Management structure
Holacracy is a method of decentralized management and organizational governance, which claims to distribute authority and decision-making through a holarchy of self-organizing teams rather than being vested in a management hierarchy. Holacracy has been adopted by for-profit and non-profit organizations in several countries. This can be seen as a greater movement within organisational design to cope with increasing complex social environments, that promises a greater degree of transparency, effectiveness and agility.
Origins.
The term is found in print for the first time in the adjectival form "holocratic" in a book from the Collège de 'Pataphysique in May 1957.
The Holacracy system was developed at "Ternary Software" in Exton, Pennsylvania. Ternary founder Brian Robertson distilled the company's best practices into an organizational system that became known as Holacracy in 2007. Robertson later developed the "Holacracy Constitution" which lays out the core principles and practices of the system. In 2011, he released a Manifesto 16 of Holacracy which was later developed in June 2015, as the book "Holacracy: The New Management System for a Rapidly Changing World," that details and explains his practices. He claims that it resembles Scaled Agile Framework, Sociocracy and Nexus. Robertson claims that the term holacracy is derived from the term holarchy; the latter was coined by Arthur Koestler in his 1967 book "The Ghost in the Machine".
Koestler wrote that a holarchy is composed of holons (Greek: ὅλον, holon neuter form of ὅλος, holos "whole") or units that are autonomous and self-reliant, but also dependent on the greater whole of which they are part. Thus a holarchy is a hierarchy of self-regulating holons that function both as autonomous wholes and as dependent parts.
Influences and comparable systems.
Holacracy, which is an alternative to command-and-control, is one of several systems of flat organization. It has been compared to sociocracy, a system of governance developed in the second half of the 20th century.
Essential elements.
In contrast to the governance process, which is collective and integrative, each member filling a role has a lot of autonomy and authority to make decisions on how to best achieve his or her goals. Some have described the authority paradigm in Holacracy as completely opposite to the one of the traditional management hierarchy; instead of needing permission to act or innovate, Holacracy gives blanket authority to take any action needed to perform the work of the roles, unless it is restricted via policies in governance or it involves spending some assets of the organization (money, intellectual property, etc.) Holacracy is highly biased toward action and innovation: it defaults to autonomy and freedom, then uses internal processes to limit that autonomy when its use in a specific way turns out to be detrimental.
Holacracy specifies a tactical meeting process that every circle goes through, usually on a weekly basis. A particular feature of this last phase, known as "triage", is to focus discussions on the concrete next steps needed by the individual who added the agenda item to address his or her issue. The intention is to avoid large, unproductive discussions dominated by the louder voices.
Its developer was described by "The New York Times" as "a computer programmer with no training in human resources, let alone occupational psychology" and "The Wall Street Journal" identified the requirement for "every decision must be unanimous" as detrimental. They also reported that "Fifteen percent of an organization’s time is spent in" ($27 billion of them "unproductive") meetings and made mention of Robertson's book.
Contemporary practice.
In the U.S., for-profit and not-for-profit organizations have adopted and practiced Holacracy. Examples include Zappos. Medium used Holacracy for several years before abandoning it in 2016. A small number of research projects have reported the use of this style of management within the area of software development who promote its benefits for the search for greater innovation but raise concerns such as lack of usual structures and cultural habits around organising work, but more research is needed. 
The New York Times wrote in 2015 that "The goal of Holacracy is to create a dynamic workplace where everyone has a voice and bureaucracy doesn’t stifle innovation." The Wall Street Journal had already asked in 2007 "Can a Company Be Run as a Democracy?" (and conceded that it "sounds like a recipe for anarchy"). The answer reported came when 18 percent of the employees at an online seller which had adopted this "radical self-management system" quit.
Claimed advantages.
Various claims have been made in respect of Holacracy. It is said to increase agility, efficiency, transparency, innovation and accountability within an organization, and to encourage individual team members to take initiative and gives them a process in which their concerns or ideas can be addressed. Further that the system of distributed authority reduces the burden on leaders to make every decision and can speed up communications and decision making processes (but this can introduce its own challenges). According to Zappos's CEO Tony Hsieh, Holacracy makes individuals more responsible for their own thoughts and actions.
Criticisms.
Steve Denning warned against viewing Holacracy as a panacea, claiming that instead of removing hierarchy, decisions are funneled down from circle to circle in a clear hierarchy, with each subsequent circle knowing less about the big picture than the one above. He also claimed that the rules and procedures are very detailed and focused on "administrivia." Lastly, Denning added that the voice of the customer was missing from the Holacracy model, concluding that for agile and customer-focused companies such as Zappos, Holacracy is a way to add administrative rigor, but that Holacracy would not necessarily work well in an organization that did not already have agility and passion for the customer. HolacracyOne partner Olivier Compagne replied to those criticisms on the company's blog, claiming that Denning's criticisms misunderstand Holacracy.
Problems occur when transitioning to this system, particularly if older systems of management are allowed to become a hidden structure and system of power, in addition to this, individuals' space can become lost within the constant connectedness.
In moving away from Holacracy, Andy Doyle of "Medium" noted that "for larger initiatives, which require coordination across functions, it can be time-consuming and divisive to gain alignment" and that Medium believed that "the act of codifying responsibilities in explicit detail hindered a proactive attitude and sense of communal ownership". They also noted that the inaccurate media coverage of Holacracy created a challenge for recruitment.
At Zappos, about 14% of the company left voluntarily in 2015 in a deliberate attempt by Zappos to only retain employees who believed in holacracy.
Other criticisms include a "one-size-fits-all" approach, layers of bureaucracy and more psychological weight.
References.
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