What would happen if a company completely got rid of middle managers?
This once unthinkable but necessary conversation around doing away with the middle-manager class has been kickstarted by the pandemic-driven rise of remote work. Many of these managers, who make up 17.6% of the US workforce, are paid large salaries to act as a type of “workplace hall monitor,” keeping an authoritative eye on everyone else. But as more employees shift to working from home, the need for this management oversight has massively decreased.
While COVID-19 drove home the idea of manager elimination at many organizations, some forward-thinking companies had already been experimenting with a less hierarchical workplace for some time. In 2012, the publishing company Medium restructured its organization and moved away from centralized management power. The new model it adopted, called holacracy, is built around “overlapping circles” instead of top-down hierarchies. Manager titles were eliminated, and managerial responsibilities were distributed among various staff members.
But four years later, Andy Doyle, Medium’s head of operations, published a piece explaining why the company was “moving beyond” holacracy and giving up the flattened model. The big takeaway: Sometimes you need hierarchy in some form in order to get things done.
But the idea of a more democratic workplace structure wasn’t abandoned by Medium, and many other companies — 220, the Holacracy website said — have had more success. And as companies try to grapple with the best ways to make a large remote workforce successful, now is the best time to rethink managerial structures. Flattening the hierarchy and doing away with most managers could help companies retain talent and attract a newly empowered workforce, but only if they implement it right.
Organizing your company around biology
Brian Robertson, a self-described “recovering CEO” of a small software company, founded the organization HolacracyOne in 2007 along with Tom Thomison, a longtime entrepreneur. The goal of the organization was to formalize a philosophy the pair had been ruminating on for some time. Holacracy is a business structure that flattens hierarchies in favor of a more equal distribution of power among workers. The term, derived from the idea of holarchy coined by Arthur Koestler in 1967, stems from a rather complex philosophical theory around holons, and it refers to something that is both an individual part and part of a whole. No one holon can exist without the other, and one holon is not any more important than another. The best example of a holarchy comes from biology: An organism is made up of organs, which are made up of tissues, which are made up of cells, which are made up of molecules. There’s no hierarchy of importance — no part can exist without all the others. Instead, the structure is flat and denotes equality.
This idea is imbued in the organizational structure that Robertson and Thomison developed, where top-down departmental structures are replaced by overlapping circles, and roles are defined not by title, status, and rank but by a list of responsibilities and accountabilities. All roles are seen as equally important to the operation of the entire organization. At a tech company, for instance, you might have a business circle with a sales circle inside it. Then next to the business circle, there might be a tech circle with product, engineering, development, testing, etc. No one person is in charge of any team. Instead, certain managerial responsibilities are spread out and built into people’s job responsibilities. There is a 38-page holacratic constitution that lays out the rules, structures, and processes for the system.
We aren’t used to a lack of hierarchy, but it can still work
Dennis van der Heijden and Claudiu Rogoveanu, the cofounders of the software company Convert in California, were particularly concerned with the amount of time they were spending greenlighting every small decision an employee wanted to make. After stumbling across Robertson’s TED talk on holacracy, they decided to give the idea a try. After eight years, their company of 40 employees still follows the holacratic model.
“I’ve put myself in a position mid-career where I cannot go back to a hierarchy. I just can’t do it!” said Morgan Legge, who joined the company to help implement holacracy. She said the key to making the model successful is to hire people who can seamlessly fit into the holacracy model: “You want people who are going to thrive in this environment. They have to be either natural, lifelong learners or want to learn and have a sense that things can be better.”
The greatest barrier to holacracy is workers who are used to the old way of doing things, Legge said. “You do what your parents tell you. There are very clear boundaries and expectations about what hierarchy means, and we’re taught not to deviate from it,” Legge continued. To combat this, employees must engage with a process of unlearning, something Legge believed many companies that had tried using holacracy hadn’t focused on enough.
To Legge, removing middle managers simply makes sense. “In holacracy, it’s the people who are closest to the work who are the people making the decisions,” she said.
A lack of managers doesn’t mean there aren’t metrics to hit. At Convert, each circle, whether it be sales, advertising, or product, decides on collective goals and metrics that fit into the broader company goals, then individual responsibilities are outlined specifically for each person to help achieve those goals. In the flattened model, employees have more freedom to decide how to meet those goals. There isn’t a “right” or “wrong” way to do things, and each circle holds its employees accountable.
In reality, someone may hold responsibilities that are more fundamental to the company’s success than another employee. Legge’s view on this is crucial in understanding how holacracy stands out as an organizational system that works differently from any other. “A certain role may be more important in terms of bottom line and dollars, but that doesn’t equate to status.” The distinction she draws between “role” and “status” highlights the idea that someone’s professional role doesn’t and shouldn’t define their value as a person. In normal organizational structures, “we equate ourselves, our self-worth, and our power with our title. Holacracy separates that,” Legge said. In a meeting, for example, no one person gets more airtime than anyone else. “You may bring in $100,000 a month, but that doesn’t mean that your voice gets to be 10 times louder than the person who is doing copywriting edits,” she added.
Jean Hsu, a former Medium employee, explained how beneficial this was. “As someone who feels uncomfortable interrupting other people to be heard, it gives me explicit space to voice my opinions without interruptions and without having to yell over other people,” she said.
As with any other element of a company’s operations, logistical matters, such as hiring, firing, complaints, and performance reviews, are either distributed between various roles or consolidated under one role. At Convert, Legge is responsible for hiring, for example.
Robertson said he loved HolacracyOne’s firing process for being “deeply human and respectful, yet also extremely effective for meeting the business needs.” The organization’s evaluation process involves three-, six-, and 12-month reviews for new employees carried out by a specific employee or group of employees who consult with those who work closely with the new employee. People are fired based on a consensus among these “partnership assessors.” If someone is asked to leave, they have a chance to speak with the partnership assessors and make changes in order to remain at the company.
Legge insisted that holacracy is the “key to successful remote work.” The clarity holacracy provides in terms of each employee’s responsibilities, and the freedom to carry out whatever is needed in order to achieve them, makes juggling time differences and life demands much easier. With teams spread across time zones, it’s crucial that all team members feel confident in knowing exactly what their own work is and have the ability to carry that out without hindrance.
But holacracy doesn’t provide much in the way of salary guidance. For a model that places flattened hierarchy at its core, this omission seems shortsighted. One difficulty Legge highlighted in setting salaries is that roles are designed to be flexible, and rigid pay structures threaten this fluidity. The most holacratic element of salaries, perhaps, is their transparency rather than their amounts. At Convert, for example, salaries are included in every job description, so anyone in the company is able to see it.
Trouble with the system
Holacracy has earned its fair share of criticism. After the shoe company Zappos publicly implemented the organizational structure in 2013, the Forbes writer Steve Denning pushed back on the system. He suggested that holacracy is, in reality, deeply hierarchical, with each circle “required to look upwards for instructions as to its purpose and guidance on how it is doing in response to that purpose.” He also said that while holacracy claims to have no managers, it still relies heavily on leaders, simply swapping out official titles with a list of responsibilities that reflect managerial relationships.
Olivier Compagne, a partner at HolacracyOne, responded in detail to Denning’s criticisms, arguing that holacracy works because of its flexibility. If you don’t want managers, he said, you don’t have to create them. It’s up to the organization to decide how circles work. They are there as structural pillars to allow for nonhierarchical organization, but they don’t enforce it.
This flexibility is something Dan Pupius, an engineer who worked at Medium during the holacracy period, said he liked about the structure. He said holacracy “makes the implicit explicit” and provides a formal way of recognizing the work of each employee by outlining exactly what their role is, rather than having people take on more than they can handle and not get credited for their work.
But at Medium, they discovered that “the governance process within holacracy doesn’t remove social hierarchy and authority,” Pupius said. “If the CEO, who’s a super-famous, three-time founder, proposes a resolution, who’s going to feel psychologically safe to oppose that? The reality is that psychological safety isn’t intrinsically available to everyone, and holacracy doesn’t have anything in it to ensure that safety.”
It’s true that holacracy doesn’t eliminate the power structures determined by characteristics such as race, gender, age, and sexuality. These structures are woven into our social fabric, and the model doesn’t pretend to uproot these entirely. But it does provide a better starting ground for challenging these structures.
For Medium, the biggest hang-up wasn’t the philosophy behind the system, but the seemingly complicated ways of operating. “I joked a lot at the time that 50% of the problem with holacracy was the name. People were really focused on the rules, so instead of saying, ‘How do we change things,’ the question became, ‘What’s the holacratic process for making change?'” Pupius said.
As a result, when Medium dropped holacracy, it retained “holacracy lite.”
Pupius also found that, sometimes, you needed hierarchy of some kind for simple logistical purposes. “You can think of holacracy as being a way of unpacking the roles and responsibilities of a manager and making them explicit. But over time what we found is, it actually made a lot of sense to consolidate a lot of those functions under the same person,” he said.
Zappos grappled with similar issues. “The problem was we introduced too much in the beginning and too much of the nuances and complications of the holacracy constitution,” Jordan Sams, a self-management trainer on the Zappos holacracy team, previously said. In 2017, the company dropped the holacracy structure in favor of holacracy lite, a system that incorporates its values and guiding principles without relying on its rigid constitution and governance structures.
How strongly do you want to get rid of the hierarchy?
Comparing the companies where holacracy has worked well and where it hasn’t highlights a possibly uncomfortable truth that its success may come down to how dedicated a company is to its values. A firm might claim to want to be nonhierarchical, but that doesn’t mean it no longer embodies hierarchy. Convert engages its employees in a process of unlearning and relearning to replace old thinking. Without this, as was evident at Zappos and Medium, the theory remains idealistic and difficult to implement properly among a workforce used to managers. Convert was also built on holacracy almost from the beginning, so its every hiring decision has focused on not only skills and abilities but also a candidate’s dedication to embracing a different type of organizational structure.
With the massive increase in remote work, companies must find and implement new working practices and ways to retain staff who have become used to better working conditions. Holacracy is an ideal partner for remote work because it emphasizes employee autonomy. As the demand increases for better work-life balance, professional integrity, and inclusivity, a flattened structure may be the way to go.
Molly Lipson is a freelance writer and an organizer from the UK.