Editor's Note: This is the first part in a series detailing ARCA's adoption of Holacracy as it's corporate organizational structure.
At ARCA, we pride ourselves on our willingness to experiment with theories and ideas, and on our ability to adapt to shifting circumstances. This creative spirit is captured in one of our four core values: We embrace change.
On July 21, we took embracing change to the next level. That day, ARCA officially adopted a new organizational structure called Holacracy. Even for a change-loving organization like ours, this is a big deal. As many employees at ARCA have noted, “this time, we only changed everything.”
Holacracy is described as “a comprehensive practice for structuring, governing, and running an organization.” It’s a system of distributed authority, and it allows each employee to self-direct his or her work. Authority is distributed by organizing the company around the work it does rather than the people who do it. Instead of job titles, employees are assigned to one or more “roles,” each of which has explicit expectations. Employees take action to meet those expectations in whatever manner they see fit, subject to the limitations of authority placed on the role by the broader organization through a “governance” process in which all employees participate. This self-direction goes so far as to replace traditional management—there are no bosses—to truly empower employees to plan and carry out work in their own ways.
All of this is accomplished through a set of rules, the Holacracy Constitution, within which the organization operates. These rules form the boundaries that allow distributed authority and self-directed work to be safe for the company and for its employees.
Many academics and business leaders agree that traditional top-down management is not an optimal structure for employee engagement, but most non-traditional ideas, like management by consensus, cause productivity and focus to suffer. The rules of Holacracy attempt to avoid the pitfalls of non-traditional management while reaping the benefits of self-direction and empowered employees.
It was these concepts that led Zappos, the world’s largest Holacracy, to implement the structure starting late last year. As Zappos CEO Tony Hsieh said, “[Holacracy] enables employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do.” This point builds on research showing that productivity per employee generally declines as companies get larger; Zappos believes that Holacracy can help prevent this phenomenon as the company grows by empowering all employees.
Our vision is that ARCA will experience the same benefits that Zappos expects: engaged, empowered, happy employees who work together to dynamically steer the organization to success. This is a big shift for ARCA—we did change everything, after all—but the outcome should be well worth it.
Continue to Part 2 of ARCA's holacracy journey.