The impact of organisational change

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How does a structure free of bosses and traditional hierarchy actually work?

I first heard the term holacracy about 10 years ago. The idea of a world without managers has always fuelled a divisive debate, but it certainly perked my interest. It was refreshing to see a new template developing for modern, self-governing businesses.

But how does a structure free of bosses and traditional hierarchy actually work? The typical corporate system is replaced by autonomous units, or circles, each with the power to plan, action and measure its own policies and processes. Each circle has a designated field of speciality, much like organs in the human body. These circles overlap to encourage collaboration and alignment with the broader mission of the organisation, as discussed in governance meetings.

When done right, the system works by energising static job roles, building agile relationships between staff and affording people room to develop their ideas. But recent examples have proved that holacracy isn’t a one-size-fits-all solution for every business.

You’ve probably seen snippets of the recent brouhaha surrounding Zappos – Amazon’s online clothing subsidiary – and its switch to self-organisation back in March. Recognising that self-governance isn’t for everybody, Zappos’ CEO Tony Hsieh offered disgruntled employees at least three months’ severance pay if they decided to quit. And 210 people – that’s one in seven Zappos employees – have taken the deal so far, around 14% of the company workforce.

The main risk facing Hsieh was the scale of implementing a completely new structure across a large organisation – and it’s difficult to see how this risk paid off.

Drastic change at this level is always going to cause friction for employee wellbeing and, although Zappos would say this is a necessary pain for its longer term strategy, I can’t help thinking more attention to the psychological impact of change would have stemmed the exodus to some extent.

This is where people management is so important. Empowering all employees to fulfil their potential is one thing, but asking them to take on the responsibility of autonomous control is clearly a load not everybody wants to bear, particularly when the transition is so immediate. Let’s not forget that effective line managers aren’t just charged with telling people what to do; they teach, organise, co-ordinate, direct and facilitate discussion to make sure all individuals are on the same course. The role of the coxswain in rowing races springs to mind.

Line managers also provide a sounding board for employees to discuss grievances, performance and validate their ambitions for career progression. Hsieh would most likely argue for an open approach to each of these factors to move towards a collaborative and trusting culture between staff,where opportunities for development are transparent and available to all.

It boils down to how fast cultural change can be embedded across an organisation, which is what makes Zappos such a fascinating case study for holacracy. There aren’t too many examples of such a bold structural experiment on such a large scale over such a short period of time. Hsieh knows that widespread cultural change does not happen overnight and it remains to be seen how long before his ‘rip the plaster’ approach fully heals – and, more importantly, whether it enables his business to grow stronger as a result. The progress of the modern workplace depends on experiments like this.

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