In mid-2016, we decided to take a radical step in our management concept: holacracy. In doing so, we largely disempowered ourselves as founders and gave everyone else at Raidboxes significantly more responsibility. I'll explain to you today what led us to this decision and why radical steps are sometimes necessary.
In mid-2016, Torben, Marcel and I decided to rely on a completely different management concept than before: holacracy. Some of you may have heard of it - but probably mostly in a negative context. Because in fact there are really only two possibilities with the holacracy : Either it catches on (as with Zappos) or it fails and is completely abolished (as with Medium). But since the media prefer to report on failures rather than successes, I think it's time for a first-hand experience report!
Using Holacracy to create more freedom
Zappos, the American Zalando role model, relies on holacracy. When 20 percent of the entire workforce leaves the company, it makes for a great (negative) cover story. Unfortunately, the fact that the remaining 80 percent are among the top employees and are probably much happier is not reported.
Another headline that is often used for holacracy is "the organization without a boss floor" (negative). In reality, however, the exact opposite is true: organizations that work with holacracy are full of new leaders. So the better headline would be "organization with 100% boss floor".
Research shows that every time the size of a city doubles, innovation or productivity per resident increases by 15 percent. But when companies get bigger, innovation or productivity per employee generally goes down. So we're trying to figure out how to structure Zappos more like a city, and less like a bureaucratic corporation. In a city, people and businesses are self-organized. We're trying to do the same thing by switching from a normal hierarchical structure to a system called Holacracy, which enables employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do.
In fact, Holacracy promises more freedom in the company. To both the new and the old managers. In this article, I will show you exactly how this is to be achieved. And I describe why Raidboxes decided to take this extreme step.
Job apathy - one reason for a radical step
If you ask your friends how things are going at work, three out of five are probably pretty dissatisfied. If you listen closely, you can usually quickly identify the source of the dissatisfaction: everyone is annoyed with their superiors. Incidentally, the two who are satisfied are usually executives themselves 😉
This subjective impression is confirmed by the Gallup Study 2016 results: 85 percent of participants don't enjoy going to work and they usually only do the minimum required by their contracts. The study has been collecting the same data for decades and you can see how the situation has barely changed over time.
All of these findings are not new and have been proven many times by science. It's not for nothing that there have been leadership training courses for ages that are supposed to remedy precisely such problems. However, in my opinion, such training can only alleviate the symptoms of a problem that is to be found at the structural level. It is caused by the way many people work today.
Today's leaders are stuck in melee mode
If you take a closer look at management theories, you will see that there are three types of leadership: dialogic, structural and cultural leadership. Dialogic leadership describes a direct interaction between superiors and employees. In this form of leadership, leading and maintaining the dialog is a major drain on resources. In my experience, leadership training often starts precisely here. But direct interaction becomes less and less important when structural and cultural leadership are perfected.
Structural leadership, on the other hand, refers to everything that does not require direct interaction. This includes general, documented work instructions, but above all rules and the structure of the company itself. For example, if the management of a call center decides to grant employees their own budget for discounts and special conditions, this creates more freedom for each individual and makes the organization more decentralized.
Cultural leadership means creating values and visions according to which the company and its workforce act. The culture of a company determines, among other things, which employees are selected. If a company sets the value of transparency as its guiding principle (as Buffer does), for example, then a team member who refuses to publish his or her salary will have little chance in the company.
If structural and cultural leadership is emphasized, the consequence is less direct interaction, thus less potential for misunderstandings and more resources for the actual core tasks. Result: the team and the management become freer and more satisfied. This is exactly what the holacracy promises.
Four reasons for our move to Holacracy
Holacracy emphasizes cultural and, above all, structural leadership while reducing dialogical leadership to a minimum.
As founders, this promise was very appealing. Ultimately, our own personal experience was the decisive factor in the decision. We wanted:
- To minimize personal frustration
- More individual freedom
- More freedom for us as managing directors
- Better scalability and more agility
1. Minimize personal frustration
A few years ago, Torben - Raidboxes founder and managing director - asked his previous employer for a promotion to a position with more responsibility. He had been working for the agency from Münster for many months at that point. And that with a below-average salary, but in a 60-hour week. Instead of a promotion, however, he was given notice of termination. The signal: anyone who dares to show initiative or contradicts the management's assessment will be fired.
For Torben, however, this was a stroke of luck and exactly the right reason to start his entrepreneurial career. This frustration was formative for Torben's entrepreneurial career and nurtured a strong desire to do better in his own company. He wanted to give his employees more freedom, more responsibility and overall more room for creativity. Of course, always with the goal of increasing the satisfaction of both parties and the productivity of the company as a whole.
2. More freedom for the individual
A year and a half after our first start-up project failed, I was certain about one thing: I never want to be an employee again! The freedom had just felt too good. It wasn't that I'd ever had a bad experience in a job. But even as a graduate in job interviews, I'd always wanted to do things differently, in my own way, and to be in a position to make important decisions by myself.
Therefore, I have no desire to "hire" anyone. The word alone symbolizes stagnation ("in place") for me. That's why I want all team members at Raidboxes to feel like entrepreneurs. For me, that means: responsibility for results and budget, the freedom to make mistakes, and the freedom to get everything out of their area that they can and think is right.
These are exactly the sort of people you need to create a holacratic organization.
3. More freedom for the management
For Marcel, our CTO at the time with over 15 years of entrepreneurial experience, such things certainly also played a role. In particular, however, he experienced that the workload for managers increases with the number of employees. With the result that there is less time for the really important things.
Reason enough to do everything differently at Raidboxes and organize the company in a way that he is needed as little as possible to keep the day-to-day business running.
4. Better scalability and more agility
Besides the personal reasons, we are aware that agility is mandatory for us. In the hosting market, we are fighting as David against Goliaths. If we don't grow fast, respond extremely quickly to customer needs and create innovations, the big companies will suffocate us in the market.
So the promises that the holacracy makes are:
- More freedom for the employer and the workforce
- more individual responsibility
- Little direct leadership
- Agility and scalability
Holacracy promised everything we were looking for!
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Introducing Holacracy at RAIDBOXES: it's been worth it!
All these reasons have led us to take this radical step. Radical because, as managing directors, we have to relinquish our authority to issue directives in the classic sense and focus much more on structural and cultural management in order to reduce our "tensions.
Our conclusion after four years holacracy: So far it has been worth it! Satisfaction in our team is very high and productivity has improved. However, we can already see that recruiting new team members is at least different than in traditional organizations. You have to focus much more on the cultural factors of the people.
How exactly Holacracy works and how to take the first steps towards implementation, I explain in my article "Holacracy in action - In 5 steps to a high performance team". You can find more information and our presentation from WordCamp Cologne on the topic of Holacracy here.
What is the situation like in your company or among your friends? Do you know the same problems? Are you perhaps even a founder yourself and have had good or bad experiences with similar concepts? I am looking forward to the exchange of opinions!