The Proliferation of Formal Structure

Funktionen und Folgen holakratisch formalisierter Organisation

Abstract

This article examines the functions of the management concept Holacracy and its consequences for implementing organizations. Data collected in five holacratic organizations are used as the empirical basis of this analysis. The theoretical foundation is constituted by Luhmann’s concept of formal organization. The implementation of Holacracy in organizations is supposed to not only weaken isolation effects of division building, but to also counteract the filtering of information caused by hierarchy. This is achieved through a strong formalization of the organization. Unintended side-effects are among others the proliferation of formal structure, the insecurity due to the rapidly changing formal structure, the possibility of work withdrawal enabled through a variety of roles, a reduction of initiatives beyond the formal structure and a rigidity of the organization’s framework due to holacratic principles.