Sociocracy In A Nutshell

Sociocracy is based on mid-nineteenth-century ideas around applied sociology. Initially, a sociocracy was defined as a government applying what it had learned from sociologists to create a society that benefitted everyone. As a result, societies could avoid autocratic rulers who would only act in their own best interests. Sociocracy therefore is a governance system that helps organizations self-govern based on values of equality.

Understanding sociocracy

In business, sociocracy is a systems-based governance approach that advocates employee empowerment, autonomy, and self-expression. This allows employees to work in alignment with company goals and strategies while maintaining their individuality at the project level. In this way, a sociocracy is a participatory form of decision making that differs from the traditional vertical (hierarchical) management system.

Sociocracy is based on certain methods, principles, and structures that create resilient and coherent systems. In the next section, we will discuss these in more detail.

The three pillars of sociocracy

Sociocratic principles are realized through three key features, known as pillars.

1 – Decision making by elected consent

Decision-making is performed by consent, with all circle members engaged collaboratively to choose an elected person from among their peers. 

Each member argues in favor of the person they consider the most competent, and each member must provide consent for the same individual to reach group consensus. However, consensus in a sociocracy means that no circle member feels the need to oppose a decision by way of a reasoned objection.

Note also that decisions are not made by an authority, traditional hierarchy structure, or majority vote.

2 – Circles and double-linking

The organization of working groups, units, or departments is represented by nested, hierarchical circles. Here, hierarchical refers to domains of authority. There is no relationship to control, power, or coercion. 

During meetings, circle members function as equals and each circle elects a secretary, facilitator, chair, and leader. Day-to-day decisions are made by the leader, but the leader is governed by a policy formulated by every member of each circle. 

Each circle is linked to both a parent and sub-circle via a double link, otherwise known as an overlap. This overlap occurs when one or two members of one circle become elected delegates in the parent circle. In other words, they are full participating members of both circles. Delegates work closely with parent circle (operational) leaders to ensure that their specific needs, goals, or proposals are duly considered.

3 – Feedback

Feedback is a critical part of all activities and roles at each level of the organization. It should be given by all employees and not concentrated on those with seniority or title.

In a sociocracy, feedback takes the form of meaningful information about the functioning of an organization. It should be collected systematically and cyclically using the lead-do-measure principle:

  • Leadplan a meeting and then make policy. This includes the collaborative creation of an agenda and even trivial details such as where and when the meeting will take place.
  • Do – perform the meeting and carry out policy. Sociocracy advocates the use of rounds, where each member of the circle has a chance to speak once per round of discussion. This fosters mutual understanding and teaches employees listening skills.
  • Measure – evaluate the meeting and evaluate policy. Evaluating the effectiveness or quality of the meeting itself is a core component of sociocracy. The secretary of the circle should record the minutes and suggest issues or topics for discussion in subsequent meetings.

Feedback should always focus on whether the function in question was able to move the circle closer to its goals.

Key takeaways:

  1. Sociocracy is an organizational governance system with a focus on equality and continuous improvement.
  2. Sociocracy empowers employees to make their own decisions while maintaining an alignment with company goals and strategies.
  3. Sociocracy is based on three key pillars: decision making by elected consent, circles with double-links, and continuous and collaborative feedback.

Read Next: Business AnalysisCompetitor Analysis, Continuous InnovationAgile MethodologyLean StartupBusiness Model InnovationProject Management.

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Organizational Structure Case Studies

Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
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