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Myths Of Companies With No Management

There are a lot of creative benefits to alternative management structures, but there are some downsides too.

Myths Of Companies With No Management
[Photo: Flickr user Jim Pennucci]

By now you’ve likely heard about the trend of Holacracy, a nontraditional structure that essentially removes managers.

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Traditional management has a lot of negative connotations, from micromanagement and mismanagement to a lack of empowerment and a lot of bureaucracy. Those things detract from what modern companies, especially startups, need to function efficiently, which is speed and skill–everyone contributing at a higher rate and high level of responsibility. This has led to a number of companies adopting newer structures.

Medium, for instance, has adopted Holacracy successfully with its 90 employees. The company is organized in circles, and each circle has a purpose. Employees can choose which circle they want to work in. Zappos recently followed suit.

AngelList, a platform for startups, has a one-person startup structure where even the slightest form of management is discouraged and employees get to choose which projects they want to work on and how they will spend their time.

Software company Valve, with 400 employees, has created a self-management organization with no management or bosses, and people choose who and what they work on. It even has a fluid furniture layout where employees can actually move desks to be near a person they want to collaborate with.

Buffer has adopted a structure with no managers but with a structured advice process that allows employees to make decisions in their area as long as they seek advice.

There is some tremendous potential and benefits with these new structures: an increase in personal responsibility, distributed decision making, increased productivity and accountability, less bureaucracy, and a greater emphasis on ownership and contribution. Frederic Laloux, author of Reinventing Organizations, has also found that in these newer structures, people bring themselves more fully to the organization instead of just their professional selves, fostering a much more creative and collaborative environment.

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Still, there are downsides, especially when companies’ “no management” approach is not structured or thought through properly. Having no titles in your company should not be done just because it sounds cool, but because you believe it’s the right thing for your company.

Here are some myths of companies that have no bosses:

It’s Easy To Have No Bosses In A Company

It’s actually not easy to build a company with no bosses, for a variety of reasons. First, most people are hardwired into thinking that bosses are necessary, and they naturally look for people to guide them.

The concept of no bosses, no mentors, and no managers is a fairly new one, so it’s not yet well understood by many people. Be prepared for questions from employees, like:

  • How will promotions and pay raises work?
  • Will there be any form of mentoring?
  • How will dismissals work?
  • How will conflicts between teams work? Who will be the decision maker?
  • What about information flows and project management in general? How will all that get handled? Who will onboard employees and be responsible for their mentorship?
  • Who will I go to to answer any concerns or issues I may have?

Onboarding in companies that have adopted Holacracy takes a lot of time, so be prepared for the time investment if you go that route. It’s also a lot harder if you already have a traditional-management company and switch to a no-management structure.

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There are two components necessary to make something like this work, says professor David Bradford of Stanford Graduate School of Business: a company culture and strong norms of how people interact with each other. Newer management structures have an even stronger company culture; people know where they stand and where they are going, and have a strong sense of how to deal with one another. All this takes time to cultivate, and isn’t easy to build.

No Management Is Equal To No Structure

One of the most important things to understand is that no management is never equal to no structure. Ethan Bernstein, a professor at Harvard Business School, said in an interview that no structure devolves into chaos and politics very quickly.

With no structure, decision making can be more heavily influenced by informal biases, which does not make for a healthy environment. Removing a traditional form of management means you’re actually investing a lot more in understanding structure because the structure will replace some human management component. There is a lot of structure to think through when replacing bosses, and alternate ways of management have structure in place to handle all these scenarios.

No Management Means An Organization Where Everyone Is Equal

There is no completely egalitarian organization. There is always either a formally established hierarchy or an informal one based on peer powers and contributors and a lot of informal bosses. If you’re opting for the second kind, think through how it will work. There will always be people who have more or less power compared to the rest of the organization.

This is because some people have more expertise in areas than others, and having a few decision makers is absolutely necessary. Not having traditional management doesn’t necessarily equate to no titles, but it often equates to having almost no titles. There is almost always a C-level team present with, at the very least, a CEO and COO. At Medium, that team is called the General counsel circle.

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Management Is Always Bad

Management isn’t bad; bad managers are bad. Making management work comes down to good hiring. Management is usually synonymous with great leadership, being inclusive, putting your team ahead of you, being willing to take responsibility when things go wrong, giving credit to the team when things go right, and trusting and empowering them to work together.

Great managers do not make all the decisions themselves. They trust their team to make great decisions as well. Great managers do not just spend their time “managing” other people. At the end of the day, if you hire bad managers or more managers than you require, your company will not do well.

In conclusion, creating these structures is hard, but they can give a lot of surprising benefits if implemented well. Ask yourself why you would like to go for a completely no-management structure versus a traditional management one. Remember that you can always opt for hybrid structures, like keeping HR and finance under a more traditional structure, and the rest of the organization under less hierarchy. Don’t copy an organization blindly; what you choose should be unique to your company.

Romy Misra is the senior director of product at Visually, where some of her responsibilities have been building and scaling the operations and analytics teams. She has a passion for researching and studying organization structures.