The world of work is in a state of upheaval and numerous new working models fill the magazine pages of this world.  Thinking about this can’t be a mistake, because if you look at the Gallup Engagement Index 2016, you can see that one in five people are already thinking about quitting their job because of poor personnel management, rigid hierarchies, or even their manager’s greed for power.

The question arises: where has the emotional connection between employees and companies, which we still know from the generation of our parents and grandparents, been lost? And how can the old dogma be re-repeated?

Perhaps the path here is moving away from strict hierarchy processes and more towards transparency, participation and self-organization in the company. So it is precisely the attributes with which the currently increasingly popular and popular frameworks Of Sociology and Holacracy adorn themselves.

In the course of this question I met Dominic Lindner, the author of this blog and exchanged intensively with him in an expert interview. In the following article I would like to summarize our findings on holacracy and sociocracy as well as the serious differences and at the end give a self-test, which shows whether holacracy or sociocracy are better suited in your context.

What is sociocracy in theory?

The term “sociocracy” is composed on the one hand of the Latin noun ‘Socius’ (companion, ally) and the Greek verb ‘kratein’ (rule, lead). Sociocracy is therefore often referred to as “common domination” and aims at the equivalence of all parties involved in decision-making processes.

According to Endenburg, the sociocracy is made up of various basic principles that are closely linked.

The 4 Basic Rules of Sociocracy according to Gerard Endenburg
1.         The Consent governs the decision-making
2.         The organization is structured in circles
3.         There is a double connection of the circles
4.         There are open elections in the agreement for the essential functions

The ‘consent’ is an important attribute of sociocracy. It must clearly be distinguished from the democratic ‘consensus’, which is mainly about achieving the highest possible rate of approval in decision-making processes. The main feature of the ‘consent’, on the other hand, is the nature and quality of the veto against a particular decision. It does not matter how many people support the objection, but it is primarily a question of how much weight the counter-argument has. Finally, by modifying existing solutions or devising new solutions, an attempt is made to minimize the strength of the argument. A decision is therefore ultimately taken when there are no more significant objections. Although the procedure seems cumbersome, it has been shown in practice that decisions are usually taken more quickly and satisfactorily.

The district organization then provides that the implementation and implementation of the decisions made will be passed on to the individual circles, which in turn act according to the Konsent principle within their circle. Unlike hierarchical corporate structures, the sociocratic approach stipulates that there are no established top-down decisions, but that both employees and managers are divided into the appropriate circles in different assembled teams, where they act without hierarchy, self-determined and responsible.  The district organisation ensures that all participants in a group, but also as a whole as a holistic organisation, work together and in a structured manner to achieve the same goal and that important framework decisions are taken by mutual agreement.

Schematic representation of sociocratic systems (own presentation)

Sociocracy in practice

In the sociocratic approach, there is also a connection between the circles, even if each circle works relatively autonomously internally. However, the circles differ in terms of name, type and area of responsibility. For example, in a consulting company, it can look like this: In smaller working groups, decisions are made, such as the priority of the tasks to be processed and in what order they are then addressed. At the working level, however, there is also a discussion about when support for, for example, compliance with deadlines must be obtained or what information may be passed on to customers or colleagues. The next level includes the guide and structural circles. Decisions can be taken here on remuneration or the legal determination of co-determination. At this level, employees should discuss, for example, redundancies or the impact of wage increases on the profitability of the company on an equal and integrated manner. The last and most decision-intensive level is that of the strategic circles (top circle). All decisions made here lead to consequences for the company as a whole. Strategic decisions such as whether all incoming applications should be accepted or rejected according to certain criteria or whether cooperation with other companies would be useful are located here. At this point, the sociocracy distributes the individual levels of the company among the different circles and thus involves all employees in the decision-making processes.

The double link is created by the lower and upper circles always connected by two participants each. The two delegates always participate in the meetings of both circles and thus ensure the exchange of information. The double link thus makes it possible to make the whole process, including all circles in the sense of the sociocratic triangle of conduct, action and measurement, i.e. the basic tasks of each circle, more dynamic and transparent, since the process is never interrupted and the individual working groups are in constant exchange with each other.

Holacracy in theory

The relatively young form of holacracy was developed by american Brian Robertson and first presented to the public in 2007. It is composed of the two ancient Greek words ‘h’los’ (all) and ‘kratein’ (rule, lead), which, similar to the sociocracy, translates as ‘all rule’. This also explains the relationship to their role model.

Holacracy sees itself as a further development of the agile work process and self-organization including team decisions. Their organizational structure accurately defines roles and functional areas for employees.

In the form of hierarchically arranged circles and subcircles, task distributions are defined in a clearly structured manner. The so-called “lead links” (connection managers) are initially responsible for the establishment of a circle and then deal with the distribution of roles within the circle. They have the power to manage resources and assign or deprive people of a role. Through these methods, hierarchical structures are partly preserved in holacracy. In addition, in contrast to the typical hierarchical structure, this concept involves all participants at all levels of the hierarchy in a large group of companies. Nevertheless, each circle and each role has its own goal and assumes its own responsibility for the internal work process.

Schematic representation of holocratic systems (own representation)

Holacracy in practice

Just like the sociocracy, holacracy consists of various core principles, which I would like to explain in the following examples:

The dual linking,often referred to as ‘double-linking’, has the task of ensuring the connection in the form of communication between the individual circles. In the example of our consulting company, each circle has its own representatives who exchange all relevant data with their neighbouring districts in constant contact. For example, when deciding on the weighting and order of processing tasks, an overview of the deadlines for each project and contract must be obtained, which is managed by the neighbouring district.

The second pillar of Holacracy is the separation of operational and control meetings. The operational part corresponds to the day-to-day business for which the individual circles organise themselves autonomously by specifying areas of responsibility and tasks. In the example of the consulting company, this could be, for example, the day-to-day tasks of the employees. The steering meetings, at which representatives of several circles meet regularly for meetings, are superior to this, e.g. to exchange goals or strategy ideas. Within these meetings, it is then also ensured that processes and structures are clearly defined and regulated, so that each team can act in an effective manner, i.e. can process applications or answer customer questions and do not have to feel exposed to obstacles, such as the lack of relevant information.

The distribution of roles is primarily about drawing a clear dividing line between ‘person’ and ‘role’. Instead of permanent job titles, the concept provides for employees with different responsibilities (e.g. “employee for social web strategy and company website” instead of “online marketing manager” in the consulting company. Responsibilities are thus more clearly identifiable and misunderstandings can be reduced.

Dynamic control is the fourth and final pillar of holacracy. It means that each circle organises and controls its own decision-making process internally. It is not a question of making the one flawless decision, but rather of developing viable and also changeable solutions. Within our consulting company, for example, this could mean that it is not decided to reject too small orders in principle, but that a list of criteria is drawn up on the basis of which decisions on the acceptance of projects are made. In this way, the acceptance of a small commitment may develop into a larger mandate in the future. In these control decisions, every person has a right to vote, in the spirit of the holacracy concept, and thus has the opportunity to participate in existing strategy structures or to make a new argument at any time.

Differences between sociocracy and holacracy

Despite many similarities and overlaps, there are also differences between the two concepts.
For example, sociocracy is often seen as the more flexible model, while holacracy involves stricter and more complicated procedures, but it also has a stronger structure.

The design of both concepts also differs in the circular model construction. In the case of double-linking, the sociocracy is based on a sole exchange of upper and lower circles. The holacracy, on the other hand, also provides for a connection with neighbouring circles.

In addition, it divides responsibilities between the individual functions and is delimited from the individual, so that responsibility is always tied to the respective role. The sociocracy, contrary to that, shares a person in each role, thereby blurring the line between individual and competence.

The role distribution in the circle is taken over by the lead link, within the holacracy. In addition to this power, it also has the possibility to dismiss employees from a role without having to obtain the consent of the Consent, as provided for in the sociocratic approach. This makes the role of the lead link more concrete than that of the sociocratic leader and, as a result, the holacracy less equal.

There are also clear differences in the area of decision-making. If the veto is vetoed and this objection cannot be remedied within a decision-making process, the discussion, after the sociocracy, must be handed over to the next higher circle and adopted by it. The holacracy, on the other hand, leaves the negotiation in the original circle, but relies on an exchange of the moderator by that of the higher circle.

In principle, it must also be distinguished that the sociocracy operates as an international community and operates under an umbrella organisation, while holacracy is bundled under the ‘Holacracy One’ association alone and, in contrast to the sociocratic approach, also offers regulated certifications. Due to the close relationship between the two forms of organisation, it is only possible to determine which concept is better suited to which type of group.

Conclusion: Which framework suits you?

Sociocracy and holacracy are quite interesting forms of organization. Both aim to increase employee involvement in the decision-making process of companies, and could thus increase agility, increase productivity and employee satisfaction, and speed up judgment.

In addition to these opportunities, however, the risks involved in such an introduction must not be neglected. In order to meet these challenges and implement the use of a new, empowering leadership concept, it is therefore important to develop a common vision so that everyone can work towards the same goal. The most difficult task in this complex process is the redistribution of power, which, however, is usually well implemented through openness, willingness and the assumption of joint responsibility of all parties involved.

Take the self-test!

Whether one of the two frameworks is suitable for your company and a realization makes sense is not so easy to judge. In the course of my work I have therefore developed a self-test, which you can download here for free.

Download Self-Test (click here)

The article is an excerpt of my student housework on “The Nature of Sociocracy and the Differences to Holacracy”. If you would like to exchange information with me on the subject or read my elaboration, please feel free to contact me (LinkedIn) or via email to:

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Verwendete Quellen anzeigen

Ayberk, E. (2016), “Because Leadership Must Change: Tasks and Self-Understanding in the Digitized World”, Springler Gabler Verlag, 1st edition

Geschwill, R./Nieswandt, M. (2016), “Lateral Management: The Principle of Success for Companies in the Digital Age”, Springer Gabler Verlag, 1st edition

Gordon, G. (2016), “CSR and Sustainable Innovation: Sustainability through Social, Economic and Ecological Innovations”, Springler Gabler Verlag, 1st edition 

Hofert, S. (2016), “Agile Leadership: Simple Measures for Better Teamwork, More Performance and Greater Creativity”, Springler Gabler Verlag, 1st edition

Austria, B./Schröder, C. (2016), “The Collegially Led Company: Ideas and Practices for the Agile Organization of Tomorrow”, Vahlen Verlag, 1st edition

Robertson, B. (2016), “Holacracy: A Revolutionary Management System for a Volatile World”, Vahlen Verlag, 1st edition

Peasant Enemy, F., “2nd Rule: The Circle Organization”, date unknown;

Peasant Enemy, F., “3rd Rule: The Double Link”, date unknown;

Peasant Enemy, F., “4th Rule: Sociocratic Choice”, date unknown;

Brinsa, M., “Holacracy: The Hierarchy of Circles”, 01.09.15;

Dikmans, S., “Rigid hierarchies? No, thank you!”, date unknown;

Franke, M., “Holocracy: A company without hierarchies – reality or myth?”, date unknown;

Gertz, W., “Holakratie says what to do, not how”, date unknown;

Hassecke, J., “From Theory to Practice: Sociocracy in Business”, 16.12.11;

Krämer, C., “Empowerment and Sociocracy: a Model of Implementation and Method for Organisations Concrete”, 10.09.15;

Oestereich, B., “Two organizational models in comparison: holacracy and sociocracy”, 31.03.16;

Oestereich, B., “Connected in the Consent – What is Sociocracy?”, 18.05.15;

o.V., “Comparison of Sociocracy and Holacracy”, date unknown;

o.V., “Sociocracy”, date unknown;

Rassek, A., “Holocracy: Effective without boss”, date unknown;

Wiehle, H., “Holacracy – self-organization for all”, date unknown;

Zeuch, A. (2016), “All power for no one. Awakening of the Corporate Democrats”, Murmann Publishers GmbH, 1st edition

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Katrin Balabasov ist Studentin der Internationalen BWL an der Hochschule Fulda. Auf den Themenbereich Agilität mit besonderem Hinblick auf Soziokratie und Holacracy ist sie durch eine Studienarbeit aufmerksam geworden. Schnell erkannte sie das Potenzial und auch ihr großes Interesse für die neuen Frameworks. Nun plant Sie auch ihre Abschlussarbeit in diesem Themenbereich zu verfassen.

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