Holocracy: What the Staffing World Should Know

159406050Zappos is a model organization and I’m sure many companies will be waiting to see if they should follow suit and adopt Holocracy as an organizational structure. Holocracy in short is an organization that runs without titles but rather with leaders of teams or circles that can be interconnected, and where workers are self directed to take full ownership of their work.

It seems like the Zappos CEO (or whatever he’s called under the new structure) Tony Hsieh is taking his delivering happiness philosophy and trying to deliver even more happiness internally to his employees.  I have no doubt that it has excited and motivated his workforce in a meaningful way. His understanding that the need to evolve is not just an external business strategy is truly innovative, and also the best retention tool. All employees need to feel valued and feel that they are evolving as well. We see it when colleagues get title changes with no real change in job function. At many companies titles can be somewhat random with little actual meaning other than to appease an employee’s need for validation.

I think this is a great experiment like communism. But, like communism, the question is will it work when taken from a theoretical concept to a fully implemented system. I did some reading and some on the street research to get reactions.

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Personally, from a recruiting point of view, my first concern is that it will create a lot of confusion, especially for larger organizations. There is of course the practical…how do I post a job on a job board with no title. But beyond that…. I imagine it’s hard to attract new talent to a job that has no title because the rest of the world operates on titles almost like a universal language.  People also want to know exactly what they are going to be doing not just in terms of responsibility but what their title will be. Think about how many times title is negotiated when making a job offer. Not to mention, for better or worse, it’s so closely tied to people’s identity. As one woman I interviewed in J Crew said, “how would you explain what you do to your parents?” And again from a recruiting perspective, how do I explain this malleable and hopefully more fluid and agile work environment to a perspective employee.

When I explained that you might be charged with a certain duty one day but then, if you’re having difficulty, have that duty taken from you and shifted to someone else, she didn’t like that idea at all. “If I take on a responsibility, I want to fulfill it, even if I’m having difficulty, rather than having it taken away from me.” She did say, however, that she wouldn’t shy away from interviewing with a company that operated under this system and would  be intrigued.

Out of approximately 10 people I spoke with one female and one male (late 20s, early 30s) categorically said they wouldn’t function well in this environment. Both coincidentally happened to work in Public Relations. The man said he’d be unmotivated to climb the corporate ladder (probably because there isn’t one).  He also wondered how you’d describe what you did when seeking employment elsewhere. As for our lady publicist, she said she yearns for a higher title and promotion and she wouldn’t be as motivated to stick around.

Everyone else generally seemed interested but hesitant. One IT professional in his 40s questioned how you determine people’s pay if job duties can be swapped. He also added that if it were a company he really wanted to work for he’d give it a shot, but if it were a smaller organization without name recognition he’d think twice.

A woman who works with her husband who owns his own business said, “I think it’s nice for people to have a voice,” which a Holocracy seems to offer. For example, if someone is not contributing and performing they may decide as a group to let that person go. She concluded, however, that she doubted if her husband would ever try such a model.

In some of my reading I found that the idea gained popularity in the 80s with some larger organizations but the implementation only lasted about 6 months. People did not self regulate as well as they had hoped, and indeed turnover also became an issue. Upper level managers started seeking employment elsewhere since they wanted to keep the titles they worked so hard to get and in the end companies lost good talent. Only one company was able to run successfully under this system for 20+ years, a small factory located in a rural area that ran like a family business.

It’s human nature to want to get ahead and sometimes it’s not about actual title, but about your ability to effect change within an organization that brings a greater sense of validation and meaning to someone’s work. I believe the key is finding a balance between the traditional and non-­‐traditional organizational structures. Then putting the right management team in place because the happiness and effectiveness of employees comes down to them regardless of their coveted title or their leadership role in whatever circle they’re part of.

The majority of the people I spoke to were open to interviewing at companies that functioned this way but recruiters get ready. If this model takes off, there’s a lot of explaining that’s going to take place as they all had lots and lots of questions. We’ll all just have to wait until all of Zappos has fully converted to a Holocracy before getting any answers.

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Michele Mavi
Michele Mavi is a recruiter at Atrium Staffing, where she responsible for training all new recruiters. She has more than 10 years of experience as a recruiter, interview coach and resume writer.

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