Holacracy: A Complicated Solution to Bad Leadership

When it comes to leadership and talent management, no concept has garnered as much attention in recent years, and no topic is quite as polarizing, as Holacracy.  Holacracy is a company that has developed a new form of organizational governance based on self-managed teams which replaces the traditional top-down leadership model predominant in today’s corporate environment.  On the surface this concept sounds like a utopian dream to the average worker toiling under an autocratic boss, which is why some big-name companies have adopted Holacracy.  But is there a simpler way to achieve the same benefits of this boss-less work structure?

Holacracy attempts to fix a very real problem: the fact that most managers are not effective leaders.  According to a Gallup study, managers are responsible for at least 70% of the productivity, motivation and commitment of their employees (aka “employee engagement”), and yet only a fraction of workers worldwide are classified as highly engaged.  Now, there are really only two ways to fix this problem, either: a) help managers become better leaders, or b) get rid of all the managers.  Holacracy opts for the latter solution.

A Partial Fix

The July – August 2016 issue of Harvard Business Review features an article that attempts to clear up the controversy about Holacracy and discusses its advantages and disadvantages.  In the article, the writers state that this form of governance pushes decision-making down to where it belongs: where the work actually gets done.  Another advantage attributed to Holacracy is that it takes full advantage of employees’ natural talents and abilities.  Employees can choose what they want to work on, and how they want to do the work, instead of being forced to work within rigidly defined roles and processes dictated by the boss.

Companies such as Zappos are ardent supporters of Holacracy, even though 18% of Zappos’ employees left within weeks of the company introducing it.  Other companies that adopted Holacracy have since dropped it.  Medium, a social media company, claimed that with all decisions being made at the team level there was far too much wasted time in meetings and it was “difficult to coordinate efforts at scale.”

In the end, the HBR article concluded that self-managed teams are best used in work groups that have a high need for adaptability and innovation, and that the traditional top-down model of management works best in areas of the business that have a high need for reliability.  Pretty insightful analysis, but is there a simpler solution?

The Indispensable Role of Managers

Human beings are clarity seeking machines.  We have a natural propensity to want to understand our role in the bigger picture.  With this in mind, it follows that in the workplace, an employee’s most basic need, and a manager’s most basic responsibility, is ensuring that performance expectations are absolutely clear.

One of a manager’s most important roles is to help others make the connection between the work that needs to get done, and the purpose of the organization.  Beyond that, managers are needed to coach employees to achieve higher performance, recognize good performance to make sure everyone knows what success looks and feels like, and to develop other leaders.

When the senior executives of an organization notice that their managers are not effective leaders, deciding to do away with the role of manager is an abdication of the executive’s responsibility.  It’s avoiding the problem rather than addressing it.

The Road Less Traveled

This well-known line of poetry by Robert Frost finds new meaning as organizations grapple with how to overcome the problem, the crisis really, of poor management.  While some organizations try to avoid the problem altogether by doing away with the role of manager, I propose taking a more head-on approach to the crisis – the approach “less traveled” or implemented.

Let me suggest three simple practices that, if infused into corporate culture, would solve 90% of all talent management problems, and foster an environment where everyone wants to give their best.

  1. Release Decision-Making Authority

Managers must learn that their primary job is not to make all the decisions, it’s to help others learn to make decisions.  This is how managers develop other leaders.  How can you expect anyone to be properly prepared to be a leader if they’ve never been trusted to make decisions on their own?  Managers coach and develop other leaders by encouraging them to make progressively more impactful decisions.  As these future leaders live with the consequences of their decisions they learn to anticipate likely outcomes, and they learn to eventually take the full weight of responsibility that accompanies the mantle of leadership.  (NOTE: take this Free Management Self-Evaluation to see if you display any habits of the dreaded micro-manager.)

  1. Play to People’s Strengths

A truckload of research and a significant portion of my writing has focused on the clear link between aligning people’s work to their strengths, and achieving higher performance.  People are exponentially more productive, happy and motivated when they do work that they enjoy and that they are naturally gifted at.  You don’t need a complicated system of governance to accomplish this.  Managers must be trained how to have frank discussions with their staff about their strengths, and where they can be most effective.  And organizations must support managers in reorganizing the work and redefining the roles of those who report to them.

  1. Recognize Good Performance

If you have ever thought Why should I praise someone for simply doing their job?, consider this:

Behaviour that gets praised gets repeated.

If someone does something well, managers must let them know that they hit the mark so that they will know what to aim for next time.  If you’re worried about providing too much praise, don’t be.  Research has shown that teams who received individual praise every seven days are 10% – 20% more productive and profitable than teams that don’t.

It Ain’t Rocket Science

Great leadership and effective management isn’t rocket science, but executive teams must be willing to make manager training and leadership development a priority before this solution can take hold in the corporate culture.  “People before profits” isn’t a cute saying reserved only for hallway conversations.  It is indeed the very formula to higher profits, and needs to become the mantra inside corporate boardroom before the leadership crisis can be tackled head-on.



  1. Gosata on July 21, 2016 at 4:05 am

    Oh that’s great and what you pointed out is very true across all walks of life even at the farm when you work with your staff fixing say a mechanical problem, these guys will always try and offer some suggestion and once that works, hey these guys get geared up and really feel they have a lot to offer in that way they don’t want any failures any more and are more than willing to be part of the solution.

    • Michael on August 25, 2016 at 9:51 am

      Thanks Gosata for your comments. You nailed a key strategy to engaging your employees: listening to their suggestions and implementing them. Your employees then take ownership and treat the business like it’s theirs. Keep up the great work!

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