GE has a version of self-management that is much like Zappos’ Holacracy–and it works

GE began rolling out “teaming” to all of its aviation plants in 2010.
GE began rolling out “teaming” to all of its aviation plants in 2010.
Image: REUTERS/Stephane Mahe
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Last November, a team of technicians at GE’s aviation manufacturing facility in Bromont, Canada, realized they would miss production goals for the year if they continued working at the same pace. Without being told by a supervisor or enticed by a bonus, the team opted to skip breaks, stagger lunches, and change their schedules so that machines would never sit idle. By the end of the year, they had met their goal.

“We say, we need x output, and then [shop-floor workers] are left to decide, how do they get all that done?” says Nate Bailey, the human resources leader for the Aviation Supply Chain. “That’s how a full teaming system works.”

“Teaming” is what GE calls its management system of working groups who decide for themselves how work should be done. At Bromont, workers don’t have supervisors, they have “coaches,” and they aren’t given directions, they’re given goals. Traditional supervisor tasks such as production planning and scheduling, policies about overtime and vacation, and improvements to manufacturing processes are managed by the teams themselves.

Members from each team also sit on “councils” with representatives from leadership and human resources to make decisions that affect the whole plant. Councils also weigh in on decisions such as when to cut overtime, whom to fire, and whom to promote.

The principle is simple: The people closest to the work know best how to do it.

Silicon Valley employed similar ideas after technology companies such as Zappos and Medium adopted the self-management system “Holacracy” in the mid-2010s. But at Bromont, as well as in many GE manufacturing facilities across the world, self-directed teams, or “Teaming,” as GE refers to its system internally, is old news. Bromont has been using its version since the plant opened in 1982. Self-directed teams first emerged in coal mining plants 30 years before that.

Viewed in that context, Holacracy and similar new management systems represent the continuation of a long trend in giving more autonomy to front-line workers. Though self-directed teams haven’t worked out for every company, their potential benefits have been well-documented by case studies that consistently show improvements in quality and contributions to modest improvements in productivity. In some cases, self-directed teams have also shown higher intrinsic job satisfaction or effectiveness than teams that were traditionally managed.

What’s wrong with top-down authority?

Most self-management systems were developed in part to avoid the pitfalls of autocratic bosses. In top-down, hierarchical organizations, individual employees can end up feeling like the have no autonomy, says Michael Lee, a doctoral candidate who has studied Holacracy at Harvard Business School, and that robs top management of valuable information.

“They feel unmotivated, they feel they can’t speak up if they disagree with their boss, and so they remain silent, which of course, is also bad for the organization because issues that seem germane don’t get raised, and the organization ends up just not being able to respond and learn and adapt.”

At Bromont, GE’s Bailey says teaming has allowed workers to fix problems directly, instead of asking permission from above. “People who are close to the production of the material oftentimes have the best ideas and are able to solve the problem better than the people who supervise the work,” he says. “You get people doing the work who provide the input on how we do it better every day.”

GE plants that use teaming make “high single-digit” improvements in productivity each year, he says, compared to “low single-digit” improvements at other plants. The company has been rolling out the system to all its 77 aviation factories, in stages, since 2010. Some of GE’s other businesses, all of which operate with a high degree of autonomy from one another, have also rolled out versions of teaming.

Teaming can only go so far

How far can companies take the concept of self-direction? GE’s teaming efforts have flattened reporting lines, removing many levels of hierarchy. At its Durham, North Carolina, engine assembly plant, for instance, all 350 workers report directly to the plant leader. In other GE Aviation plants, such as the Bromont site, all workers report directly to someone on the plant leader’s direct team. Though teaming represents a flatter version of hierarchy, there’s still a clear top-down structure in place.

Self-directed teams often share a goal that doesn’t require collaborating with other types of teams to complete. “Generally self-managed teams have operated in contexts where a lot of members of a team hold the same role, such as in manufacturing contexts, or where teams don’t have to work closely together,” says Lee. At GE factories, he points out, teams “work at different parts of the line, but they all work on the line.”

At other companies that use self-directed teams, the team is focused on independent projects that don’t require a lot of interaction with other teams. At the video game maker Valve, which uses a form of self-directed teams, for instance, workers form multidisciplinary “cabals” to collaborate around specific projects.

Holacracy also aims to give the people who own the work control over decision-making, but the system goes far beyond that. It’s meant to accommodate organizations that require large-scale coordination not just within groups, but across groups. As put in place by some Silicon Valley companies, it attempts to create an entire organization that is self-managed.

Both systems “are trying in some way to have the work itself be driving force of how we organize and rational for how we get things done,” says Amy Edmondson, a professor of management at Harvard Business School who literally wrote the book on teaming—which is called Teaming.

But the structure of that autonomy is very different. Instead of employing a traditional hierarchy, but with fewer levels, like GE has, Holacracy defines hierarchy based on work roles. Someone may have more or less authority within the same group of people, depending on the type of decision. The design of the organization is also in the hands of workers; the system assigns accountability to both teams and specific individuals within them; and it provides mechanisms for workers to coordinate both within teams and across them.

Few Holacracy successes

Successful examples of Holacracy, a much younger system than self-direct teams, aren’t yet easy to find. Medium dropped Holacracy after a few years. Its head of operations, Andy Doyle, explained in a blog post that coordinating between teams on larger projects had become too time consuming, and that the “act of codifying responsibilities in explicit detail hindered a proactive attitude and sense of communal ownership.” When almost 20% of Zappos’ employees accepted a buyout offer, Holacracy was a factor.

Critics of Holacracy say that it can create a new kind of bureaucratic red tape by assigning authority to roles rather than static positions and creating specific rules for interactions such as meetings. Researchers such as Lee are skeptical Holacracy can be effective for all enterprises.

“Using self-management across an entire enterprise to determine what should be done, who should do it, and how people will be rewarded is hard, uncertain work, and in many environments it won’t pay off,” says an article he co-authored in Harvard Business Review last summer. My colleague Aimee Groth, who documented Zappos’s experiment with Holacracy in her book The Kingdom of Happiness, has like others criticized the system for creating so much process that it removes the human element from the workplace.

Self-direction can backfire

At GE, teaming is used on the factory floor, not in offices. And it has been most successful at new plants. “It’s easier to start with a brand new culture,” says Denice Biocca, GE’s head of HR for supply chain and services, who helped implement teaming in a previous role as a senior HR executive at GE Aviation. “I think what the challenge is, and what some of our businesses aren’t sure how to do, is how do you take a 50-year-old factory and switch” to teaming.

Outside of GE, researchers have found that self-directed teams can backfire, like Holacracy, by shifting away from one type of control to another. The group becomes consumed with a new type of authority, enforcing shared values. One case study by James Barker, a researcher at Marquette University, found workers at a small manufacturing plant who switched to self-directed teams eventually replaced bureaucratic control with their own system. These unwritten “rules” were enforced by peer-pressure rather than a supervisor. Workers punished each other for differing from norms, such as the expectation to do whatever it took–working overtime, switching breaks–to meet their goal.

“The irony of the change in this post-bureaucratic organization,” Barker concluded, “is that, instead of loosening, the iron cage of rule-based, rational control, as Max Weber called it, actually became tighter.”