In mid-2016 we decided to take a radical step in our management concept: Holacracy . As a result, we have largely disempowered ourselves as founders and given our employees significantly more responsibility. Today I will explain to you what led us to this decision and why radical steps are sometimes necessary.
So Torben, Marcel and I decided to go with Holacracy as a radically different approach than we were used to. Some of you may have already heard of it but likely in a negative context. Because in Holacracy there are actually only two ways it can go: either it will prevail (as with Zappos) or it fails and is completely done away with (as with Medium). However, as the media tends to prefer reporting on failures rather than successes, I think it's time to hear from people with first-hand experience.
Using Holacracy to create more freedom
Zappos, the American Zalando model, relies on Holacracy . When 20 percent of the entire workforce leaves the company, it is a great (negative) cover story. The fact that the remaining 80 percent are among the top employees* and are probably much happier again is not worth mentioning in this context.
Another headline that is often used for Holacracy is "Organization without a boss floor" (negative). In reality, however, the exact opposite is the case: Organizations working with Holacracy are full of new bosses. So the better headline would be: "Organization full of bosses*ins".
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-organizing. 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 within the company. For both the new and the old bosses*. 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.
Apathy at work - The reason for the radical change
If you ask your friends about how things are going at work, three out of five of your friends and acquaintances are probably quite dissatisfied. The source of dissatisfaction is usually quickly identified on closer inspection: everyone is annoyed by their bosses. The two satisfied ones are then by the way usually even high-level personnel. 😉
This subjective impression is confirmed when you look at the results of the Gallup Study 2016: 85 percent of participants don't enjoy going to work and while there they usually only do the minimum work required by their contracts. The study has been collecting the same data for decades so it's easy to see how this fact has barely changed over time.
These findings aren't new and have been proven by researchers many times before. Management training courses designed to resolve these types problems have been around for such a long time already. In my opinion, however, such training can only alleviate the symptoms of a problem that is found on a structural level. The problem itself is caused by the way in which we work today.
Today's leaders - Always in melee mode
If you take a closer look at management theories, you will find that there are three types of leadership: Dialogic, structural and cultural leadership. Dialogical leadership describes a direct interaction between superiors and employees*. In this form of leadership, leading and maintaining the dialogue is a major resource eater. In my experience, management training often starts right here. But direct interaction becomes less and less important when structural and cultural leadership is 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. If, for example, the management of a call center decides to grant the 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 that the entrepreneurs create values and visions, according to which the company and its staff act. Among other things, the culture of a company determines which employees* are selected. For example, if a company sets the value of transparency as its guiding principle (as it Buffer ), then a team member who refuses to publish his 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: employees and "bosses" become freer and more satisfied. This is exactly what Holacracy promises.
Four reasons behind our move to Holacracy
Holacracy emphasizes cultural, but above all structural leadership, and reduces dialogical leadership to a minimum.
This promise was for us, as founders, very appealing. Ultimately, our own personal experience was the decisive factor in the decision.
- Minimize personal frustration
- More freedom for the individual
- More freedom for us managing directors
- Better scalability and more agility
1. Minimize personal frustration
Some years ago Torben - RAIDBOXES founder and managing director - asked his previous employer for a promotion with more responsibility. At that time he had already worked for the agency from Münster for many months. And that for a below average salary, but with a 60-hour week. Instead of a promotion, however, he was presented with a notice of termination. The signal: Whoever 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 characteristic of Torben's entrepreneurial career and nourished a strong desire to do better in his own company. He wanted to give his employees* more freedom, more responsibility and overall more creative freedom. Naturally always with the aim of increasing the satisfaction of both parties and the productivity of the company as a whole.
2. More freedom for the individual
For me, 18 months after our first start-up project failed, one thing was clear: I never want to be employed again! The freedom just felt too good. I'd never really had a bad experience in a job. But even during interviews after graduation, I often wanted to do things differently, in my own way, and to be able to make the important decisions myself.
So I don't feel like "hiring" anyone. The word alone symbolizes standstill ("on the spot") for me. Therefore I would like that all coworkers * inside with RAIDBOXES can feel as entrepreneurs * inside. For me this means: responsibility for results and budgets, 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 then CTO with over 15 years of entrepreneurial experience, such things certainly played a role. However, his experience has shown that the more employees there are, the more work the managers have to do. With the result that there is less time for the really important things.
Reason enough to do everything differently at RAIDBOXES and to organize the company in such a way that he is needed as little as possible to keep the daily business running.
4. Better scalability and more agility
Apart from the personal reasons for our decision, we're also fully aware that we need to be agile. We, as David, are out there fighting the Goliaths on the hosting market. If we don't grow quickly, react to customer demands swiftly and create innovations, the big players on the market will eat us up.
In our opinion, free, happy and motivated employees* are therefore a basic prerequisite for our competitiveness!
So the promises that Holacracy makes are
- more freedom for the employer and the workforce
- more responsibility for the individual
- little direct management
- as well as agility and scalability.
And that was exactly what we needed!
Starting out with Holacracy: So far it's been worth it!
All these reasons have led us to take this radical step. Radical because we, as managing directors, must relinquish our authority to issue directives in the classic sense and must concentrate much more on structural and cultural management in order to reduce our "tensions".
Our conclusion after meanwhile four years Holacracy : So far it has been worth it! The satisfaction of our employees* is very high and productivity has improved. However, you can already notice that the Recruitment of new team members is at least different from that of traditional organizations. You have to focus much more on the cultural factors of the applicants.
I explain exactly how Holacracy works and how to take the first steps towards implementation in my articleHolacracy in Action: 5 Steps to Developing a High-Performance Team. Further information and our presentation from WordCamp Cologne on this topic of Holacracy can be found here.
What is the situation in your company or your circle of 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!