Holacracy and the Law
Delaware Journal of Corporation Law, vol. 42, issue 3, pp. 619-686, 2018
69 Pages Posted: 6 Oct 2020 Last revised: 9 Oct 2020
Date Written: 2018
No law requires companies to have CEOs, officers, supervisors, chains of command, or even employees. But traditional managerial structures are so ingrained in our political economy that legal doctrines take them for granted. What if they were to disappear? Under holacracy, a new version of participatory management adopted at companies like Zappos and Medium, companies are replacing managers, organizational charts, and subordinates with governance circles, roles, and lead links. The promise of holacracy is a system of management that devolves responsibilities to teams, empowers workers to act freely within specified zones of authority, and energizes the entire organization around an evolutionary purpose. This Article takes holacracy’s fully imagined approach and asks how current law would respond. Looking at corporate law, fiduciary law, labor and employment law, contract law, and criminal law, the Article breaks down the legal and economic assumptions about traditional firm hierarchies and then contemplates how we can reconceive existing law and policy to match the purposes of holacracy and its kin. Ultimately, holacracy teaches us not only about the possibilities of participatory governance, but also the extent to which we assume that hierarchy goes hand-in-hand with business entities.
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