office, you could be right: The system hinges on hiring a certain type of employee. Productivity, McGrath says, requires workers to be highly organized and quickly convert everything that passes their desk into a checklist, reminder or other actionable item to prevent backlog.

In a traditional company structure, the manager might reconvene the team to provide feedback and approval. Subordinates present their work and, usually, it's the manager's job to weigh in and give direction. The manager will let the team know if there's still work left to be done, and the process will continue.

In a holacracy, however, team members check in with one another about checklist items at routinely scheduled operational meetings. In the event more work is needed, they must provide clear action items for those next steps. The process repeats until consensus says the campaign is ready.

But while it's democratic, it's not a free-for-all, cautions McGrath: "Everybody’s perspective is considered, but the decision definitely doesn’t hinge on everybody agreeing. An idea gets the go ahead as long as it won’t cause harm or move the company backward. So if it’s safe enough to try now, [you] go for it, even if that’s not how [you] would personally do it."

Implementing such a radically different paradigm isn't for everyone, especially leaders who have worked their way up the career ladder to achieve a certain position. "It's definitely a self-selecting thing," McGrath says. "There are going to be people who don't want to give up control over their team. But if you're open to it, many former managers say [it] has allowed them to focus on the aspects of their job they actually enjoy."

And at its core, the philosophy does offer useful takeaways for businesses thinking about how to adapt for the future (Whirlpool, for example, while not a holacracy, recently chose to get rid of all titles). Simplifying management structures, eliminating bureaucracies and prioritizing productivity over internal politics are all smart ways to keep employees engaged — and keep your company on its toes.

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