Holacracy - The Dystopia Behind the Utopia

Introduction

Holacracy is celebrated as the holy grail of modern organizational structures. It promises flat hierarchies, more employee participation, and quick adaptability. But is it really the panacea for organizational problems, or is there more to it? In this blog post, we take a critical look at holacracy and why it might not be the ideal solution for every company.

The Costs of Team Structures

In Holacracy, teams are set up to act as small businesses within the company. Sounds promising at first, but the devil is in the detail. A team has to cover a multitude of roles, which exponentially increases the team size and thus the personnel costs. It becomes difficult to bundle the forces and focus on common goals. In addition, coordinating between many different roles presents a huge challenge. The end results are inefficient teams and high personnel costs, which is definitely not a sustainable business model.

The challenges for employees

Holacracy requires a high degree of self-organization and personal responsibility from employees. But what if not everyone is ready or capable of doing so? And what about the further development of employees? Often, they are the only ones in their roles within the team and risk deviating from the optimal development path. Furthermore, employees are usually not paid for their various roles, but for their main position, which can lead to a discrepancy between responsibility and compensation.

The Bureaucratic Monster

Ironically, holacracy, which aims for agility and flexibility, can lead to more bureaucracy. Because every team and every employee must understand a wealth of rules and responsibilities. These new layers of bureaucracy can slow down the company and counteract the actual purpose of holacracy. Holacracy even adds more meetings to everyday life.

The Loss of Social Coherence

The flat hierarchies and the decentralized structure of holacracy can paradoxically lead to ‘hidden hierarchies’. This creates a social complexity that can contribute to misunderstandings and conflicts. There are no clear lines of communication, which can promote a sense of isolation among teams and individuals.

Conclusion

Holacracy is not a one-size-fits-all solution and definitely not suitable for every company, not for every team and not for every employee. While the theoretical advantages sound attractive, numerous challenges and disadvantages arise in practical application. Therefore, companies should carefully examine whether this organizational model fits their culture, their goals and especially their employees. If the employees can already contribute, there is no need for Holacracy. However, if the employees cannot contribute, Holacracy will also not be able to save anything.

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