Holacracy is a comprehensively designed internal management system that has received significant attention for its adoption at Zappos, Medium, and other tech companies. Holacracy replaces the internal firm hierarchy with a governance process that looks, in many ways, like a constitutional democracy. However, holacracy has a nomenclature all its own. CEOs hand over their power to a system of governance “circles”--teams that are assigned specific management responsibilities. These teams have the power to design and refine corporate policy within their jurisdictions. There is no overarching hierarchy to make ultimate decisions or overrule teams; instead, there is generally one ultimate governance circle--representing the entire organization--that has the final authority. The circles manage the assignment of roles to workers and oversee their performance. Ultimately, holacracy is a combination of democratic republic, Quaker meetinghouse, and tech-speak: the system is structured to encourage participation by all employees in governance through a carefully designed set of roles and opportunities.
Matthew T. Bodie, Holacracy and the Law, 42 Del. J. Corp. L. 621-22 (2018) (footnotes omitted)