Hiring is everything

Hiring is going to be different for companies that opt for non-management structures. A company will be attracting a certain kind of people and the chosen style of organization may not suit everyone who is looking to join.

AngelList’s COO Graham Jenkin says his company not only has no managers, but that discourage even the slightest form of management that may occur among peers. They even have documentation that outlines how to handle people who try to manage you on the job. Accordingly, the company usually attracts past founders and people with good persuasive powers who can encourage collaboration without management. Even Naval Ravikant, the CEO, doesn’t typically manage anyone – if he has an idea, he proposes it. But it’s only implemented if an engineer is persuaded to take it on. If not, it isn’t.

The hiring process for companies with non-traditional structures also tends to be long and complex. This is both because it’s harder to find a person who fits in well and also because bad hires within self managing organizations can go unchecked for a long time if there are no self correction methods in place.

One of the most important things to keep in mind is that when there are no bosses, peer relationships become very important. In self-managing organizations like Valve and AngelList where people decide how to spend their time and what projects they work on, they completely work off of the peer model to hold each other accountable.

“When it appears that someone isn’t working out, we’ll collect feedback from their peers in a more formal way, summarize that feedback, and deliver it (either their mentor will deliver it or I will),” Jenkin said about AngelList. “Depending on the situation, they’ll either be given that feedback and let go, or they’ll be given some time to show that they’re improving based on the feedback. 30-60 days.”

At Valve, peer reviews even go so far as to drive employee compensation. Valve’s economist-in-residence Yanis Varoufakis says that a large part of the pay is bonus based and is left to peer reviews to determine that portion. Payment contracts have a minimum pay segment in them and there is no upper level on bonuses.

It takes time

One key illusion about non-management structures people have is that they become efficient right away. If your company wants such a structure, that illusion needs to be shattered right away. Apart from the time spent just designing a non-management structure, there will also be a significant investment of time in maintaining it.

Brian Roberson, who first developed Holacracy at Ternary Software, has said that it takes 4-6 months for a company to become operationally grounded in its structure. But then it takes years, for the organization to come to some level of mastery. That’s for structures that other people have used and established. If a company wants to adopt its own, it will likely take longer to figure out all the details.