Over the past year, Zappos has instituted a controversial management structure called holacracy, which abolishes traditional corporate hierarchy in favor of self-governance. The online shoe retailer recently offered employees pay to leave since adopting holacracy, and 14% accepted the offer to avoid working under the model.
So, what is holacracy about, really? According to its constitution, “Holacracy is a new way of running an organization that removes power from a management hierarchy and distributes it across clear roles, which can then be executed autonomously, without a micromanaging boss.” It continues, “The work is actually more structured than in a conventional company, just differently so. With Holacracy, there is a clear set of rules and processes for how a team breaks up its work, and defines its roles with clear responsibilities and expectations.”
Zappos CEO Tony Hsieh has taken the new management method to heart, but admitted in a memo to employees earlier this year, “It’s not for everyone.” Of course, holacracy isn’t the only unusual management ideology to make its way into boardroom. Here are three others, which all seek to distribute power at a company more evenly among its employees.
1. Flat structure
Chicago's Basecamp, a software company, employs a horizontal org chart that gives employees the freedom to work amongst each other without any specific hierarchy. Unlike holacracy, the flat structure does not come with specific guidelines or a constitution. Instead, there's simply more freedom.
But the management style courted controversy when co-founder Jason Fried published an essay for Inc about what happened when an employee asked for, well, some vertical promotion. Short answer: The worker was fired.
Some insight from Fried: "We're not big fans of what I consider 'vertical' ambition—that is, the usual career-path trajectory, in which a newbie moves up the ladder from associate to manager to vice president over a number of years of service," he wrote in Inc. "On the other hand, we revere 'horizontal' ambition—in which employees who love what they do are encouraged to dig deeper, expand their knowledge, and become better at it."
Makes you think a little more about the next time you ask for a promotion, right?
2. Self-management
Tomato producer Morning Star has gone with an even more flexible management structure than holacracy: self-management. "We envision an organization of self-managing professionals who initiate communication and coordination of their activities with fellow colleagues, customers, suppliers and fellow industry participants, absent directives from others," according to the company's website. Morning Star is affiliated with the Self-Management Institute, whose role is to spread the organizational model to other businesses.
"Different from traditional manufacturing companies, Morning Star relied on self-management to execute the work in any part of the organization," according to a Harvard Business School research paper. "The company was built on individual freedom, with the expectation that employees would take responsibility for holding their peers accountable and address performance failures directly."
According to the HBS study, self-management allows employees "to find joy and excitement utilizing their unique talents and to weave those talents into activities which complement and strengthen fellow colleagues' activities."
3. Lattice organization
W. L. Gore & Associates
When filling key leadership positions, Gore seeks broad input from the associates. For example, after two longtime divisional leaders retired, the company held a series of input sessions across the division, asking more than 1,300 associates to identify the attributes that should be considered when selecting the new leadership team. A similar process was used to ask Human Resources Associates for input on a new global HR leader, and the current CEO was named only after asking a wide group of leaders whom they would support as the next president. These practices are in keeping with W.L. Gore & Associate's core belief that leaders must demonstrate "followership" to truly lead -- in other words, that leadership is something to be earned, rather than appointed.W.L. Gore, a U.S.-based manufacturer that makes Gore-Tex products, popularized the lattice structure, which bears some similarities to the flat structure used by Basecamp. The company even cracked Fortune's Best Companies to Work For ranking in the past because of its management style.
"Gore's unique 'lattice' management structure, which illustrates a nonhierarchical system based on interconnection among associates, is free from traditional bosses and managers," according to the company's website. "There is no assigned authority, and we become leaders based on our ability to gain the respect of our peers and to attract followers."
A Gore employee is responsible for managing his or herself and is wholly accountable to others on their team. There are also what's called "core commitments" that employees are expected to make and follow through on.
Gore CEO Terri Kelly told The Wall Street Journal in 2010: "First, we don’t want to operate in a hierarchy, where decisions have to make their way up to the top and then back down. We’re a lattice or a network, not a hierarchy, and associates can go directly to anyone in the organization to get what they need to be successful."
