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Change the way of working. Ways into self‐organization with the use of
Holacracy: An empirical investigation

Article in European Management Review · May 2021

DOI: 10.1111/emre.12457

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DOI: 10.1111/emre.12457

ORIGINAL ARTICLE

Change the way of working. Ways into self-organization with the

use of Holacracy: An empirical investigation

Sabrina Schell1 | Nicole Bischof2

1
Institute for Organization and Human Abstract
Resource Management, University of Berne,
Berne, Switzerland
Holacracy, a self-managing design for organizations, uses the radical decentraliza-
2
Competence Center for Leadership and
tion of authority and a lack of a manager-subordinate relationship. It differs
Human Resource Management, University of significantly from traditional organizational forms, and in particular, the transfor-
applied Sciences of Eastern Switzerland, mation of the organization from a traditional to a holacratic system brings with it
St. Gallen, Switzerland
various challenges, especially for employees and teams that need to be resolved,
Correspondence
so organizations can realize their potential. This study uses an explorative case
Dr. Nicole Bischof, University of applied study design with 43 qualitative interviews in Swiss holacratic organizations to
Sciences of Eastern Switzerland, Competence gain deeper insights into the organizational system itself and especially the path
Center for Leadership and Human Resource
Management, Rosenbergstrasse 59, 9000
into the holacratic system. We conclude by presenting an overarching model and
St. Gallen, Switzerland. identifying four different ways to handle the change into the self-managing orga-
Email: [email protected] nizational design.

KEYWORDS
change, holacracy, self-managing organizations

INTRODUCTION roles, implying that individuals assume much more

responsibility in self-steered organizational systems than
Rapid changes in all areas of the economy require a in ‘traditional’ organizations, which are typically hierar-
higher speed in decision-making processes, more innova- chically organized. This level of responsibility presents an
tion and new work settings. These developments motivate additional challenge to work since self-leadership is man-
companies to change their way of organizing work by datory. Orientation in work is defined by the purpose1 of
changing the organizational design, reducing hierarchy each circle and the purpose of the organization. Within
and, thus, becoming more agile. ‘Changes of work’ the framework of this purpose, employees act freely and
(McBride & Martínez Lucio, 2016) are accompanied by shape their work. As Getz (2009, p. 35) defines organiza-
purpose-driven working behaviors and new forms of tional forms, which are called Freedom Forms (F-form),
leadership. A new form of organization is Holacracy, as ‘the organizational forms that allow employees to take
which is a self-managing organizational design with flat full responsibility and take responsibility for decision-
hierarchies, purpose-driven actions and high require- making that are best,” holacracy can be named as one
ments for self-leadership (Amundsen & Martinsen, 2015; example of an F-form organization.
Dinh et al., 2014; Lee & Edmondson, 2017). According To date, knowledge regarding holacracy is limited
to Lee and Edmondson (2017, p. 52), ‘the introduction of (Bernstein et al., 2016; Ravarini & Martinez, 2019;
holacracy gained widespread attention as one of the first Robertson, 2015) because this organizational system was
fully specified self-managing designs, made available to only invented in 2007 and promoted since 2015, and
any organization interested in adopting it’; however, almost no (empirical) studies providing evidence regard-
currently, only limited research, especially empirical ing the different behaviors in holacratic organizations
research, exists regarding this kind of organization. exist (Lee & Edmondson, 2017). Thus far, some critiques
Holacratically-organized systems are characterized by have been formulated since the approach is quite radical
a minimum hierarchy, a high level of freedom and maxi-
mum self-leadership. Teams are organized into so-called 1
The purpose clarifies the identity and intention of a role or circle. The purpose
‘circles,’ and instead of positions, there are ‘roles’ orients the action of a role even without any other explicit accountabilities,
(Robertson, 2015). A single person can fulfill several policies, strategies, priorities, or resources (https://www.holacracy.org/glossary).

European Management Review. 2021;1–15. wileyonlinelibrary.com/journal/emre © 2021 European Academy of Management 1

2 SCHELL AND BISCHOF

and, therefore, not easily applicable to large, long- accepting, self-correcting and reversing, which offer hints
existing organizations (Bernstein et al., 2016). Individuals for future research regarding the fitness of individuals for
are known to vary in the degree to which they feel com- self-managing organizations.
fortable in radically organized systems (Bernstein
et al., 2016). Research investigating how individuals
address change, such as changes in roles, and which THEORETICAL BACKGROUND
interventions could support employees in adjusting to or
operating in self-managing organizations is lacking Self-managing organizations
(Lee & Edmondson, 2017). The change from a hierarchi-
cal to a self-managing organization is associated with The current trends in organizational designs foster flat
power shifts, and in this field, less is known about how hierarchies and so-called self-managing organizations.
individuals address this power shift (Sveningsson & These ‘changes of work’ (McBride & Martínez
Alvesson, 2003). In this paper, we aim to present insights Lucio, 2016; Rubery, 2015) are accompanied by purpose-
from the first empirical study of holacratic organizations driven working behaviors and new forms of leadership
and answer the following research questions: How does (Avolio & Gardner, 2005). Lee and Edmondson (2017)
holacracy work? How does the change from a traditional undertook the first attempt to provide a comprehensive
organization to a holacratic organization take place? How overview of self-managing organizations and presented
do individuals experience their roles in the new organiza- the three features of the definition of self-managing orga-
tional design? nizations. Their definitions mainly focus on the radical
We empirically investigated this phenomenon decentralization of authority and the lack of manager-
through 43 interviews in five holacratic organizations in subordinate relationships in self-managing organizations
Switzerland. Subsequently, we analyzed eight additional (Lee & Edmondson, 2017). In their literature review, the
companies via single interviews and secondary data. As authors underline that managerial hierarchy functions
holacracy is a new type of organizational system, we first are more effective under stable conditions, which is based
aimed to understand how the organizational system on the assumption that in the current complex and
works in reality. Second, we focused on the experiences, dynamic environment, other forms of organizational
concerns and fears of employees associated with this new designs (Fjeldstad & Snow, 2018) are needed, which is
form of organization, which is characterized by a shift in consistent with the current trending work performed by
power and responsibilities and the decentralization of Laloux (2014). Furthermore, self-organized organizations
authority. Specifically, we focus on how the involved enable employees to react quickly to changes and
actors react to the change into a holacratic system. We empower them to engage in continuous development
adopted a grounded theory approach to deeply under- (Laloux, 2014; Lee & Edmondson, 2017).
stand this new phenomenon. Self-organization can assume different forms in com-
We contribute to the literature by providing the first panies (Lee & Edmondson, 2017). Small units of an orga-
empirical insights into holacratic organizations nization can be converted to self-organization, such as by
(Laloux, 2014; Robertson, 2015) and contribute to a introducing self-organized teams (Cohen & Ledford,
deeper understanding of this new form of organizational 1994; Manz, 1992; Stewart & Manz, 1995), but it is also
design, its function, its strengths and its weaknesses. Spe- possible to change the design of the organization
cifically, we show how individuals develop and find their holistically and introduce sociocracy (Endenburg, 1988)
roles during the period of transformation and in the or holacracy (Robertson, 2015). These two systems pene-
holacratic system. The construction of the design in its trate the organization holistically (Lee & Edmondson,
origin form implies that roles are separated from persons. 2017), create other forms of hierarchy and promote and
In our study, we show that this separation is not possible, demand self-leadership (Manz, 1986).
and therefore, individuals seek and find different ways to These forms of organizations have effects at diff-
address changes and role definitions. The pure implemen- erent levels, and therefore, a transformation is far-
tation of the organizational design cannot proceed with- reaching and tedious (Hughes, 2016; Rafferty &
out the accompaniment and construction of a tribe space Minbashian, 2019). Usually, organizations are role-based
that also considers the personal space of each employee. (Lee & Edmondson, 2017), and employees have to
We show that in highly formalized self-managing organi- define, complete and, if necessary, change their roles
zations (Lee & Edmondson, 2017), additional needs arise, (Robertson, 2007). In addition, there are different career
such as the need for human resource departments and paths since the classic management career is eliminated
coaches to support organization members in the learning (Lyons et al., 2015). This change is accompanied by
of the new system and the adaption of it (Heyden new demands on the organization to find framework
et al., 2017; Kammerlander et al., 2018), in which the conditions under which employees can create opportuni-
need for personal space is a salient issue (Romme, 2015). ties to find orientation and stability (Feldman, 2000)
Finally, we identify four different types of reactions to but still remain agile and flexible (Feldman &
the change to a holacratic system, namely, ignoring, Pentland, 2003).
RADICALLY SELF-ORGANIZED 3

Holacracy as a concept for organizational design roles are defined in the holacracy framework. The most
prominent are the lead link and the rep links. The circles
Holacracy is a governance framework that aims to replace choose their rep links and lead links independently. Their
traditional and hierarchical top-down structures in organi- task is basically to work on feedback and tensions
zations by distributing authority and power to each beyond the boundaries of the circles and to establish a
employee (Bernstein et al., 2016). The transformation connection to the other circles (Robertson, 2015).
toward holacracy is radical in that it addresses all levels The lead link is partly assigned management tasks,
from organizational up to the individual level and identity such as structuring governance and defining metrics, pri-
(Kammerlander et al., 2018). The definition of holacracy orities and strategies in the form of simple decision-
found on the official website of Holacracy.org describes making rules that are intended to provide guidance to
the governance framework as a social technology for agile individual roles. In addition, they are responsible for
and purposeful organizations that changes the classical releasing resources, assigning and delegating roles, moni-
structure of an organization, the decision-making processes toring role fit, and taking on unfilled roles within the cir-
and the distribution of power. In traditional hierarchical cle. By restricting individual roles, however, a lead link
structures, positions are bound to branches, and the organi- can only have access to the governance process of the cir-
zational chart follows the shape of a pyramid. A holacracy cle. By delegating responsibilities to different roles, the
is built on circles—so-called ‘holons’—in which employees affected element or the authority of the lead link role is
work together (Robertson, 2015). Each circle has potential removed, and its authority is restricted (Robertson, 2015).
subcircles and includes multiple roles instead of job descrip- The rep link is chosen by the circle members of the
tions, which are occupied by employees. These roles are subcircles and represents them within the superordinate
not bound to people but are defined around the work. supercircle. Relevant perspectives are carried from the
Depending on the degree to which an organization applies subcircle into the operational business and governance of
holacracy, the rules are the same for everybody, regardless the supercircle to create a suitable environment and to
of their position. These rules are found in the holacracy optimally ensure the flow of information and transpar-
constitution, which functions as a rulebook and is ency between the circles. Rep links transfer feedback
accessible to everyone (Robertson, 2015). The constitution from the circle members into the superordinate context,
guides the process and defines every employee’s field of tensions are eliminated and the autonomy of the subcircle
action. Within an organization running holacracy, the can be protected in the long term (Robertson, 2015).
constitution is the formal power holder in the organization The tool for fostering transparency and agility is the
rather than a specific person (e.g., CEO, president, etc.). meeting structure. Holacracy differentiates between two
forms of meetings: governance meetings and tactical
meetings (Robertson, 2015). These meetings always fol-
The operational functioning of holacracy low the same structure. In the first form—the governance
meeting—members of a circle voluntarily meet at least
Holacracy structures an organization in circles and is once a month to update the circle’s governance. The roles
guided by a purpose, which can be found above all in the and the respective accountabilities needed to reach the
constitution, which represents the set of rules of goals are created and assigned to members of the circle or
the holacratic system (Robertson, 2007). Operationally, redefined. This meeting is about working ‘on’ the com-
holacracy is lived and implemented through roles and pany. It therefore focuses on governance and not on oper-
meetings (Robertson, 2015). ations. The article ‘Organization at the leading edge:
A role is defined by the task to be performed, by the Introducing holacracy’ (Robertson, 2007, p. 21) highlights
areas to be controlled or by the associated responsibili- that the key to effective governance meetings is to “con-
ties, which allows a clear division of roles in an organiza- tinually pull the focus back to roles and accountabilities.”
tion. Roles that are subsequently performed by one In the dynamic forum of the tactical meeting, goals
person bundle all stakeholder expectations of an area. are set, activities are coordinated with other departments,
Roles are not tied to a specific person but describe pro- and activities of the operative day-to-day business are
cess and action expectations that include guidelines for planned. In addition, resources such as money, time and
behavior. Employees are often assigned several roles, personnel are allocated by the lead link within this frame-
which may also be in different circles. These defined roles work. In contrast to governance meetings, these meetings
are dynamically adaptable and can be exchanged or even take place weekly or biweekly (Robertson, 2015;
rejected by the employee. By assigning roles, employees Yugendhar & Ali, 2017).
are given the authority to freely dispose of the activities
to be carried out and to make appropriate decisions. It is
assumed that everyone has the basic ability to absorb and METHOD
process information to fulfill their own role. All role
holders assume obligations at the same time as they This study uses a grounded theory approach (Glaser &
assume their roles. The respective functions of several Strauss, 2017) to gain a more nuanced understanding of
4 SCHELL AND BISCHOF

how holacracy works and how individuals and teams to be conducted was not determined beforehand. How-
react to the change to a holacratic organizational design. ever, after 40 interviews, saturation was reached, limited
As empirical research in this area is lacking, there is a new information was obtained, and similar patterns
need to understand how such an organizational system is started to recur. In total, we conducted 43 semistructured
implemented, and there is a particular need to identify the interviews (average length: 50 minutes). We always
main changes required at the individual and team levels. attempted to interview individuals who had initiated the
change to holacracy, former managers and employees
across hierarchies and tenures to gain different perspec-
Data collection tives (Flick, 2014).
Table 1 summarizes the data collected for the in-
Between 2017 and 2018, we collected data in the form of depth cases. Additionally, we performed nine interviews
documents (e.g., webpages and blogs), and qualitative for seven cases (see Table 2).
semistructured interviews and ethnographic observations
were performed. We contacted all holacratic companies
known in Switzerland at the time. The cases included are Data analysis
the companies that agreed to interviews and observations.
In one case, 12 hours of meetings during the first The interviews were recorded and verbally transcribed.
3 months of the transformation from a hierarchical to a The vast amount of data from the 43 in-depth
holacratic organization and six firm visits were under- semistructured interviews resulted in approximately
taken. We added holacratic organizations and used the 800 pages of transcripts. We conducted semistructured
opportunity to speak with experts on holacratic organiza- interviews that were divided into five parts. After the
tions while we contacted all known holacratic warm-up phase, which focused on the interviewee’s back-
organizations in Switzerland. The number of interviews ground (how long he or she has been with the company,

TABLE 1 Data sources

Holacracy
Company case Beginner and guinea pig Expert Evangelist Pioneer Adapter

Industry Technology company consulting and technology consulting software-engineering media agency
firm firm and consulting
company
size 250 280 6 180 35
Transformation to 2016 2015 2016 2015 2016
holacracy in
status of holacracy Set up and Holocractic Holocractic Holocractic Holocractic
implementation phase
Driver for Need for change and loss Need for change because Authenticty Whish to become Need for more
transformation of market shares of the pace of decision- more agile and formalization of
maging processes innovative. self-management
Informants Former Chief Techology consultants and software consultants, founders and Founder Five
Officer, Four Lead- developer, 4 lead links, rep link, former partners, Employees
Links (all former 2 rep links lead link 5 lead links
Manager), Two Rep-
Links Five Employees
(on different level
before the
transformation)
Number of 13 7 3 5 6
interviews
Supplementary
material
Meeting observation 12 hours in three circles
Company visits x x x
Webpages and blog x x x x x
articles
Networking events x x
with panel
discussions
RADICALLY SELF-ORGANIZED 5

TABLE 2 Overview supplementary cases

Supplementary
case Case description Emerging challenges Quotes

SC 1 Large Swiss insurance company. The embeddedness was a major challenge, ‘in the meantime I have learned to
IT-division transformed towards only one division was transformed. know other models. But at that time,
holacracy. After one year of A former strongly hierarchical holacracy was the only one and our
implementation, they quit and organized organization was unable consultant has promoted it very
implemented agile methods like to change leadership to self- much.’
scrum. organization is very short time.
SC 2 Swiss transportation company. The the implementation was a one-person- ‘No, I have not. for me it was always
HR-division was transformed decision. This implicits challenges. clear that I want to implement this
towards holacracy in 2017 and is The transformation has to be an [holacracy].’
still organized like this. example for other divisions.
SC 3 Self-employed consultant for holacracy. not being part of a system lowers ‘yes, they are much more efficient and
Holds a major mandat at an IT- credibility and traceability. economically successful. But not
division of a concern. because they want to, as an
objective, but as a result.’
SC 4 Swiss media agency of medium size. Embeddedness within the market and ‘it is our duty to create a context for
Complete transformation towards acceptance by customers are experienced-based learning.’
holacracy in 2016. challenges. Appreciation as
challenge, thus an instrument was
created.
SC 5 Swiss telco company. Two divisions— How to initiate a change in thinking “when we now think of the old meeting
HR and Training—have been and taking responsibility were strukture we shiver. No one wants to
transformed towards holacracy since major challenges. go back, even the former critics.’
2015.
SC 6 Anonym; ICT branche the definition of circles and roles “put all tasks and topics on post-it’s,
without tremendous overlapping ideally each team in a seperate
and redundancy. colour. Then you can sort it and
cluster.’
SC 7 Swiss company in textile industry, Personnel topics like rekruitment, ‘I would recommend the
implemented holacracy in 2016. competence profiles and salary implementation of holacracy in
issues were major challenges to healthy organizations only.’
be solved.

in which circles he or she is active and to what extent he (Corbin & Strauss, 1990) and developed a coding scheme
or she is involved in the transition to holacracy), the sec- (Gioia et al., 2013) to analyze these rich in-depth data
ond part dealt with more specific questions about the through multistep coding procedures using the software
individual perception of holacracy. Example questions MaxQDA (Huberman & Miles, 1994). One result of our
were, for example, how do you perceive the meeting analysis was the handling of the change from a tradi-
structure that holacracy provides and to what extent do tional to a self-managing organization (see Figure 1).
you perceive leadership in holacracy? In the third part, In the analysis, we used inductive qualitative tech-
we focused on the team level, for example, by asking niques, including multiple readings of the transcripts and
questions such as who do you feel is part of your team, parallel calibration with the organizational design litera-
and do the people you have just mentioned correspond to ture, and inductively developed codes and categories,
a circle? In the fourth part, we asked questions on the such as leadership, stability and cultural factors. We
organizational level, such as do you find the purpose of iteratively employed our data and literature sources and
the organization comprehensible and meaningful, can applied cross-reading and cross-coding techniques
you orientate yourself on it, and what influence does the (Huberman & Miles, 1994). Adopting the interactive syn-
constitution have on your work? In the final part, we thesis approach, we composed a ‘general condensation’
asked for an evaluation of holacracy in general and gave depicting the essential personal meanings of the inter-
the opportunity to add something. viewees and used our findings to develop an overarching
We used a multistage approach to analyze our data. model (see Figure 2).
First, we summarized each of our five in-depth cases and
conducted a first descriptive analysis to understand the
transformation process toward holacracy, as well as FINDINGS
the implementation of and working under holacracy.
Then, we undertook an in-depth analysis of the five cases Since holacracy is a relatively new organizational design,
to obtain a first picture of this empirical puzzle in the first step, we were interested in how it works and
6 SCHELL AND BISCHOF

and circles via a top-down process. In the case of Guinea

Pig, initially, several questions were raised regarding
whether actions were still allowed in the new role as
follows:

Guinea Pig_I_6:“It no longer matters what

my function was before. Now, it is easier for
me [because I do not have a management
position], and I can actively stay out of some
problems. However, sometimes, I would like
to do something, or I am writing an email to
employees, and then, I have to ask myself:
‘Am I allowed to do this?’

In contrast, because of its size of only six employees,

Holacracy Evangelist was able to establish the first
holacratic system with holacratic processes. Due to the
use of circles since the foundation of the company, in
Adapter, the employees were able to define and find their
own roles independently.
The roles in holacracy are responsible for tasks and
are work purpose-driven, which differs from functions in
hierarchical organization settings. Individuals are aware
that roles are disconnected from human beings, and while
some employees find this approach to be a penalty,
others evaluate it as a benefit. Figure 3 illustrates the shift
from being an employee with a job description to a mem-
ber of a holacratic organization with various roles. On
the first level, the shift from being an employee with a job
description to an individual with different roles is
described. On the second level, the changes in identity are
illustrated. On the third level, the changes in the ways of
working and collaborating are illustrated. All levels inter-
act with one another.
Individuals have many roles and responsibilities, and
the responsibilities are separate from one another in the
FIGURE 1 Data structure first step. In this step, the change disturbs the former
employee identity. Moreover, the change includes new
ways of working—for example, decision making in meet-
how change takes place and examined three different ings occurs only through the integration of the opinions
levels: individuals, circles and meetings. We chose these of those role holders who are affected by the decisions.
three elements because they are not only the main com- Individuals are only able to find orientation and sta-
ponents of organizational design in the theoretical con- bility by being aware of the purpose and ‘why’” of their
ception of the organizational model (along with role and assuming responsibility for it, which includes
constitution) (Robertson, 2015) but also because our continuous improvement.
analysis shows that most of the dynamics, drivers, and
areas of tension are contained in these three elements. Adapter_I_1: “Yes, I’m sure of the freedom it
The result is visualized in the following model and is gives you to plan and control the whole thing
explained in the next sections (see Figure 2). yourself, how you do something, what you do
and where you do it. You get so much more
responsibility for something, and you want to
From person to role deliver something truly good to it.”

The analyzed firms address the roles, the definitions of In the next phase, individuals need time to define,
roles and the search for employees who can fulfill each understand and improve their roles. As the first imple-
role in different ways. The cases Expert and Pioneer used mentation of roles is driven by concepts more than needs
similar processes and established an initial set of roles (if the transformation occurs on a cutoff date), during the
RADICALLY SELF-ORGANIZED 7

FIGURE 2 From employee to roles

FIGURE 3 The way toward holacracy: an overarching model

implementation phase, new roles must be created, and uncertainty, as it requires organizational members to
roles must be deleted, as they do not capture the purpose adapt their roles, behaviors and ways of working.
of the circle and/or organization. During the implementa- During the final phase, individuals are integrated into
tion phase, the process is static, as it is a new process that a holacratic system in which they are aware of role
must be learned and lived by the members of the organi- changes and continuous improvement. In the best case,
zation. During this phase, individuals become aware that individuals are able to search for roles and responsibili-
roles are not infinite, and certain roles must be eliminated ties that also allow them to fulfill their personal purpose
if their purpose has been fulfilled. This process can create in working.
8 SCHELL AND BISCHOF

In all cases, the disconnect between the role and Guinea Pig_I_3: Of course, we have different
human being could be observed as an area of tension roles in various circles. However, we are
among some employees, especially in cases that changed working across these circles, and we are still a
from a hierarchical system to a holacratic system with a team. We are working together because we
cutoff date, such as in the cases of Guinea Pigs and have the same topics.
Experts. We observed that the limitations on opinions
and ideas given their role were a challenge for some This finding indicates the disconnect between ‘role
employees. Roles must be aware of their responsibility and soul’ (Robertson, 2015). In combination with indi-
and purpose; thus, the person holding the role may no viduals being unaware of the purpose of the circles to
longer be a part of some discussions or may not be which they belong, this disconnect can create a struggle
involved in a certain area. Other employees prefer a task- for individuals in terms of stability and organization and
oriented role system and enjoy holding responsibility for requires a high level of self-leadership.
different roles. Moreover, we observed employees who
emphasized the opportunity based on the distinction Expert_I_4: It is helpful to look back from
between a role/function and the individual because it hel- time to time and ask ‘Why do we do this?’
ped prevent work issues from becoming personal. The purposes of roles and circles have to go
In summary, employees proceed through a multistage together.
process in which they first destroy their previous identity
and then have to redefine it. Here, it is particularly There is an opportunity for the appreciation of
important to develop an understanding of roles, their specific tasks. One employee mentioned that since the
functions and, especially, their purpose. transformation to holacracy, her function is no longer
overlooked.
A holacracy works as a system composed of different
From team to circle: affiliation circles, and the work regulates which circles are newly
formed and which are broken up. The circles can be used
The analyzed case studies differ in number and their for stability and orientation and should be scrutinized
understanding of circles. Based on the size of the through a continuous process. Nevertheless, the circles
organization and the business model, the number of cir- must create their own group identity. We observed that
cles ranged from three (Holacracy Evangelist) to circles do not work or function as teams. This observa-
44 (Guinea Pig). The circles were organized with internal tion provides information regarding group identity. In
functions, such as ‘communication and change’ or the first step, teams are broken up, and the individuals
‘administration.’ and external functions, such as ‘sales are distributed into roles and circles. In prior organiza-
and acquisition,’ ‘customer 1,’ and ‘customer 2’ in the tion models, a new teambuilding process would have to
cases of Guinea Pig and Expert or ‘geographic areas’ in be implemented under such circumstances. In contrast,
the case of Adapter. In five organizations (2 cases and the holacratic system assumes that the individual knows
3 supplementary), the circles were established by a best how to work and only regulates the making of deci-
cutoff date. sions. Thus, parallel processes must emerge when team-
Circles organize the collaboration between different work is needed. The holacratic system works when circles
roles, and the work of the circles is guided by their continuously evolve and meetings are used to make deci-
purpose and ways of using meetings. The progress of a sions. The circles are not intended to create teams, which
circle can be observed by the number and length of is a finding of our study. Meetings represent the elemen-
meetings and the number of timeouts during meetings tary tool used to control collaboration in circles, but
(roles can ask for a timeout to discuss the process of meetings are not sufficient to form a social group. The
the meeting). Changes in circles regarding their purpose, purpose determines the way of working rather than a
lead links and members are a sign of the stability of group/team identity. Alternatively, employees indepen-
the circle. dently search for others with whom they can build a team
if collaboration is required for a given project.
Expert_I_2: One agrees within a circle upon a
rhythm, but if it is obvious that we do not need
a meeting now, it does not take place. From set agendas to check-ins: meeting culture

Throughout the interviews, the employees did not use Roles are created in meetings, and tensions have to be
the terms ‘team’ and ‘circle’ synonymously, which could communicated in meetings. We observed during our
be because individuals have up to 20 roles, and circles observation of meetings and interviews that the meetings,
could include up to 45 people. Consequently, the team especially at the beginning of the transformation, are
effect was lost, and we observed that this resulted in the evaluated as highly formalized and, in part, counterintui-
loss of stability. tive. Furthermore, the high formalization of the meetings
RADICALLY SELF-ORGANIZED 9

and the limitation of interaction stemming from the which can prevent people from being involved and raise
agenda and focus on roles are associated with several expectations that people should not be involved in team
challenges and opportunities for individuals. Self- cohesion, which, in turn, can also affect organizational
organization generates a question among the circles commitment and could be an antecedent for ignoring and
regarding the usefulness of meetings and their frequency, reversing behaviors.
and each role is able to decide if he or she would like to
join in each meeting. Thus, each circle needs to determine
how to collaborate using holacratic meetings, resulting in Application of holacracy
different frequencies and meeting cultures in different
circles. In some meetings, only 25% of the circle members From all five cases and the supplementary data, we
participate. Other meetings include more than 30 mem- derived an overarching model consisting of three phases:
bers of the circle. the setup phase, the implementation phase and life in a
At the beginning of the implementation, the meetings holacratic organization (see Figure 2).
take a long time because the participants are not aware During the starting phase of the transformation into a
of the process, and the communication of tensions creates holacratic system, the focus of the organization is on
several challenges: establishing the new system, which includes changes to
the circles and the definition of new roles and responsibil-
Guinea Pig_I_9: I do not know how and when ities. It can be seen as a distribution of individuals in roles
I can or should communicate my tensions. and transforming a pyramid into a circle. During this
Therefore, I found the solutions to my prob- time, there is a low initial understanding of the function-
lems together with other team members I ality of holacracy, of responsibilities and the work of
worked with before. roles and circles and, most importantly, of the mode
of operation in different kinds of meetings. We observed
Circles ask for the right to exist or undertake actions that employees could not learn how holacracy works
to adapt their purpose. Individuals take time to clarify from the constitution or role purpose but also by shaping
whether the tension is communicated in the right meet- the role, by attending tactical and governmental meetings
ing, communicate their tensions outside the meeting or and articulating tensions, and by deciding about neces-
give up. sary changes to the system or building new roles.
Considering the number of holacratic meetings, espe-
cially when an individual has several roles, the different Holacracy Evangelist_I_1: Holacracy has to
ways of conducting holacratic meetings are complicated be experienced, so you can truly feel it, and
for some members of circles. In particular, in those circles some questions can somehow not be answered
in which teams exist or if teams exist across circles, addi- out of the old system.
tional meetings were organized. These additional meet-
ings served the function of being creative and open to The starting phase included the breaking up of the
new ideas. Holacratic meetings are task-related, and the previous system (except in the case of Adapter), and new
other meetings are idea- or culture-related. working practices had to be trained. We observed a high
level of uncertainty during this phase.
Expert_I_3: I like things to be organized and In the implementation phase, individuals become
structured, and the holacracy meetings are increasingly familiar with the system and try to work on
very structured. Therefore, there’s no time for the system, with the goal of becoming a flexible and agile
chitchatting and is truly to the point and get- organization. As the organization is in a learning state,
ting things done. I noticed that many people we illustrate this phase in our model in Figure 2 through
struggle with it, especially when they have a conscious step-by-step changes in all areas. Tensions
facilitator who does not stick to the structure; become more obvious, and roles are able to communicate
so, if you think if you do it well, it’s truly their tensions actively. However, as tensions are identi-
good. If you do not stick to the guidelines, fied and communicated and roles are added or removed,
then it can be some a pain. additional types of learning and continuous adaptability
are required. Our cases demonstrate that during this time,
Holacracy organizes work through (highly) formal- learning patterns can also be observed, and these focus
ized meetings. By dividing the meetings into governance on organizing a functioning system in which individuals
and tactical meetings, they provide a clear structure and and teams are able to work.
divide the processes into ‘working on’ the organization
and ‘working in’ the organization. Additionally, the Supplementary data_I_3: You can change
meetings provide ways to make decisions but do not offer management or inform or train people.
room for collaboration and creative processes. Here, we Holacracy you learn first when you live within
observe a clear separation between person and role, it. All the rest is for nothing. You can plan it
10 SCHELL AND BISCHOF

for a year. You will learn it only in the doing. processes and collaboration and decelerate productivity.
In addition, everybody says this; this we real- The high amount of independence and self-leadership can
ize now. lead to conflicts. In this self-managing system, the role of
mediation and conflict management is missing and has to
In a holacracy, the purpose of the company should be be added subsequently.
clearly defined and drive the selection of its organiza-
tional members. Our cases demonstrate that during the Pioneer_I_4: We had some conflicts recently,
implementation phase, on the one hand, the circles’ and no one took the lead to solve these con-
purposes are shaped to increase identification with the flicts. Therefore, we booked a conflict man-
purpose at the individual and group levels. This process agement seminar for ourselves and learned
also occurs because in the beginning, the circles’ purposes how to solve such things.
were not clear and provided limited guidance. On the
other hand, during this time, new roles are created and In our cases, we observed that circles should work on
must be fulfilled. This means that the members of the their purposes for continuous improvement and to gain
organization must be able to adapt their own manner of agility. Every change in purpose must be learned by the
sense making and be able to continuously take on new members of the circle and will additionally affect
roles. the other circles inside the organization. Moreover, when
Especially during this phase in holacratic organiza- circles fulfill their purpose and are no longer needed, this
tional development, we observed that a competency of means a loss of responsibility and accountability and
particular importance is self-leadership, which includes comes with a search for new roles. Following this, we
self-management and self-motivation as well as commu- observe that a continuous reflection of individuals’ own
nication capabilities. identities and organizational identity occurs.
Since our research started not only with how the
Supplementary data_I_7: I truly believe that holacracy system works but also with how individuals in
social, communication and negotiation compe- particular deal with change in this context, we were able
tencies of people – well, negotiation to observe different phenomena. On the one hand, there
competence because everybody has to negoti- is a power shift within organizations, which is also signifi-
ate much more than before—increases a lot.” cantly related to the four ways of dealing with change.

Collaboration within a holacracy differs from that in

the former systems that the organizations used. The dif- The powershift
ferent meeting approaches and their structures and mean-
ings must be learned first. Under holacracy, all roles are responsible for decisions,
As the collaboration is organized into circles instead regardless of the hierarchical level. Organizations that
of teams, the perception of ‘oneness’ did not come up in previously worked with a hierarchical structure are
every circle. Identification is important because the experiencing a change such that currently, all role
higher the degree of identification with a social group is, leaders, rather than managers, are involved in the
the stronger the bonds of attachment to that group tend decision-making process. Responsibilities, rather than
to be, and this could be reason why during this phase, the hierarchy levels, determine the process. Additionally, the
values of the organization were challenged by some mem- path to holacracy requires a power shift, especially in for-
bers of the organization. Changes in roles and circles merly hierarchically organized companies (such as
were actively made and required much attention and Guinea Pig, Expert and the three cases presented in our
resources. supplementary data). Our observations at the team level
In the last phase of our model, life in a holacratic (circles) regarding the new locations of responsibilities
organization, the system works, and its adaptability is in and shift of power represent several patterns of behavior.
the DNA of the company. We illustrate this in our model In organizations that have established holacracy as a new
in Figure 2 through the continuous improvement of roles organizational system, we find at least three patterns of
and circles. On an individual level, members of the orga- behavior. Former managers or leaders currently fill the
nization are familiar with their roles, the mode of collab- roles of lead links and thus preserve a proportional part
oration and the system itself. Because of a high degree of of their authority.
self-leadership and self-management in the organization,
they are independently responsible for their own learning Supplementary Case 7: Lead links do priori-
and development. From time to time, every organization tize and decide over resources. This is also a
hires new employees. These employees cannot learn with kind of leadership, in a way.
other employees who were involved in the transforma-
tion. Instead, they must learn on their own. However, The second behavior is that former managers are
these additional employees disturb the established relieved to lose the burden of accountability, especially
RADICALLY SELF-ORGANIZED 11

over subordinates, and they integrate themselves into the observations, that old forms of meetings have been
system. retained and that the manager-subordinate relationship
has also remained, which we derive, for example, from
Pioneer_I_2: I am truly happy to see how the continued release of resources or from the behavior
everybody is taking responsibility for our of employees in continuing to go to their manager to
company and that it is not on me to decide agree on decisions. We also find indications at the team
everything as a board member. level, for example, the old teams will be retained instead
of using the new circles, which is associated with the fact
The third behavioral alternative is that persons who that the holacratic meeting forms are not used.
were not previously performing leading functions decline We define accepting and coping as the complete
new additional responsibilities. acceptance of the system and the adoption of that system.
This means that the individuals and the team try to
Pioneer_I_2: There are huge expectations on understand the system and learn to find their roles, build
everybody to take self-responsibility. identities and use self-management possibilities. If
enough individuals using this strategy are in a circle, it
These individuals only wish to preserve their account- can also be observed that this circle is faster than others,
abilities and expert position, as they were not in person- for example, in learning and implementing meeting
nel management for a reason. In organizations that forms, communicating and implementing tensions and
started within the first year with holacracy, we find the optimizing the flow of information with the entire
following two types of behavior patterns toward power: organization.
those who appreciate the evolutionary and self- We define self-correcting as adapting the system, after
autonomous characteristics of holacracy with a high a very short time, to the needs of the individual and the
degree of self-responsibility and those used to and social- team. This behavior includes a fast learning curve of
ized into hierarchical systems who search for hierarchy the system and the possibilities of the system, as well as
within holacracy. These individuals ‘detect’ shadow early adaptation, for example, through additional
structures and overlaps between role and person. meetings that allow collaboration or a reduction of the
At Guinea Pigs and Experts, 90% of the lead link meeting frequency.
functions are filled by former managers. In these cases, We define reversing as active resistance against the
there is the perception that management still exists, and system. Individuals who include this strategy actively
lead links are perceived as a type of manager or leader launch initiatives to return to the hierarchical system.
and treated as such. For example, after the last process Some interviewees reported that people who do not suc-
step of the tactical section, at the point when the decision ceed in this are also willing to leave the organization. If
should have been made, all eyes turned to the lead link many people who pursue this strategy are in circles, it
who was a former manager. We interpreted this gesture can also be observed that these circles do not keep to the
as adherence to the old structures and a hidden manage- meetings or do not document their results, which leads to
ment system. The function of rep links becomes even a worse flow of information within the organization.
more complex, and we observed some problems associ-
ated with how these roles should be fulfilled.
DISCUSSION
Guinea Pig_I_3: From my point of view,
many of the lead links and rep links have been Our findings show several challenges and opportunities
interchanged. […] The influence of the rep at the individual and team levels, and through our overall
links has to become larger. […] I have. model, we were also able to determine the outcomes at
the organizational level.

Four different ways of dealing with change on

the way to holacracy Theoretical contributions

Derived from the handling of power in the various orga- The starting point of our research was three research
nizations, as well as the findings from the analysis that questions: How does holacracy work? How does the
led to the process model, we were able to identify four change from a traditional organization to a holacratic
different ways of dealing with change: ignoring, reversing, organization take place? How do individuals experience
accepting/coping and self-correcting. their roles in the new organizational design? By answering
We define ignoring as negating the existing system these questions, we can also make numerous theoretical
and acting as if there had been no change in the organiza- contributions.
tional system. On an individual level, we derive this from First, we gain deep insides in a new form of an orga-
the fact that we have observed, especially in the nizational design, with a focus on self-management,
12 SCHELL AND BISCHOF

namely, holacracy. Holacracy is a highly formalized sys- of organizational members (Gioia et al., 2000;
tem with numerous rules, structured processes and Luhmann, 1995). Since this is a new system and the
decision-making processes that may be unknown to translation problem exists, it can create stress for
employees. The system is experiencing a resurgence in employees and lead to a continuous disruption of identity
practice and is being used increasingly (in pure form or formation (Abes et al., 2007; Ahuja et al., 2019). There
adapted), but empirical studies that provide deeper are many ideas and measures at the governance level to
insight into this organizational system are lacking so far mitigate this, but at the individual level, there is likely to
(Bernstein et al., 2016; Yugendhar & Ali, 2017). Our be a need for further ideas and measures at the human
study makes this contribution. We show theoretically but resource management level to help employees build their
also empirically the characteristics of the system and, new identities and find stabilizing elements (Burke &
even more, some challenges and opportunities that could Reitzes, 1981; Hackman & Wageman, 2005).
be identified. Organizationally, there are highly formal- Moreover, we contribute to collaboration aspects by
ized processes and procedures. At the team and individ- investigating holacratic organizations at the team level,
ual level, however, these can and are adapted over time, which is also influenced by the change from a traditional
depending on the attitude of the actors involved, and to a holacratic organization. The meetings in holacracy
adapted to the requirements of the organization. It focus on decision-making processes instead of collabora-
remains questionable whether this makes use of the tion. Therefore, identification processes are missing,
strengths of the system and the organization or whether it which can have an impact on team cohesion (Cohen &
is not rather the case that the system cannot unfold its full Ledford, 1994; Mathieu et al., 2015). We did not pursue
potential. There is potential for further research here. the topic of team cohesion any further in our interviews
Second, with our study, we investigated how because it only came up during the editing process. How-
change in particular is perceived and implemented at ever, there are first indications that team cohesion is a
different levels. Since this form of organization is challenge in this system, and new approaches may be
quite new, employees must first learn this form of needed to create and maintain it.
organization (Feldman, 2000), find their way around Our third contribution is that the four identifying
and, as necessary, improve their image as employees strategies for dealing with change provide initial indica-
(Robertson, 2015). We observed several practices that tions that there are different groups of people in organi-
individuals apply in the holacratic system to orient them- zations who deal with change in different ways. This may
selves and organize their work, even if they fill several also be an indication that there may be a fit between the
roles, for example, motivating themselves, being reflec- individual and the organizational form (Kristof, 1996).
tive, formulating concerns (tensions), finding a way to Our analyses and observations do not yet reveal any pat-
decide for or against new roles and maintaining social tern of age or gender, for example. Future research could,
contacts and personal networks. Some practices support however, use these indications quantitatively to question
stability (Feldman, 2000; Feldman & Pentland, 2003). the fit between the individual and the organizational
Additionally, organizations react by establishing parallel form (Kristof, 1996), for example, to identify the optimal
systems, for example, career, salary or tribe spaces, to individuals for organizational design. Furthermore, we
support organizational members. We conclude that on show that if too many people in a group who oppose the
the one hand, the change in the organizational design system are in a circle, this can also harm the whole
does not consider or irritate aspects of the culture of an organization in implementing the system (Aggarwal
organization, (Jones et al., 2005) which, on the other et al., 2017).
hand, leads to the fact that parallel systems can or must
be developed to give individuals security and thereby sta-
bilize the organization such that it can be agile again Practical implications
(if this is the desired goal).
Furthermore, we investigate the factors helping and During our research project, it became increasingly
hindering defining the roles of employees. The most clear that many organizations are searching for new
important influencing factors include the purpose of the forms of organization and that there is a strong need
role, the circle and the organization. This purpose can be for organizations to adapt to current social events.
evaluated as a stabilizing factor (Laloux, 2014) that fos- Implementing holacracy is one way to meet these
ters commitment to the organization (Mottaz, 1988), challenges. The holacratic organizational system prom-
which is also an important antecedent for identity ises higher levels of transparency, effectiveness and agility
creation (Fuller et al., 2003). We also find some factors (Robertson, 2015; Romme, 2015; Yugendhar &
hindering role definition, such as the perceived loss of Ali, 2017). Through a ‘constitution,’ power is formally
collaboration or personal (psychological) reasons given to the members of the organization. In our observa-
(Ravarini & Martinez, 2019). However, as holacracy is a tions, the question of how power is actually distributed,
newly established system, it is disturbed by the context, especially when property is tied to individuals, often
which also has an impact on the stability and orientation arises. Moreover, as lead links have power over
RADICALLY SELF-ORGANIZED 13

resources, a hierarchy still exists. If these positions are The current study suggests additional opportunities
filled by former managers, an additional shadow cabinet for future research resulting from the discussion above.
exists, resulting in the formal design and design in action Using this first empirical study as a starting point to ana-
falling apart. An awareness of this problem, continuous lyze this new type of organizational design (Fjeldstad &
questioning, recurring role clarification, or even a change Snow, 2018) allows us to delve deeper into contextual
in lead links could counteract this problem. factors and identify the building of individuals and teams
Through a (highly formalized) meeting structure, fast in which the individual is separated from the work that
decisions should be realized, and consent in decision should be performed. Moreover, at the team level, we
making allows a shift in planning and realizing work observed that the words ‘team’ and ‘circle’ are not used
(Robertson, 2015). The philosophy better a decision than synonymously, offering insights that individuals must
no decision is inherent in the system. How and if these search for and create their own team. Studying holacratic
promises are realized depends on the implementation and systems offers possibilities for future research concerning
realization of the system. An organization’s initial situa- team creation and self-managing teams (Erez et al., 2002;
tion seems to influence implementation, as underscored Manz et al., 2016; Neck & Manz, 1994). Since holacratic
by the following quote from one of our interviews: ‘I organizations are a minority, adaption is required in
would recommend the implementation of holacracy in recruiting (Noe et al., 2006), quality management
healthy organizations only.’ During the lifetime of (Boiral, 2011) and rules because the established processes
holacracy as a system, the pace is very fast, suggesting and requirements were not created for this type of organi-
that decisions and system adjustments, such as esta- zation. Legal issues of certified quality management,
blishing a new circle, can be made very quickly due to the corporate governance and reporting for holacracy are to
effective meeting structure and role competencies. This is be solved. These issues give cause for future investiga-
accompanied by more fluent communication, which, tions. Organizations use this type of organizational
however, can and must be constantly trained and design to become more flexible and agile. Future research
questioned, especially if there is no role clarity or if, con- could more deeply investigate outcome variables, such as
trary to the system, there are power concentrations and performance and innovation. Finally, the appropriate-
shadow cabinets. Coaches and trainers who continuously ness of holacracy for small or family businesses has to be
create an awareness of roles, communication, meeting evaluated and adopted.
structures and decision-making processes and who sup-
port individuals in coming to terms with different roles
are suitable. CONCLUSION
This fast change in working groups introduces
challenges to identify formation at the individual and In the conversation about new organizational forms and
organizational levels (Ashforth & Mael, 1989; Gioia designs, our research provides deeper insight into
et al., 2000; Tajfel & Turner, 1979), and these challenges holacracy. In particular, we show how a transformation
have to be captured by change management activities to the new organizational design can take place and how
with established coaching functions that enable individuals, in particular, deal with this far-reaching
employees to work under holacracy. The missing change to organize work in a new way. This important
‘personal space’ must be addressed independently by the topic, especially in the current volatile and ambiguous
organization since it is not represented by holacracy. This environment, has so far been brushed tangentially only in
can be represented by specific roles and responsibilities, the extant literature. As such, this study provides insight
for example, in the circle responsible for human resource into holacracy and a new perspective on the change to
management or by external coaches. Circles can also organize work and structure organizations.
form an identity that can support individual members. As such, this study, as one of the first empirical stud-
ies, provides a starting point to delve deeper into the new
forms of self-organization and holacracy in particular.
Limitations and future research We hope that our study will inspire further research and
stimulate discussion on organizational change to generate
First, we set boundary conditions by investigating organi- a deeper understanding of holacracy and other organiza-
zations applying holacracy as a system and no other tional forms.
holacratic organized systems, such as sociocracy, or agile
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