What it means
In a conventional structure, a person holds a job title and a manager decides what that job includes. Under holacracy the unit is the role rather than the person: a role has a purpose, a set of accountabilities and a defined domain it controls, and one person may fill several roles across different teams.
Roles are grouped into circles, and circles nest inside larger circles, which replaces the usual reporting hierarchy with a hierarchy of scope. The reason organisations try it is speed and clarity of decision making.
In a traditional company, ambiguity about who decides what tends to push choices upwards, which creates bottlenecks at senior level and leaves people waiting for approval on matters they understand better than their manager. Holacracy tries to fix this by making authority explicit, so anyone holding a role can act within its domain without asking permission.
The mechanics matter more than the philosophy. Governance meetings exist only to change roles and accountabilities, tactical meetings exist only to move work forward, and any participant can raise a tension, meaning a gap between how things are and how they could be.
Proposals pass unless someone can show a concrete, reasoned objection, which prevents decisions dying from vague discomfort. The honest counterweight is that holacracy is demanding.
It requires real training, disciplined facilitation and a genuine willingness by founders to give up informal veto power, and organisations that adopt the language without the process usually end up with more confusion than before. Several well-known adopters have scaled it back, and many businesses take selected ideas, such as explicit role charters and objection-based decision making, without adopting the whole system.
Holacracy also changes how people are paid and reviewed, because there is no manager writing an annual appraisal. Firms using it typically build peer-based compensation processes and role-level feedback instead, which is additional machinery that has to be designed rather than assumed.
In practice
Real-world examples.
Example
A 45-person digital agency adopts holacracy and replaces its account director layer with circles for client delivery, creative and operations. A designer who holds the pricing role in the creative circle can now approve a quote up to an agreed limit without waiting for a partner.
Example
A manufacturing firm tries holacracy in its product development group only, keeping the factory on a conventional structure because shift safety requires a clear single line of command. After a year the product group keeps the role charters and the tension-based meetings but drops the full constitution.
Example
A software company abandons its holacracy rollout after eighteen months because the founders kept overruling circle decisions informally. The post-mortem concludes the failure was about founder behaviour rather than the model itself.
Case study
Seen in the real world.
The following is an illustrative and entirely fictional example. Larkspur Analytics, a 60-person data consultancy, moved to holacracy after growth left staff waiting days for approvals on routine client decisions. It invested in six weeks of facilitator training, wrote 140 role charters, and set up five circles with a documented process for changing any of them.
The first year was uneven. Meeting time actually rose while people learned the process, and three senior managers left because they could not see a career path without a title. But approval delays on client work fell sharply, and staff surveys showed a clear rise in the sense that people knew who decided what.
By year three Larkspur had kept the role charters, the tension process and the objection test, but had reintroduced a small leadership circle with explicit authority over budget and hiring. The illustrative lesson is that the useful part was clarity about decision rights, not the abolition of hierarchy for its own sake.
Watch out
Common mistakes.
- Treating holacracy as an absence of structure, when it actually imposes more explicit structure than a conventional organisation chart.
- Adopting the vocabulary of circles and tensions without the constitution, facilitation and training that make the process work.
- Assuming holacracy removes accountability, when the whole point is that accountabilities are written down at role level.
Questions
People also ask.
Does holacracy mean nobody is the boss?
No, authority still exists, but it sits with defined roles and domains rather than with managers who can override anything.
Is it suitable for any business?
It fits knowledge work with many judgement calls better than operations that need a single clear command line, such as safety-critical production or emergency response.
How is pay handled without managers?
Firms using holacracy typically design peer review panels or role-based pay bands, which must be built deliberately rather than left to chance.
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