Zero Hierarchy ?
The word manager comes from an Italian word “Maneggiare” which means “handling” or “training (horses)” with our “manus” or hand. This is how it is described in Dictionary.com , literally meaning training of people to carry out tasks.
I did some research to find out when this word (manager) was first coined and was surprised to note that it has a 400-year history, used in the early 1600s.
A manager is an important cog in the organizational wheel who is conferred the holy task to strategize, staff, plan , direct and execute tasks in the broader interest of the company.
Come 1900, when the industrial revolution was in full flow, factories were burgeoning everywhere, came the concept of “mass production”. With mass production tasks got specialized and practically repeatable in nature when companies and the leadership started looking for ideas to maximize the output.
Enter the era of Taylorism , Fredrick Taylor’s vision of scientific management which viewed employees as specialized and replaceable components. Given all of this was born the concept of a manager who would know how to piece the jigsaw together and distribute tasks to workers in order to maximize the output.
Given the commentary above, it is a 100-year old principle ; is it still applicable to our generation ? If the goal is to maximize the output could there be ways to do it without involving layers and decision chains in the middle ?
While many companies that you would know of and have probably worked in already swear by the idea of “flat structure” it is just a reduction in layers by cutting the middle management and moving tasks up one echelon. However, as one of my colleagues said it is utopian to think of an organization without managers ! When I spoke to my manager, he felt it probably may work in small organizations, but it will be next to impossible to run very large organizations with bite-sized chunks of information flowing up on a daily basis. One more colleague said success of non-hierarchical system will only happen if there are strict rules and principles of ethics , cited his brother’s venture which is owner driven but in the same breath he did say that in a 25-man organization is possible to run without structures and relations. Maybe if there are expansions the owner will need to distribute authority. He had concerns around maker-checker system, non-regularity of progress updates and lack of trust. Another colleague aptly put it - “Have you heard of movements without leaders ? If we analogize organizations as movements how would it run without leadership structures ?”
Another colleague told me “Why do you keep talking about PMO when it comes to projects ?”
A human resource friend was more positive , felt that individual contributor role is a possibility if proper coaching / counselling is provided. “ If there is ambiguity even that needs to be defined clearly” is what he concluded.
Given the perspectives above I was nearly ready to write off the idea of a zero-manager organization, till I did some more discussions and readings.
It is at this time that I came across a Brazilian second generation entrepreneur named Ricardo Semler who said in 1989?“I am president of a manufacturing company that treats its 800 employees like responsible adults. Most of them—including factory workers—set their own working hours. All have access to the company books. The vast majority vote on many important corporate decisions”
While it is a big Brazilian manufacturing unit it isn’t a shaker and mover in the corporate world. However, what struck me was the 360-degree change from an autocratically led organization to an open floodgate of employee participation , 30 years back !
Just to name a few things that changed in Semco were
Result ; Impressive growth rate of 40% over 20 years, revenue of $ 100M and employee churn rate of 2%. Clearly in my mind something did go right, and the experiment paid its dividend over time.
Ok , so you think this is a one-off, right ?
On further research we came across CRISP, which got featured in a BBC news item as “ NO CEO: A Swedish company” along with a 4-minute video.
“Yes, to some degree this is true. We did delegate some of the tasks of the CEO to our hired staff and increased their mandate to take decisions regarding finances and their own working conditions. However, one important difference is that no one tells anyone else what to do, or how much to work” as per Crisp board of Directors. A new board is elected every year as part of the legal framework but essentially does very little other than holding a formal power.
Result; Crisp yearly revenue is $ 10M just on software consulting alone. Crispers who have worked with the company for more than 2 years get to own a part of the company.
Yeah ok , are there more ?
Zappos , an US online shoe company which adopted the no-manager structure from inception. Tony Hsieh the owner of Zappos defined a happy working environment in his book Delivering Happiness. ?It is worthwhile to note that Amazon acquired Zappos a decade back at $ 1.2B
Haier , a Chinese behemoth all of $ 28B has experimented with Entrepreneurial Microenterprise model which revolves around product owner, microenterprise owner and the Entrepreneur. Microenterprises are independent organizations who have full authority to decide and run their organization as self-driven, self-motivated and self-organized with no pull or push from the top.
And then there is Valve , a gaming co ($ 3B revenue), Morning star ($ 1.4B revenue), BASECAMP(valued at $ 100B), Treehouse($ 4B revenue) and many more.
Steve Jobs was a believer of ideas and not hierarchies , though he never implemented this in real life. But Jobs is a credible name in the world of business, so if he thinks organizations may work without hierarchies there is some merit to this thought.
Enter the world of Holacracy.
It is an organization structure based on collaboration and consensus rather than command and control. Holacracy comes from the word Holon which is a “whole” and each whole is connected to the larger whole or purpose. Basically, a structure of sub-circles within bigger Circle. Confusing , eh ? Let’s talk about this then…
A traditional organization is a pyramid , where authority resides at the top and is delegated downwards. If decisions have to be taken queries will travel upwards and needs a political might to move issues between layers and boxes.
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There are defined positions, job descriptions and names which run the command and control centre.
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As I ?wrote this, I broke into a smile as it reminded me of a popular cliché I used to hear in the American MNCs I worked for , “the buck stops here”. This structure seems efficient , but it is almost a century old and has a potential to be clunky. While the world around us has changed a mile , we tend to run corporations as if we are running a?car manufacturing factory from far back in 1920. Decision making is centralised , it is slow, it has to do a few rounds before a final decision is reached by which time the opportunity to grow the business is lost manifold. What does it do to the morale of the employees ? A popular study in USA and Europe figured out that 40% of the workforce remains disengaged with the larger goal. If I were running my own shop I would be scared to hear this, isn’t it ?
Traditional structure pushes us in the direction of ranks, professional development and procedures while a holacratic structure allows function based organisations with tasks at hand viz products, sales etc. which is nothing but a network of same-skilled people. Networking comes naturally to our new gen what with Whatsapp, Facebook, Discord, Linkedin and many more, isnt it ?
It is a change in the way we have looked at organisations. To give you an analogy ; the generation that worked in the 1990s through 2010s were information hoarders. It was key to their existence. But look at the latest gen, the moment they get any information they share it in the social media for all to see. That’s a big mindshift change !
So why not organise ourselves where we have roles and not titles, nor ?job descriptions and we can hop in and out of roles ? Why cant we make decisions that are useful for the organisation quickly within smaller groups and effect them ?
The organisations I spoke about above have done experiments and reorganised themselves around circles and sub circles rather than pyramids.
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The larger circle reports to the board which is the organisaitonal goal / purpose of the organisaiton. All other circles are sub circles and can work within their own sphere and take decisions that are relevant to the growth of the company. There are daily tasks that help in continuous improvement / Kaizen and these can be effected in the sub circles without taking permissions from a boss. Each of these circles have a representative that interfaces with the other circles so that a joint KPI is discussed and agreed. People can take on multiple roles irrespective of what their academics permit them to , or they can choose to work on 2 different sub circles at the same time. We must note here that all circles are aligned in the final objective which is the biggest circle in the picture above, thus saying there are boundaries within which these autonomous circles work.
What are the guiding principles for this to be effective ?
§?Teams are organized around network of circles.?There is an outer circle which decides on the purpose or the goal of the organization. Within that circle are self-governing sub-circles which align to the larger circle. All circles in effect must align and continuously contribute to the larger circle or goal. Now is it different from a traditional model ? Contextually , the aim is to get everyone aligned to the purpose however the difference is that each of these network of people can govern the way they want to run their business and take independent decisions as long as it keeps growing the purpose of the larger circle or the board.
§?There are no performance reviews , just peer to peer feedback loop. Some HR gurus believe it is nearly impossible to correlate performance and remuneration, so why do it ? How work is done , by whom and what should be delivered is discussed on daily basis within the circles which in effect is a review !
§?There are quarterly meetings where all circles meet together to discuss how they align to the larger circle and if there are changes in the purpose the way to imbibe it.
Is this that simple ?
§?We have heard of terms like “team player”, it is perhaps most pertinent in holacratic setup,?finding team players is important
§?First and foremost hiring has to be right if an organisation wants to tread this path. Individuals have to tune in to the new ways of working and be absolutely comfortable with a setup which has no command and control in place. Mostly , internal resources should be encouraged to work on multiple roles which enhances their skills as well as makes them an important cog in the wheel
§?Trust and radical transparency is key to this success
§?Governing boundaries may be defined but if there are many rule books / sets it will become impossible to work in circles
§?Elected leadership within and outside circles ; “Primus inter Pares” principle where the first among equals is elected as the spokesman of a circle
§?Innovation is key to this structure. Employees are the first to sense tension (bad word ain’t it? Let’s just call it as gap) in a company where they see gaps. They must be empowered to bring about changes they feel is good for the organisation and even the Board should not take that right away from the employee. That’s when authority is truly distributed.
§?If a tension (gap) is identified, a consent method is used to take a nod from a room full of people. People can raise objections, answers sought but then at some point in time a nod is good way to move forward than a formal YES from the command centre. It works great for policy proposals, if you add on many such proposals across the company on a daily basis , in a traditional company it will add a few years of bureaucracy
§?Each circle or sub-circle will also have a purpose aligned to the larger purpose and what it does is it becomes a heirarchy of purpose (not people)
§?People probably will have to start co-owing a company if this is to succeed in the long run
§?Roles can be created and ditched at will. Temporary roles can be created without getting a heirarchical structure of reporting
§?Holacracy brings with itself a?set of clear rules relating to governance?that enable a workforce to sidestep the complexity of an organisational structure (it is more than just a chart, people and power make it more complex)
§?Be prepared for multiple structural changes as gaps are identified and tensions reduced through quick structural changes which does not need a top down approval.
In conclusion I would say ; for many years I worked for a Swedish firm and enjoyed consensual decision making (meeting room melodrama) which sometimes were lengthy, but there was a large acceptance across the organisation. I always thought, that’s the way Swedes are built , but when I internalised Holacratic governance model I realised they were only setting a joint purpose for functions and organisational units.
Will human ego allow this to succeed in a large traditional organisation ? Will we see many more migrating to this principle ? Time will tell I guess….