Holacracy Community of Practice Archive, 2015-2019 Community Holacracy Web Site

Transcript: The Partnership Circle as Internal Staffing Firm - Part 2 A Conversation with Mike Williams, CEO of the David Allen Company & HolacracyOne Partner Tom Thomison, 09-11-12

Below is the transcript from the 9-11-12 Partnership Circle (Part 2) call with Mike Williams, President & CEO of the David Allen Company, and HolacracyOne Partner Tom Thomison.  This was their second dialogue on the Partnership Circle, and they explored how compensation, performance evaluation assessment, and professional development are currently being energized and innovated through the practice of Holacracy at both the David Allen Company and HolacracyOne.  


Deborah Boyar: Welcome everyone. I’m Deborah Boyar, Host of HolacracyOne’s Community of Practice, and I would like to introduce you to our conversation partners in today’s follow-up call on the Partnership Circle. After our first call on this topic last month, our guests expressed a desire to continue delving into this rich topic, so we’re delighted to welcome them back again today. Mike Williams, President and CEO of the David Allen Company, brings 22 years of training and leadership development to his many roles at DavidCo, which include Lead Links to both the GCC and Partnership Circle. With a long track record of developing organizational talent, Mike previously served as a senior executive at GE Healthcare, where he led major efforts in employee engagement. He also developed a curriculum for teaching GTD® to children. Welcome back, Mike! It’s an honor and pleasure to see you again here.


Mike Williams:         Thank you. It’s good to be here.


Deborah Boyar:       Yes. Our other guest needs no introduction to our regular listeners, but for new folks tuning in, I’m delighted to introduce to you Tom Thomison, co-founder of HolacracyOne and Lead Link to our Application Circle. A seasoned entrepreneur with three decades of organizational experience, Tom helped grow several startups and founded four companies. He has a unique capacity to clearly language the complex insights gleaned from his extensive work in the trenches with organizations adapting Holacracy, and that’s in fact where he and Mike first met, at the David Allen Company as they began implementing Holacracy over a year ago. It’s an honor to work with you, Tom, and wonderful to have you back, Mike. I’m happy to turn the call over to you both right now.


Tom Thomison:        Thank you, Deborah.


Mike Williams:         Thank you.


Tom Thomison:        Thank you as always for the introductions. Honored to be here and great to have you back, Mike. Really appreciate coming to round two on this topic.


Mike Williams:         Good to be here.




Tom Thomison:        Yes, thanks. We had kind of a full range of topics and discussions last time around on the Partnership Circle and Partnership matters – or the People Circle, as some organizations call it, and I thought we would dive into a few more specific topics this round. To kind of get us started just so folks can get oriented to what we’re talking about, this issue has to do with the people issues. So often, we talk about how Holacracy is not about people, Holacracy organizes around the work, not around the people.  And so, that’s all well and good, but people still show up of course, and energize all the roles, and do all the work of the organization. So where are they  – what do we do with them?  That gave rise of course to something we call Partnership matters. The Partnership Circle actually comes right out of the Holacracy Constitution (Section 5.2). Issues dealing with the people come from the Constitutional reference that those that ratify the Constitution maintain the authority to hire, fire, and deal with matters relating to people, employees, partners, and members. So the ratifiers of the Constitution can decide how to deal with those matters, and since the ratification of the Constitution usually is at the Board or CEO level, the Board decides how it wants to deal with the people issues, and oftentimes that takes the form of spinning up a Partnership Circle or a People Circle to deal with these issues. I like to think of it simply as an internal staffing agency, a circle whose work is to deal with how do you acquire or/and maintain really good folks well-suited for the purpose of the organization.


          That’s kind of where we’re at. We’re talking about the Partnership Circle. As I said, some organizations changed the name, which is just fine, to People Circle. Some have changed it to the Membership Circle. So there are all kinds of ways of doing that. The People Circle in DavidCo’s case hangs off of the Board, and deals with matters relating to compensation, performance, employee acquisition, recruiting -- all of those kind of matters, and we talked about several of those last time.




So on this call I’d like to start with compensation.  Mike, I know you guys have begun to deal with shifting how you hold and think about compensation in a Holacratic system as opposed to a conventional system, and I kind of see that there are two ends of the spectrum. On the first, when folks begin to practice, of course everything is as it was with a conventional compensation system; oftentimes tied to a particular job description, oftentimes tied to a particular market rate for that job position, and maybe with some classic banding or tiers around compensation. So that’s typically what we find in most organizations when we start to practice Holacracy, and that serves for a while, but it’s also the source for some interesting tensions around how do we shift compensation systems to be more aligned with Holacratic principles?




Then we have the other end of the spectrum, which we have talked a whole lot about on a lot of different calls, which is HolacracyOne’s compensation system, which is all partner-based. We are not dealing with employees and employee compensation or W2s. We have no structured compensation that’s tied to a position. It’s all partner-based, K1-based partnership compensation. So that’s the other end of the spectrum, and then in between there are all kinds of varieties of ways of addressing this issue. So Mike, I thought we’d just kind of start here with how you guys are dealing with compensation right now.




Mike Williams:         Very good. To first set a little context, we tend to be classified largely as a professional services organization providing training and consulting to other companies, so I think most of my comments will be kind of from that space. So, before I go right into compensation, I’d like to share some higher-level framing about Holacracy to ground some of the stories I’ll tell. When the David Allen Company became a Holacratic organization, the one thing I like to try to articulate to people is that it’s almost like being acquired by a different company, where you have to understand the new rules of the company. All companies have rules and games, and I always encourage people to understand the game that they’re signing up for and then within that, you understand the rules of the game and stuff like that. So whenever you start like we did with an existing employee pool, pretend like you were acquired, and you have a new game to sign up for. There is a persistent and constant learning and reeducation cycle that’s going on as we do this. So I just position that in the spirit of Holacracy, which is really good at managing a lot of these. It gives you a pathway to manage a lot of the tensions that come up in this system. When we launched the Partnership Circle, then you’ve just created a new structure to process new and old tensions that were in the organization.


And there also Holacracy is very good. It’s almost like Agile Programming or a Lean Startup where you’re always testing a working hypothesis. Everything’s a draft. So that’s my preamble.


Tom Thomison:        Right, everything is a draft.




Mike Williams:         And now on to your specific question regarding compensation. Because we started out in a compensation state where we had jobs and job descriptions, then based on those job descriptions, we got the market value for those job descriptions and then set the market rate. Since then we’ve moved, and advanced the conversation to being a little more robust in understanding the roles and accountabilities, and then within those roles and accountabilities, we’re starting to tease apart the magnitude of impact of the roles and accountabilities. There is some conversation going on there. Then what we do with those roles and accountabilities to determine what we’re going to pay people is this:  our current process involves using a third-party specialist in compensation, and we engage this person at least once a year. We’re figuring out if we need to do it more often, but at least once a year he provides input based on the very clear roles and accountabilities (which come out of GlassFrog) for an individual, and we try to go to a market assessment and get some information back, as well as use our business rationale based on the value created for our business to come up with what we deem a fair compensation for an individual.  So we do use the information from GlassFrog. We’ve got a couple of step process to get multiple perspectives on that, and then from those multiple perspectives, we determine a compensation rate for the individual.


Tom Thomison:        Yes. It’s interesting that with GlassFrog you get a much more concrete documentation of what a person is actually doing instead of a specific one-to-one correlation of a job description or job position and compensation.  With GlassFrog, you can begin to get an aggregate view of the roles that specific individual fills, and then the accountabilities associated with those roles, and then tie all that back to an adequate compensation for an individual of that caliber filling those type of roles, which is I think exactly where you guys are at. With the clarity that you now have with about 18 months of practice under your belt, and roles and accountabilities, you can begin to start tying back the compensation amounts to both of those activities, as opposed to the job position or job description.


Mike Williams:         Yes and what’s in that dynamic, then tensions at the GCC side of the house, where the works gets done, impel that circle – and every circle -- to make sure they have all the roles and accountabilities entered into GlassFrog. So it starts linking the two together.


Tom Thomison:        Yes. Yes, absolutely. I like that tie-in because it has teeth.  In GlassFrog, the accountabilities show up; that becomes one of the tensions, right? A Circle member has a tension to make the implicit explicit – not only is it good business practice but “Wow, this is how I get compensated. It’s really good to have visibility to the actual work, in the actual roles that I’m actually doing for the organization.” That’s a strong motivating intention among many, good motivating tensions to get good records in governance about the work of the Circle. It’s a nice bridge to organize the job to work. So, some of those individuals need to be clear and crisp about what that work is.


Mike Williams:         Then the motivating thing that we’re doing now in iteration number 2 or 22 -- I can’t remember which one it is! – is that we’re trying to resolve within the company what are some good rhythms, patterns and triggers to engage these reviews, and then if adjustments are needed, how to reconcile that with the company’s financials and then the timing of giving increases and those kinds of things, which are typical HR system kinds of things. That’s what we’re working through right now.


Tom Thomison:        Yes. Yes, I think that’s an interesting one too about salary increases, merit raises, and dealing with labor laws. There are some labor issues about compensation, of course, and how do you reconcile conventional labor requirements with Holacratic principles? We talked a little bit about that last time, and I think that’s part of the work of the People Circle is to figure that stuff out, and keep figuring out how to interface to the conventional world within your Holacratic system.


Mike Williams:         We do have a People Circle, we call it, and in that circle, we do have a role called Legal and Compliance. So for example, as we try to find people to energize roles, we have kind of two main structures. One, to hire a person; or two, to work with, say, an independent contractor of some sort. In our area, we definitely need to understand that we are complying with the law as far as how to use independent contractors and in California there are some very specific criteria you need to meet as to not to put your business at risk for using those kinds of folks. It’s really dependent on the kind of role. All that kind of stuff is finding its way into the People Circle in service of working with the Lead Links of our GCC circle to get the work done.


Tom Thomison:        Yes. I like that; it’s also reflective of grappling with the real tensions as they occur, having to address the legal issues, the compliance issues, and then working back, which gives rise to a role that you need to energize to deal with that, the legal issues. So I like again the organic nature of how Holacracy doesn’t prescribe what you need to do, but gives you the vehicles and tools to unpack what’s needed, based on the tensions that are actually developing. For example, I know when we started with DavidCo and when we started with many other companies, compensation of course already exists. Of course, people are getting paid and they are getting paid either on bonus or leverage or options or a whole variety of things, and that works until it doesn’t. When it starts to not work is actually when you start to deepen your practice. When folks get more comfortable with this notion of role filling, not job positions or job titles; then all of a sudden, there’s this notion or understanding or Aha! moment of, “Wow, I can have multiple roles. I can have multiple roles in multiple circles. I can pursue things that I am interested in and start marketing and pitching myself in this organization because I’m not boxed into or anchored to one particular job title or position.” That causes all kinds of goodness and causes all kinds of tension, right?  Because it immediately says, “Oh my god, if I’ve got a person filling multiple roles, even possibly across multiple circles, how do I compensate this person?  What is the compensation tool that is going to work?” I know that you guys are wrestling with the issue now.


Mike Williams:         Yes, and how your circles are designed to get the work done. In our instance, what we find is you may have some role fillers across multiple circles, but they are generally filling similar kinds of roles; that’s one pattern that we see. So the work is the same, it’s just kind of a little different content. Then you got others that are truly taking on more depth than breadth, and those are different situations. We’re just taking them one at a time as they appear, and just processing them as best we can through the Holacracy process, and through the compensation process that we’ve indentified.


I do see Ingrid has a quick question here about the criteria and expertise for the compensation specialist. So we had a specialist that we worked with, and this specialist is growing with us as we grow into Holacracy. We’ve engaged this person, and we’ve informed them that if they want to stay engaged with us, “Here is something that we’re pursuing. We would appreciate you pursuing it with us.” So that person has been in conversation with our Holacracy rep, and has been looking into GlassFrog, and is starting the journey to understand this new type of management model as well, and has undergone the process of keeping their mind open, helping us reconcile differences, helping us raise questions, and helping us as a business resolve those questions. And we’re always trying to resolve it back as closely as we can to Holacratic principles, but it’s an iterative process for us so we’re learning as we go.




Tom Thomison:        Yes, I think that will be an iterative process for many organizations, stepping through what they find workable, allowing that to kind of gel and take hold, and then learning again what new tensions arise from the latest iteration. I know in general we kind of talked about this notion of complexity holding, and that being one way to start structuring how we think about role filling activity. We’ve all been accustomed to the banding or tiered kind of compensation system. And so I think one iteration that organizations will explore is around role fillers that have a very specific focus, kind of a source matter expertise in one particular area. They may fill one role deeply, and that might be a compensation package or band or tier for that kind of role filler dealing with that kind of complexity. Then kind of a step up from that is someone maybe later in their careers with more experience, more complexity holding, they can fill many roles within one circle; and ducks in and out, has the agility and flexibility to take any position, any role as it comes up, or  closes down roles as they are no longer needed. Then, I think from there you probably have role fillers that begin to span multiple circles, holding different contexts and different scopes and being able to energize the work across multiple circles. That’s kind of a different tier, a different level of capacity. Then you probably have those that can scale different levels of the holarchy, different levels of scale; so broader circles and sub-circles and planning in broader and sub-circle kinds of dynamics. Then you probably have those that can hold the broadest perspectives, the most complexity, and can deal with the most ambiguity and figure out how to differentiate that ambiguity into concrete roles and accountabilities. There’s probably a tiering or a banding kind of approach that will I think naturally emerge as folks take iterative steps in developing compensation systems rather than a one-to-one correlation with my job, my position, my compensation package. I don’t know if you guys are starting to have these kinds of conversations within the People Circle.


Mike Williams:         Yes, we are – it’s interesting because they are starting to appear naturally, so we are starting to see some natural segmentation of some sort. We haven’t yet solidified or acted on it. But in future iterations, I wouldn’t be surprised to see if something emerges from that kind of energy, in just trying to match dynamic steering with practical and pragmatic compensation management.


Tom Thomison:        Yes, it’s interesting territory. I love that you guys have got the compensation specialist. I had an opportunity to speak with him as well, and we really enjoy working with him and leveraging his many, many years of experience and then shifting that experience into a different paradigm, a different mental model about compensation. I think there is a lot of opportunity for compensation consultants out in the world as we’re dealing with post-conventional ways of counting for people’s energy. I often say that members, partners are lending their time, their energy, and their talent, and it’s that exchange that we want to compensate or account for. Instead of just a payroll or a salary, we want to really bring more conscious attention to what’s the exchange with the time, talent, and energy on behalf of something greater.


Mike Williams:         Yes, I think this is a good segue into Eric’s question because it kind of hits on some of that which is how do you factor in how effectively somebody’s energizing the role? What kind of approach, what is the approach to performance assessment? So, maybe it’ll start with the last piece and even take it up a level. In the definition of fit-for-role, are the seeds for what you need to hire for and then also the characteristics of a Holacratic organization, we’ve expressed those in something called fit-for-org.




Mike Williams:  So when we’re hiring into the organization now, again going back to some people who were acquired by this company, and just in that, you'll get a natural distribution of those that adapt it, or are waiting on the fence, and reject it. Then with each opportunity to hire somebody, you have an opportunity to become really clear on what this organization is about, the operating principles, and what you can expect. Therefore, they’re selecting into it versus being acquired by it, to go back to my analogy. Now in the interview process we’ve become more and more rigorous, and this is just a continual area of improvement for us to improve how we use our fit-for-org competencies to help interview, based on the ability to deal with ambiguity, the ability to inform, the learning agility, those kind of things and then each fit-for-role brings on its own characteristics. So for example, our account executive, which is a sales position might have a certain amount of competencies that are important for that role, and then let’s say our calendar manager might have a different set of competencies needed to manage a professional services group calendar. Yes, so number one is we’ve been pushing hard back up into this system to select the right people for the system, and then that positions you for clearer performance assessment.




Mike Williams:  Performance assessment in Holacracy kind of flips it around; instead of waiting for the annual review, you’re showing up at your weekly tactical meeting, and the weekly tactical is an output of your key processes, if you’re tracking the checklists, metrics and projects. It takes a once a year cycle to get a feedback to, for those who embrace it, a 52-point cycle, but in the Holacracy system, the team can quickly – every week -- assess where work’s getting done and not getting done.


Mike Williams:  Another approach to using GlassFrog that we’re leaning into is that it actually paints a very clear picture over time of the activities that you’re doing as an organization. So with that picture, you can actually start to assess “Is this real value added?” -- meaning that the customer would pay for it. “Is it business value add?” Meaning that it’s important to support the business, or “Is it non-value add?” Meaning why are we doing this?  At the business level, you start to get information that you can use just to apply some Lean Processing Principles or just simple common sense to say, “Why do we have this role?”


Now going back to the performance assessment, so you’ve got your incremental assessment and then one of the things that we found is we need to spend a little time with our Lead Links, because one of the Lead Links’ responsibilities is making sure that they’re giving feedback to their role holders. So we’re working internally to beef up our fit-for-role checklist. If you’ve got somebody ramping up in a fit-for-role, what are the ramp-up milestones, how are they doing against those milestones, and just being conscious of what good work looks like and basing the assessment against, “Is good work showing up?” We don’t necessarily right now do performance assessments across the board. For some, they’re probably “How do you deal with that? How does that feed into your merit increase and your bonus system and all that kind of stuff?”


Tom Thomison:        That’s a big shift, yes.


Mike Williams:         It goes back to our compensation philosophy that we’re moving towards, which is paying a fair compensation, and then we’re moving more towards a - I don’t want to call it a profit sharing - but a bonus pool based on business performance parameters, and we’d like to move to a point where we could pay those out. So it’s compensation in relationship to the performance of the business.


Tom Thomison:        Yes, that’s a really nice move. It’s another great example, I think, of how these two dichotomies of fit-for-role and fit-for-org really give clarity on how to address some very old conventional business issues, in terms of the ways we’ve dealt with business issues, in a new way through new lenses. This fit-for-role lens really shifts performance management, and performance assessment. Just as you stated, Mike, performance assessment comes in near real-time or at least weekly during the synchronization. With all the visibility that GlassFrog brings, all the role holders and the accountabilities, and then the weekly tactical meetings that are constantly surfacing, “How are we tracking? How are we doing with our checklist items? How are we tracking on our metrics or our projects moving for their current state to done? And how are we, as a peer group, as a circle, helping each other to move things forward?” From that work together, there’s a strong sense, a natural assessing, of how the performance of the circle is, and how the role fillers are functioning in their activities. So I think the performance side becomes more aligned, as you just said, to the business issues, and less about my merit increase or the compensation issues. I think performance moves more to fit-for-role kind of discussions and how the individual is actually showing up and doing the work. Then there’s a natural sort of self-evident way of enhancing one’s performance, as there is kind of a natural progression of filling more roles, being able to do more work and that actually naturally gives rise to making it visible that you’ve got a role filler that is able to take on more. That is the performance assessment. It’s being assessed right there in real-time, based on the real work of the organization, and I think that’s pretty cool. I know we talked about early on performance management and performance assessments and we went right to the definition of assessing what? What performance? Most of the time, those tools are used for compensation matters, not getting the work done in terms of operational matters. So it’s kind of an interesting split.


Mike Williams:         Yes. One other thing I’d add to that is the metrics, our goals, and then there’s also an opportunity, particularly at the circle level and at the individual level, for learning milestones. “What’s my next test over a period of time to see how I can change performance, or try something to improve customer service, or try a different approach?” Short cycle learning tests are things that are very trackable and are very easy to place in a tactical meeting, either in a checklist or on the project list -- what did we learn from this project? There’s a lot of ways to insert a review and reflection time to help share some learning as well, yes.


Tom Thomison:        Yes. I like that you can get formal even within the circles about what kind of criteria you’re looking for; what are the markers, what are the developmental or work markers and I think that becomes the work of the circle. Again, that’s a nice segregation. We’ve dealt with that question as well, you and I, at DavidCo about “Let’s go back to the compensation matters.” It’s really a high-impact topic -- who sets compensation for the company? Where is compensation actually set? Where is that work? With the People Circle at play, it’s really clear that the People Circle has authority and scope over the intersection of the individuals and the organization, including all compensation matters.




Tom Thomison:        So the compensation system is developed in the People Circle. But the consumers of that, the beneficiaries of that, the ones who have to make that work are on the operational side, in the GCC. So there is an interesting tension between those two entities, between those two structures. The compensation system is being created, maintained and evolved in the People Circle with direct input from the operational units, which of course means those resources, and having to pay for those resources to deliver the services of this organization.


Mike Williams:         Going back to the feedback part of it, just to articulate some dynamics that we see in role holder to role holder feedback. How do you give feedback to a role holder where you feel that their performance is either not up to snuff or the way that they’re delivering it seems to be not very productive or destructive, in just kind of like the attitude or the way it’s delivered? So that tension has shown up. Some people feel more comfortable resolving that peer-to-peer. Some people go up to a Lead Link, and have a conversation and the Lead Link then goes and shares feedback. So that is kind of showing up in multiple different ways. We don’t have one single way to manage that kind of tension at this point other than that the formal feedback loop process is definitely at the Lead Link level. So we see more education at that level, and the more use of checklists, the better you have fit-for-role in mind, the clearer your feedback can be.


Tom Thomison:        Yes. Yes, I think there’s a lot of work to do yet in feedback systems. I know one of our other clients has created a piece of software around GlassFrog to be able to assess or evaluate or provide feedback to role holders on specific accountabilities and be able to start tracking and trending that. That brings up some interesting tie-ins back to compensation, back to driving tension to make sure that the roles and accountabilities are clear and up to date in capturing the work. So this notion of a feedback system is really interesting, which is a dynamic steering principle; it’s kind of baked into Holacracy. And I think that’s where the work is -- shifting from performance assessment to feedback, constant feedback on how the work is being conducted, how the role fillers are filling their roles, how successful are we at getting the work with the circle done, with feedback groups and feedback systems. We have some of those out of the box, of course, with our checklist, our metrics and projects, but it will be, I think, a natural evolution to start getting feedback from groups about individual role fillers and their energizing of roles.




Mike Williams:         I see another comment here:  “It sounds like compensation might be based on an increased ability to deal with ambiguity – how do we try to get better at it?”  So, I would say in general that feels like a true statement because those who can deal with the ambiguity, harness it, and direct it tend to be valuable resources in our organization. “How does one get better at it?” is an interesting question and Holacracy actually provides a lot of interesting ways to deal with this. One, in Holacracy, there are moments when you, as an individual, are going to come into an ambiguous situation by design. So let’s take governance. You participate in a governance meeting, you don’t necessarily know what’s going to show up, and your ability to deal with the ambiguity and integrate it right there at the moment is an opportunity to practice every time you see a governance meeting coming up, if you have tensions around ambiguous situations. So just becoming conscious of situations where you can practice dealing with the ambiguity is a first step in helping to improve your skill with ambiguity. And there are pre-governance steps that you could take to help write clearer proposals, come to the meeting prepared, kind of psyche yourself up for how you want to get and give feedback. Prepare for all those times you’re going to be asked for stuff, so you can get used to the game and get used to dealing with ambiguity at that level.


Then just Holacracy in general, particularly if you dynamically steer and restructure a circle or something like that, you got to be able to throw stuff up and kind of regroup it back around the work. So dealing with ambiguity is a skill that can be practiced. I think there are triggers in Holacracy that allow you to become conscious to it and become conscious to places where you can practice it. Some people might just need to be comfortable with it, and some people might want to like really lean into it, and go to other roles within the company that if they feel they do this well, they would probably be attracted to those roles. For those that don’t, they just might need to manage their ambiguous situation so they can feel better about it.


Tom Thomison:        Yes, I do think that practice makes one more comfortable or can make one more comfortable in dealing with ambiguity. And seeing that ambiguity is okay, and seeing how ambiguity is digested in this rule-set, in the rules of this game, as we opened with, is reassuring.  The rules of Holacracy say ambiguity is just fine as a tension source. It’s like we want to play with ambiguity. We want to play with what’s needed now, and then collapsing to some sort of decision around that via our governance process, until something new is needed and then what’s needed now, right? It’s just playing that game of always being in flow with reality, in terms of what’s needed – a.k.a. ambiguity, dealing with ambiguity, dealing with life is ambiguity. And I think Holacracy as a practice helps us, all of us, me included, every day, deal with that ambiguity and have confidence that I have a place to process that ambiguity into something concrete, at least for now, until something else arises.


PROFESSIONAL DEVELOPMENT:  It’s not the work of the organization to develop people, but people get to develop by actually doing the work of the organization through the practice of Holacracy


Tom Thomison:         So this gives rise to one of the sayings, the phrases that I often use with Holacracy. “It’s not the work of the organization to develop the people,” right? “It’s not the work of the organization to develop people,” but people get to develop by actually doing the work of the organization through the practice. An interesting twist, and I think it’s more than just a play on words, because so many organizations have professional development programs and they take a lot of pride, for really good reasons, in developing their people -- but it feels a little bit off. It’s like a bit off in a Holacratic system. Not that development isn’t worth pursuing or isn’t needed, but it’s just not part of the purpose oftentimes. It’s not aligned with what this organization is doing in the world.


So I invite us to now shift to professional development, which is one of the other things I wanted to talk about. How do you deal with professional development and training in a Holacratic system? I know you spent years in organizational development and training programs -- creating them, delivering them, and this is an interesting conundrum. If it’s not the work of the organization to develop people, what do you do?  How do you deal with professional development? Because it doesn’t go away. It’s just how do you frame it, how do you do it? I know you guys have been working on this as well.


Mike Williams:         So, let me see here. It’s an interesting thing, because there’s certainly a camp within the professional development space that makes its whole living around professional development and stuff like that. But when you actually look at the learning process, what’s happening is you’re introducing a concept, or somebody’s learning a concept. I think most learning plans have you go out to test and try, get feedback, and then review and reflect.


And, those are all natural steps in the Holacracy process, where you no longer need to wait for anybody to invite you to an executive training session or whatever. You can start your own learning loops right away. If part of the practice is maintaining your project list and doing weekly reviews, you’ve got natural reflection time built-in, with weekly updated information. So this is kind of a Drucker thing, where you’ve got a built-in learning management process based on real performance, based on the real things that you’re working on. His advice to knowledge workers was to run an iteration, predict where you’re going to be, run another iteration, see if how you predicted actually showed up, and then what was the difference, and start all over again. So you can do that as an individual, and then at the next level of complexity, where you’re intersecting with a team at a team level, it also introduces that team learning dynamic, going back to the idea of learning milestones and sharing. One of the ways of professional development is just becoming conscious to what’s available to you in the system already, if you choose to use it in such a manner, which is always a free will choice for an individual.


Now having said that, when you go to work for an organization, there are certain things that they hold dear, and they don’t want to lead the ramp-up of some key skills left to chance. In our company, we have some certain fit-for-org kind of things that we don’t want left to chance, and some of them are at the higher level, like we want people to master Holacracy as a practice. We want them to master the GTD® methodology as a practice; they’re both principle-based, and we feel that mastery and practice of both of those will lead you to good places.


Then there are the brass tacks. I wouldn’t call it professional development, but just taking care of helping people understand what your email system is, what are the rules and regs for using databases, and all that kind of stuff. So that’s all in the fit-for-org side. That’s kind of the general stuff that we take care of out of the People Circle.


Then the fit-for-role stuff, you start in getting into professional development at the role level. A sales executive needs to transact work in such a way that it produces a good outcome, and then through the coaching and the milestones and the feedback and the systems that you choose to use to do that process, there’s always feedback loops available, and ideally your metrics will help you understand what’s working and what’s not working from a performance standpoint.


Tom Thomison:        Yes. Again, I like the split between fit-for-org and fit-for-role, and using that as a way of thinking about professional development. Also, it’s the doing the work that does the developing oftentimes. If you take the concept, Mike, that you guys are playing with, you can then allow the functional groups, the work circles, to decide how to optimize their skill development, their capacity development. Do they just expose people to more, and that’s how professional development occurs, or do they go and acquire or buy some outside resources to increase competencies and skills related to the work of that circle? I think Holacracy makes it really clear what type of professional or competency development is needed where, and what circle bears the brunt of the cost of that, and makes good decisions about when to spend or when not to spend, when to buy or when to build competencies within the organization along functional lines or value streamlines or business unit lines or product lines, however your structure. Then it allows the People Circle to deal with, as you said, all the baseline issues, the value issues, the fit-for-organization and maintaining good fits for this organization, and it allows for clarity where those costs gets bucketed and where that work is done, and what authorities are at play to do that work.


So I think that’s – you guys are really unpacking that very well with a lot of maturity now. Again, 18 months, two years in, really starting to place where professional development lives instead of just having it all mashed into one implicit thing. You’ve teased it apart now and it’s beginning to live in different, and I would say, more appropriate places, where you can be more discriminating for more effective, across the organization, distribution of professional wealth.




Mike Williams:         Yes. I think the word discriminative, or the ability to discriminate at the next level, is starting to show up, which is pretty interesting.  To go back to Eric’s comment about how do you factor in how effectively somebody is energizing a role, well there is kind of another business layer to energizing, which is how much do you want to energize a role? Then can you produce enough widgets at that rate of energizing to keep your business where it needs to go? So starting to pay attention to how energy is expended, and budgeted. A very easy proxy for money is hours spent on something.


At the next level of discernment, we’re starting to do time tracking just on a monthly basis just to form a broad, sweeping perspective: what percentage of your time did you spend in this role, in this role versus this role? Then from that you can get some high level math just to understand where the energy of the organization is going. and then from that you can continue the process of inquiry and say, “Hmm, that’s curious. Why do we do that?”


Tom Thomison:        Right, yes. Yes, exactly.  Yes, and then tying that energy back to the cost of acquiring that energy back to the People Circle, and budgets, and where all that resides. I think that’s an interesting way of doing it, and it’s splitting out where do you account for time and focus and allowing the circles to find a novel, simple way of doing that, and then yet tying it back to the actual cost, the labor costs.  Those are consolidated or centralized in the People Circle, since it has the authority over acquiring those resources and compensating those resources.


So it’s a nice tensioning again between the People Circle of finding good energizers for roles and the operational side of the business, communicating what’s needed and how back to the People Circle. I think you guys are just starting to develop signaling systems across those two circles, across that boundary -- how do you gather input and integrate the perspectives and needs of the Lead Links of your subcircles that are filling roles with the needs of finding good people and the cost to find those good people and the overall labor cost to the organization?


Mike Williams:         Correct. Say tuned. We’ll do it another call in six months.


Tom Thomison:        I think you guys are just starting to develop those, and it cross-connects between the circles.  Yes. Yes, exactly. So lots of shifting. I think that’s the chief takeaway with the Partnership Circle, the Partnership matters or the People Circle, Membership Circle, or however it’s called in your organization. Like everything else in Holacracy, it’s all the same but shifted. We still have to deal with many of the same issues, but we have new tools, new lenses, and new ways to discriminate on how to deal with those issues in a distributed authority system, within the rule set of Holacracy.




Today we wanted to touch on today compensation systems, first: where that work is held, who has authority over compensation, and how you might start maturing it or iterating it, changing it, shifting it over time; and then we moved into talking about assessments: performance assessment, where that lives, some techniques for doing that, why you should do it, what’s the motivation for assessing; and then training or professional development: how do you account for that, where does it live and why. So those were some of the three concrete things that I wanted to touch on today.


I see we do have another question about “How do compensation levels compare with more traditional practices when Holacracy approaches are used?” I’m assuming that means -- are they comparable?  Are you able to have a Holacratic compensation system that will actually attract folks who want to come work for your organization and will they be compensated at market rate? I think the short answer is yes. So I want to know, Mike, how you’re dealing with it with your organization, dealing with market rates, especially in California.  How are you dealing with this stuff?


Mike Williams:         So the process that we use to answer the question right now is a balance of using multiple perspectives to help us derive a reasonable answer. We do use our compensation specialist to go out to the market to compare. We do bring that data back in and look at the roles, the scope, the time and duration -- not necessarily the time and duration, but maybe a person’s demonstrated ability to stretch and expand, and then we come up with our rate. So I think based on having knowledge of market rates and having knowledge of Holacracy, I think they’re relatively the same in parity, if you will. I think the larger question also gets answered in the organization’s overall compensation philosophy on how it shares in the business performance of the business and things like that. That’s where some of the compensation could vary, based on traditional approaches. So I guess that would be my answer on that one.


Tom Thomison:        Yes. Yes, I think multi-part compensation packages are still at play. You can have base compensation, leveraged compensation, and profit-sharing compensation components. All of those are still absolutely available and viable. It’s just how do you structure them, and why are you making the decisions you make around those different compensation packages? So I think you can get very comparable compensation systems packages to attract the people you need in a Holacratic environment.


One last question before we bring this to a close. The question, “Is it true that the final decision for compensation for all people in the company resides in the People Circle?” Mike, I’ll let you address that. For DavidCo, does the financial decision for compensation for all people in the company reside in the People Circle?


Mike Williams:         That’s where the authority for the final decision lies, but I would say that the decision for compensation that happens relates very much to the people who need roles energized and, in my opinion, the more effective way to arrive at that outcome of a decision is incorporating the feedback of the stakeholders and then arriving at a decision.  Many times you arrive at a decision together that makes sense. If you arrive at a place where you agree to disagree, then somebody has to have the authority to make the decision. So yes, we would have the authority to make that decision, but I can’t think of a case where we’ve agreed to disagree and we needed to play a trump card or anything like that.


Tom Thomison:        Well said. The authority resides there but there’s a desire to integrate perspectives as a need to get to good decisions. Beautiful.


Yes, I love it. So that brings us to the bottom of the hour, so we’ll bring this dialogue to a close and this series to a close on the People Circle, the Partnership Circle. Thank you so much, Mike, for taking so much time out of your day to join us and share your experiences.


Mike Williams:         Great. Great, thanks for having me. I wish everybody working in the community great success in their practice.


Tom Thomison:        I really appreciate your time and contribution for this series. Thank you.


Mike Williams:        What I’d say is to try, experiment, come back, try, experiment again. Man, that is what we’re doing on this end. That’s what you do in life, too. So it’s a good framework for it.     


Tom Thomison:        It’s what we’re doing on this end, too!


Mike Williams:         Bye-bye.


Tom Thomison:        All right, everybody. Thanks for attending. Great questions.

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