Fascinating article by Inc’s David Burkus. Holocracy, Does it work in practice? (read more at inc.com)
To most business professionals, the idea of firing your managers sounds insane. However some of the most successful companies do in fact run manager-less, while others have found ways to push some of the management function down to the level of those who are being managed. In either case, more and more leaders are discovering that employees are most productive and engaged when they control their own destiny.
Employees at Valve Software don’t have to take orders from ‘the boss.’ That’s because, at the Bellevue, Washington-based company, there are no bosses to give orders.
As I write about in Under New Management, Valve is a company with no managers. They don’t believe in managers, or job descriptions. When new people join the company, they rotate around on various projects, talk to lots of people, and then decide which project (or projects) to jump into full-time.
Valve isn’t just a small handful of programmers working in a garage either. The company was founded in 1996 by Mike Harrington and Gabe Newell. The company grew organically and quickly based on the success of its critically acclaimed game series Half-Life. The company has grown dramatically from the original partnership to more than 400 people.
Ordinarily, that type of growth would require a fairly rigid hierarchy to manage everyone and keep them working in the right direction. But Harrington and Newell chose to ignore the traditional structure and to build something that would allow innovative and talented people to thrive.
In fact, what Valve employees work on changes so much each day that every employee’s desk is equipped with wheels and organized such that only two cords need to be unplugged before it can be rolled to wherever it’s needed in the shop.
There are lots of people, however, to tell them what they could do. Since Valve has no managers, all projects are started by an individual employee or a group pitching an idea and then recruiting a team. If enough people join the group, the project starts. Sometimes an individual employee is referred to as the ‘leader’ for a project, but everyone knows that this simply means that this person is keeping track of all of the information and organizing what’s being done — not giving orders.
There are also lots of people to tell employees how they’re doing. Valve may not have managers, but it does have a performance management system in place. A designated set of employees interview everyone in the company and ask who they’ve worked with since the last peer review session. They ask about their experiences working with each person. That feedback is collected and anonymized, and then every employee is given a report on their peers’ experiences working with them.
Valve also empowers all of its employees to make hiring decisions, which it describes as “the most important thing in the universe.” Valve attributes the success of its organizational design to hiring the smartest, most innovative, and most talented people it can find. The company’s handbook reminds employees, “Any time you interview a potential hire, you need to ask yourself not only if they’re talented or collaborative but also if they’re capable of literally running this company, because they will be.”
The leaders of companies like Valve have discovered something that researchers have known for decades: when individuals feel free to determine what they’re working on or how they work, they’re more motivated, more loyal and more productive. While Valve’s almost free-form structure may not be ideal for every company, the lessons learned here about improved productivity and engagement are of use to all.