Holacracy
is trendy. Rather than a traditional hierarchy with several levels of
management, holacracy requires a flat organizational structure that promotes
self-management. It is designed to empower employees to make decisions
without the direction or assistance of managers. Zappos adopted the
holacractic approach in the hope that employees would “act more like
entrepreneurs and self-direct their work instead of reporting to a manager
who tells them what to do.” Without managers, holacracy advocates assert,
employees have the authority to accomplish more and address issues directly.
Holacracy is not
without critics. Called “cultish”
and “unlikely
to work,” holacracy comes with its own constitution
and requires regimented meetings intended to produce innovation and
otherwise further the organization’s goals. Traditional human resources
decisions, like hiring, firing, and setting pay, are made by committee instead
of by managers. If more employees are needed, for example, a group or
“holon” will make staffing decisions, even if that particular “holon” does not
control or have a broad understanding of the organization’s overall business
needs. Holacracy is built on the theory that “holons” will work
seamlessly, and that conflict will be minimized by “tension
proceedings” in which each member has a chance to discuss problems within
the group until the group is satisfied.
Despite the discussion
and interest surrounding holacracy and the rise of other innovative
workplace management structures, it’s essential to remember that
employment law is built on the assumption that business decisions are made by
individuals who are empowered to bind an organization. “Holons’ may or may not
be deemed to be managers in some future case against Zappos, but somebody
at Zappos is going to be deemed responsible for the hiring, firing, or other
personnel decisions made by “holons.” Organizational responsibility and
liability are created by the actions and decisions of those designated as
managers and supervisors. Simply put, the legal buck stops somewhere,
with someone.
Most
employment disputes center on whether or not management authority has been
exercised reasonably and lawfully. That’s not likely to change because
organizations adopt new ways of doing business. Whether faced with a Faragher/Ellerth
affirmative defense in a sexual harassment action, a dispute over whether a
manager had authority to enter into a contract, or a simple determination of
exemption status under the FLSA, courts will continue to apply traditional –
very non-trendy – legal analysis when employees sue employers. We predict
that the holocracy constitution will not be consulted when those court
decisions are made.
Posted by Kate Bischoff
