Over the past 20 months I have been invited to more than 50 events to talk about our way of self organising Liip. Of course to elaborate on the Holacracy® model, but also on our culture. Here are the most common questions that come up almost every time.
1. Is everyone willing and able to work this way?
The simple answer: I guess so. We don't offer anything else anymore and it seems to work for all of my colleagues.
A more reflected response might be: Look at our private lives. We are perfectly capable of taking huge decisions by ourselves. We start families or sign big and long term mortgage contracts. Of course some do it better and easier than others. Nevertheless at the end of the day almost everybody by themselves. So why is it that we think employees cannot do this in the professional context? I'm amazed by how little trust some companies give their employees and force them to approve even small amounts of money they think needs to be spent. This example is one of the many signs of mistrust and a missed opportunity. If you want to be trusted as a company you have to trust your employees first. Not the other way around. I can only encourage companies to let go and trust their employees. Give them good tools to take the best decisions possible and let them do so. More independent minds will take bolder decisions than others. And at times when a bad decision was made, think of the money you saved for the non-existent bureaucracy.
2. But what if things goes south, mustn't there be a boss?
Yes, things go south. We make errors, everyone does and should now and then. And if you don't, you don't innovate anyway. Does this mean that one single person – usually a CEO – has to take responsibility for every decision taken? I'd say no. If we only talk about errors and bad decisions but not illegal behavior, THE ONE AND ULTIMATE RESPONSIBLE is not needed; but many. The idea of the all knowing and all anticipating hero is only kept up to justify overwhelmingly high monetary compensation; and this kind of heroes doesn't exist anyway. Of course we owe stakeholders to act in the best interest of the company. But we all do, not only CEOs. So we prefer to live a culture of trust and goodwill and not “safe my ass behavior” and politics.
We also found a way to deal with the interests of shareholders: We see them as landlords giving away a building for a reasonable rent. Shareholders don't interfere with what's happening within the building as long as it's used how it's meant to be. And if good money is generated within, renters can do what they want with it. The rent has to be paid first of course. A rent that covers the capital costs and the risks taken by the shareholders. So in that sense Liip is this building and Liipers are the renters. The rent is the dividend and the money made on top of that the bonus for every renter. Usually a 14th salary for everyone; that's our current objective. If Liipers are not able to pay the rent, that's the risk we take as shareholders as we would as landlords.
3. What about careers, how do I get ahead?
You won't become boss of anyone at Liip.
Of course the consequence of not having traditional hierarchies anymore, changes the way we look at careers. We don't offer this concept because we don't see an added value to it. We prefer to put everyone in charge and trust them rather than relying on “managers”. If you want to get ahead you can do this by getting better in your domain. You might then fill roles that have more impact. And this also gives you personal boost and recognition. A role gets you a good title, but you won't be able to rule over others and tell them what to do, or how.
I'm also quite sure that this inexistent career pressure frees Liipers to reduce their workload to better arrange their private with their professional life. Half of all Liipers work part time. This is quite rare for Swiss private companies.
4. You don't have money spending control, do you have a money printing machine?
Quite the opposite. We earn every Swiss Franc by performing valuable services for our clients. So it's the time spent on projects we can bill to them, there is no other revenue stream. And yes, there is serious competition.
By letting everyone in the company spend money if it serves the role/s they are in, we put people in charge. So automatically Liipers seek advice before spending money. Because they know they cannot hide behind a superior or a budget given months ago. This not only frees all employees and reduces bureaucracy drastically, it leads to better decisions. Of course transparency about our performance is crucial. Everyone has access to the company's numbers. And in an understandable way also for non accounting experts: We use the number of salaries the company can afford to pay over the past 12 months and over all forecasts of our current projects. If you see that we are at let's say 13.1 salaries (we contractually guarantee 13 salaries as employer) it might not even come to your mind to spend a lot of money on something not very important. When we are at 14.6 though, it might be a good moment to make investments or work on an innovation project. Nice side-effect: we don't need budgets anymore.
Of course it helps that we are self-owned. Almost half of the staff is also co-owner of the company. So there are no shareholders without a job at Liip.
5. How do you define salaries?
Right now we use a system we developed a while ago. It's based on “objective” parameters like education, experience plus soft skills and peer feedback. So called “Salary Determiners” —an ordinary Holacracy ® role— transform this information into numbers. These are then used to calculate one's salary. As you can imagine there is a bit of a paternalistic component in this process. We try to get rid of that and would like to establish a salary system that integrates even better with the Holacracy ® model. Even though we would still want part of the salary that is based on those classic parameters, I personally would like to experiment with badges for achievements, and connect those to a wage scale. HolacracyOne – the company behind Holacracy ® – defined an interesting concept: badges are given to others by the ones already having a specific badge. This ensures that badges don't lose value and enables domain experts to review their respective colleagues. More participatory or even democratic approaches don't seem to be healthy for the salary context, I guess. In any case not efficient.
What FAQ come to your mind? Let me know by leaving a comment!