Over the past few weeks, I've been fascinated by the implementation of holacracy at Zappo's. In case you haven't heard of holacracy, it's a "complete system for self-organization" designed to free organizations from non-flexible hierarchies. As the holacracy.org site explains:

Traditional hierarchy is reaching its limits, but “flat management” alternatives lack the rigor needed to run a business effectively. Holacracy is a third-way: it brings structure and discipline to a peer-to-peer workplace.

As an advocate for rebellious thinking at work and for a significantly different relationship between managers and teams, you might think that I'd be excited about holacracy. And I guess I sort of am. I'm all for self-organization and in principle would root for any effort to dismantle outmoded hierarchical concepts. But the recent reports that 14% of Zappo employees chose a buyout option over continuation with the holacracy implementation got me to thinking that holacracy might have its own issues. Just because hierarchy is suboptimal doesn't mean that any other system would be better.

I'll confess that I haven't read the holacracy book--a condition that Zappo employees were urged to meet before receiving the buyout package. But I've checked out the holacracy constitution and wiki, and there are a few things that give me pause.

Holacracy, by its own admission, is about more structure not less. Quoting again from the holacracy.org website: "the work {in a holacracy} is actually more structured than in a conventional company, just differently so." I don't know about you, but this just don't sit right with me. Holacracy makes decisions through a network of dozens if not hundreds of intersecting circles--each circle being responsible for some aspect of the organization's business. Differences are resolved and decisions made in governance meetings where tensions and objections to policies are discussed in a process that has seemingly strict rules and a weighty formal tone. (Holocracy proponents say that you can't judge the process by its rules in much the same way that you can't judge baseball by its rulebook.)

Like, I bet, for most rebels at work, the small hairs on the back of my neck levitate when I find my actions governed by a strict process. Rules have always had a lowest common denominator quality for me. For me, a healthy workplace has productive relationships, comfortable and intuitive patterns of work, and yes flow--the state of being so completely involved in an activity that individual egos largely disappear. I know that many individuals aren't happy in what is admittedly a messy environment. They want more control and more certainty, and many are actually happy to delegate upwards to the boss the responsibility for exercising that control. Perhaps, even, the world is divided into two essential types: those who enjoy a good mess and those who like to exercise control.

Another problem I see with holacracy is its assumption, implicit throughout, that humans will act rationally in the workplace

The strict rules for when and how to speak in governance meetings appear to ignore the essential emotional qualities of humans. If I didn't know better, I'd suspect that all the rational actor economists, having been defeated by the strong research findings of behavioral economics that humans are anything but rational actors, have moved over to support holacracy. For example, and quoting from the holacracy wiki: "reactions {a stage in governance meetings) are the only step of the governance meeting when people can speak freely." What this means is that during most steps of the governance meeting, comments and discussion are circumscribed. I'm sure this is for efficiency's sake--to prevent the type of rambling that we're all too familiar with during staff meetings. But scripted meetings also will reduce the opportunity for the playful give and take, the bantering that is the foundation for the trust that fuels successful teams. As the research shows, teams become great in part because they laugh with each other and communicate freely. When you read the bylaws of holacracy, you're hard-pressed to find the bit about having fun. 

I have to imagine that most organizations implementing holacracy don't go exactly by the book. Or maybe when your governance circle functions like a well-oiled machine, trust is a byproduct rather than a prerequisite. Holocracy proponents say that their transparent processes eliminate the hidden rules and passive-aggressive behaviors common in so many organizations. That would certainly be a plus. But I have to think that some of the individuals that left Zappos did so because they didn't quite see the advantage in replacing hierarchy and bosses with a controlling process.