Do You Really Need a Boss?

The articles in the Are Bosses Necessary? section of this week’s What You Need to Know focus on radical business models that upend traditional hierarchies in favor of more individual autonomy. Some companies have successfully navigated without bosses, but there are also many failures with this type of structure.

For your initial post, provide your thoughts on whether or not we need bosses in companies today. With all the technological innovation available, can employees become their own boss and take ownership of their decision making? If the first person you speak with can make a decision or solve your issue, would that be better for you as a consumer? As a business employee or colleague? Is this even possible?

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Careers: Radical New Idea: Middle Managers — When experiments in self-management fall flat, companies give bosses another try

This spring, employees at tech firm Treehouse Island Inc. got something they hadn’t had in years — a boss.

Since 2013, the Portland, Ore., online coding school had been something out of an office drone’s fantasy. Under co-founder and CEO Ryan Carson’s leadership, staff worked four-day weeks, pitched in only on projects they felt like doing, rarely had to send email and had no direct bosses.

But as the business grew, enrolling upward of 100,000 students for its online courses and employing about 100 workers, some projects weren’t being completed and employees were unsure of their responsibilities. While it wasn’t weighed down by bureaucracy, Treehouse was stalled. And Mr. Carson, one of the most vocal cheerleaders for managerless companies, was forced to re-evaluate his allegiance to an organizational approach he had espoused in blog posts and interviews.

“That experiment broke,” Mr. Carson says. “I just had to admit it.”

For founders of upstart companies, reinventing management is often another way to prove that they can do business differently. Companies like Web retailer Zappos.com Inc. have made big bets on systems that allow workers to manage themselves without the aid of middle managers, while software-development methods like Lean and Agile place rapid problem-solving and empowered teams over traditional work hierarchy. But as they hit growing pains, some firms are rethinking the way they work.

Without managers to coordinate projects and supervise workers — cheering a job well done or doling out blame for missed deadlines — Treehouse employees weren’t as productive as they could have been, executives said. For a company that delivers courses in programming languages like PHP and Python to students interested in becoming software developers, that meant losing ground to competitors.

“There’s no real reason to push hard because no one knows about it,” Mr. Carson says. “We almost had some of our best people sort of getting used to the fact that not as much was expected of them.”

Dave McFarland was initially excited about Treehouse’s flat structure when he joined in March of 2014 as a teacher of JavaScript programming. Since the company allowed employees to pitch projects to the staff, he eagerly proposed things that interested him, such as a tool to evaluate what students had learned in their courses. Too few workers wanted to tackle the project, though, and without a champion in management, it went nowhere.

He ultimately stopped proposing ideas. “You just kind of felt like, ‘I can’t get these things done,'” says Mr. McFarland, now one of the company’s new managers.

Endless discussion sank other decisions, in part because employees on the company’s chat system weighed in on initiatives outside their area of expertise.

Questions about which subjects to teach would spark plenty of analysis and chatter but resulted in few answers or plans, says Michael Watson, the company’s finance and operations chief, estimating that decisions about things like Treehouse’s website design took twice as long as they should have. Mr. Watson adds that constant questions from staff on small-bore issues like expenses — questions they would have asked a direct boss, had there been one — ate into his time for strategic work.

Middle managers are often vilified as symptoms of corporate bloat, but things fall apart without them, according to Quy Huy. A professor of strategy at Insead’s Singapore campus, he’s studied middle managers at over 100 organizations and found that midlevel bosses deliver employees the resources they need for work and keep staff motivated and on task in uncertain times.

Employees “want people of authority to reassure them, to give them direction,” he says. “It’s human nature.”

Not all forays into self-management go awry. California tomato processor Morning Star Co. has no formal management, and employees rely on data points such as tons of tomatoes harvested per man-hour to remain assured that employees are doing their jobs, according to Paul Green. A longtime Morning Star employee, he now studies organizational behavior at Harvard Business School and observes the company for research.

Morning Star’s bossless workers are happy, according to Mr. Green, who adds that “it would be a stretch to say [it] has this perfect organizational system worked out.”

During a recent visit, he observed employees hesitating about shutting down a clogged machine; they sought input from more colleagues until someone seen as an important decision maker made the call, he says.

Treehouse’s executives say the company’s new bosses have brought benefits. Revenue has increased since Mr. Carson made the switch, as has the number of minutes of video courses the company produces, according to the CEO. Mr. Watson says the time it takes customer support employees to respond to students who have questions has dropped to 3 1/2 hours from seven hours. (Employees still work four-day weeks.)

Shifting to different forms of communication from the company’s homegrown messaging system has also cut down on what Mr. Carson describes as “black hole” discussions about decisions. With roles now defined and managers tracking assignments, email is proving useful.

Craig Dennis, a teacher at the company, says he likes having a manager to give him direction and praise for a job well done. He sometimes misses pitching colleagues on a cool project, but says life with a boss is “light years better.”

Credit: By Rachel Feintzeig

Word count: 887

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Who’s the boss?

In a holacracy, there isn’t one. It isn’t as flaky as it sounds–even larger companies like Zappos are kissing hierarchy goodbye

The first thing the advocates of holacracy would like to clear up is that, even though it’s a management philosophy about getting rid of managers, this doesn’t mean pushing a company into anarchy, or even hippy-dippy Montessori indulgence. Quite the opposite: They suggest holacracy is about companies growing up.

Take Phil Caravaggio, the founder of Precision Nutrition, a 60-person Toronto firm specializing in tailored life coaching. As his firm grew past the point where it could be run informally on the strength of personal relationships, he went looking for a way to structure the company without setting up yet another deadening corporate hierarchy.

His search led him to holacracy, a governance method that emerged from a software firm in Pennsylvania, of all places, over the last decade. Since then, holacracy has racked up a number of big-name adherents, most notably Zappos, the 1,500-employee, Amazon-owned online footwear store, and the chatter has been growing.

“It’s a system for giving everyone real clear autonomy without everything devolving into chaos,” explains Caravaggio, speaking over sparkling water in a corner of the Soho club in downtown Toronto.

Caravaggio might be said to head up the firm, though this is where things get fuzzy, because in addition to rejecting hierarchy, holacracy also eschews job titles. When pressed, he says he’s technically the “lead link of the general company circle”; one senses that he’s had a lot of practice explaining this to people.

In a holacracy, the organization is grouped into a series of concentric, autonomous circles–say, a finance circle, a marketing circle that might contain a web-design circle, all within a big circle that represents the company itself.

Every circle has a leader, who does many of the things a traditional boss does, like deciding on priorities and assigning who does what on the team. But no circle’s leader is allowed to butt in on the decision-making process of any other circle–even the smaller ones.

The way these circles speak to each other is one of holacracy’s hallmarks. In a traditional organization, the team managers typically represent their teams in meetings. But this puts managers in a bind: On one hand, they have to champion their team’s interests to the company; on the other, they have to be the ones to impose their superior’s decisions on their team–two roles that can be completely at odds. In a holacracy, each circle elects a representative who’s not the leader to sit in other circles, report on their team’s progress, and express its concerns to the broader company.

In fact, everything about the way a holacracy works is determined by a set of written rules. It’s all laid out in a detailed, but surprisingly concise, 30-page constitution: who is allowed to do what, how meetings are run, how decisions get made, and how to make changes to the rules themselves–which can be easily done, as long as the rule-changing itself follows the rules. Once a company signs up, the agreed-upon written tenets are the highest authority–not the founder or erstwhile CEO.

It’s as if, after centuries spent listening to complaints that government should work more like business, somebody decided that business should work more like government. Managers still have power in a holacracy, but it’s diffused and limited by the rules. “You can compare it to the way a society is run,” says Olivier Compagne, a partner at HolacracyOne, the consultancy founded by holacracy pioneer Brian Robertson. “You can have a dictator at the top, or a constitutional system that distributes authority. Executives have limited authorities, and they cannot trump it.”

As the story is told, Robertson developed holacracy after years spent running up against management as a software developer, only to start his own company and discover he’d replicated the exact same system he had once railed against. After sampling ideas from other management philosophies popular in the software world, like Agile and Getting Things Done, Robertson founded HolacracyOne in 2007 to promote the concept and offer software to support it.

The extent to which it will make a dent on the corporate world remains to be seen. Observers suggest that, predictably enough, it will be a better fit for some companies than others. “It tends to work well in situations where problems are difficult to define,” says Kenneth Goh, an assistant professor of organizational behaviour at Western’s Ivey Business School–for instance, he says, creating interactive media out of an alchemic combination of graphics, music, writing and programming. “Because the end product could be dominated by any of these elements at different times, team hierarchy needs to be flexible to respond effectively and promptly to feedback,” he says. “These are scenarios that are likely to thrive under holacracy.” Conversely, businesses that attack well-defined problems might benefit less, especially if they already have bureaucratic processes that might not embrace constitutional re-engineering.

For Caravaggio, the system’s value hit home in 2012, about a year after Precision Nutrition adopted it. The company was set to launch its professional certification program–which normally would have required oversight from senior executives. But the timing coincided with a few trips out of the country. Having a governance system in place that can grow and change according to its own rules freed up employees from the overhead of organizational bickering and the need for managerial interference. “We did $1.5 million in one day. It was the smoothest launch we’d ever done, and nobody missed me,” says Caravaggio. “To me, it was the demarcation point between being a collection of heroic individuals, and having a system that is trusted by talented people to do what needs to be done.”

Associated Graphic

Illustration Alessandro Gottardo

PHOTOGRAPHS (TAN) JOE TABACCA/AP; (RACHMAN) RANDY QUAN/THE GLOBE AND MAIL

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