Introduction to self-managing organizations
What are self-managing organizations?
Hierarchical structures with formal reporting relationships are widely established organizational forms and remain an integral part of most companies.
Over the last decades less-hierarchical ways of organizing have raised in popularity. Less-hierarchical work designs decentralize decision making power, by transferring management authority from upper to lower organizational levels. Examples of widely used concepts are self-managed work teams, employee empowerment initiatives or participative management.
Besides these incremental approaches towards less-hierarchical organizing, there are also organizational designs that seek a radical abolition of hierarchies in the organizational structures. Among these concepts are the so-called self-managing organizations.
A self-managing organization (SMO) is defined by three characteristics:
- SMOs practice radical decentralization of authority, which implies the complete elimination of reporting relationships between managers and subordinates.
- SMOs manifest a formal system with explicit rules and principles on how the decentralization is executed.
- Decentralization is practiced organization-wide, requiring that these rules apply to every member of the company.
Holacracy, Teal organization, Self-managing organizations … Where are the differences?
Other concepts frequently used in the field of radical self-management include Holacracy, Teal organization, Freedom-form organization or Boss-less firm.
The following table gives an overview over these different concepts.
Name of the concept | Definition | Compliance with the defintion of a self-managing organization |
---|---|---|
Holacracy | No predominant definition. According to HolacracyOne (2022) it is “a new way of structuring and running your organization that replaces conventional management. Power is distributed throughout a concrete organizational structure – giving individuals and teams freedom while staying aligned to the organization’s purpose.” | Radical Decentralization of AuthorityOrganization-wideFormal system |
Teal organization | No predominant definition. In teal organization self-management replaces the hierarchical pyramid. As a guiding metaphor, teal organizations can be seen as living systems with own creative potential and sense of direction (Laloux, 2014) | Radical Decentralization of AuthorityOrganization-wideFormal system |
Freedom-form (F-form) organization | A F-form is defined as an “organizational form that allows employees complete freedom and responsibility to take actions they decide are best” (Getz, 2009, p. 35) | Criteria not sufficiently specified |
Boss-less firm | At a boss-less organizations “identification and evaluation of promising opportunities and allocation of employees to those tasks are left to the employees themselves” (Ketkar & Workiewicz, 2021, p. 963) | Criteria not sufficiently specified |
How do self-managing organizations work?
SMOs vary in their approaches to the implementation of self-management. In most SMOs, teams are used as the basic structure. Instead of predefined positions and job descriptions, employees fulfil different roles. These roles are constantly redefined in terms of work packages and areas of responsibility. A common purpose and clear rules for cooperation provide a guiding framework for the employee’s actions. Trust, transparency, and the belief in the decision-making ability of employees are key values.
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Bernstein, E., Bunch, J., Canner, N., & Lee, M. (2016). Beyond the holacracy hype. Harvard business review 94(7), 8.
Hamel, G. (2011). First, let’s fire all the managers. Harvard business review 89(12), 48-60.
Martela, F. (2019). What makes self-managing organizations novel? Comparing how Weberian bureaucracy, Mintzberg’s adhocracy, and self-organizing solve six fundamental problems of organizing. Journal of Organization Design 8(1), 1-23.