Discover the power of humanocracy - a revolutionary organizational approach that unleashes human potential, empowers innovation, and drives meaningful change.
For many of us, dealing with bureaucracy sounds like a complete nightmare. The bureaucratic machine turns simple tasks into long exhausting quests that often make no sense. This is true for basically every type of human activity – but, luckily, it doesn’t have to be so.
In “Humanocracy: Creating Organizations as Amazing as the People Inside them”, Gary Gamel and Michele Zanini discuss an alternative human-centric and people-positive approach. This approach is humanocracy, and it recognizes people as the most adaptive and creative production power – and, basically, the only power that makes progress possible.
The trend of humanocracy can already be traced in some modern progressive organizations, and the success of these organizations proves this trend needs to be paid close attention to.
Let’s discuss the main ideas Gamel and Zanini cover in their book.
The initial goal of bureaucracy was efficiency based on the principles of the division of labor (specialization) and standardization of work.
Frederick Winslow Taylor, the Father of Scientific Management, believed that through meticulous observation, it’s possible to find the “one best way” of doing any task. Employees were supposed to follow specific rules to produce the best results. In the philosophy of taylorism, the distinction between “managers” and “employees” was very important.
Bureaucracy was a product of its time – thanks to it, organizations were able to achieve high degrees of efficiency, and many semi-illiterate, or totally illiterate, people got a steady job.
Bureaucracies are authoritarian power structures. They enforce rules, often dull and suffocating, and pave the way for politicking. They discourage initiative and entrepreneurship. Bureaucratic organizations are inertial, risk-averse, and not open to innovation.
For large companies, bureaucracies cause a serious problem. As the company grows, administrative layers get added – and then, at some point, the bureaucratic apparatus starts growing faster than the organization itself. Instead of improving the quality of their product or service, companies get buried with administrative tasks to solve.
In such organizations, there is no room for personal growth. Employees are limited by a list of responsibilities dictated by their roles, and don’t really have voice. All power is concentrated in the hands of managers, especially those at the very top.
Treated as resources, employees feel highly disconnected from what they do at work, and don’t contribute as much as they can.
Unfortunately, the vast majority of modern organizations still exist in the old traditional paradigm that curbs the freedom of employees and impedes progress:
The fault lies not with any particular manager, but with a management regime that empowers the few at the expense of many, that prizes conformance over originality, that wedges human beings into narrow roles, robs them of agency, and treats them as mere resources.
But the times change. And contemporary employees are not mostly illiterate anymore. We need new solutions.
In our fast-changing world, bureaucracies create more problems than benefits. To be more adaptable, organizations need to be rebuilt.
If we believe that a just society is one in which people have the opportunity and freedom to become their best selves, then we shouldn’t tolerate the soft tyranny that millions of employees face each day at work.
The alternative is humanocracy. Humanocracy is a worldview that places a human being in the center of any activity. Humanocracy focuses on human freedom and growth and recognizes humans as the main factor of production rather than resources or capital. It aims to maximize contribution, acknowledging that it’s people who are resilient and adaptable – not organizations.
The goal of humanocracy is to create an environment in which everyone is inspired to give their best.
According to Gamel and Zanini, there are 7 principles of humanocracy.
What spurs competition, creates new jobs, and demonstrates the value of new technologies? Of course, it’s entrepreneurship. And the bedrock of entrepreneurship is ownership.
Yale professor Henry Hansman mentions two basic rights of every business owner – the right to control the firm and the right to keep the residual earnings. In most organizations, team members don’t have much of these.
In one of the studies, 62% of Americans claimed they would like to start their own business. Yes, being an owner means you will have to work harder without any guarantee of success.
However, people believe that there is more security in owning a business than working for someone else. As an employee, you can be laid off, or not hired at all, since employers often prefer hiring contractors to full-time employees.
An option to live in a centrally planned economy doesn’t look very attractive. We prefer to have a free choice, not enforced on us by the state. However, many companies are still structured like command economies.
In a bureaucracy, big decisions are made by a small number of people. In a market, though, what comes into play is collective intelligence. New product launches, marketing campaigns, pricing shifts – all these things are discussed and agreed upon collectively.
In markets, investors can put their money where they want, so funding decisions are dynamic and distributed.
Besides, markets create the discipline of competition, upgrading their products to win customers. Competitive advantage helps companies stay afloat and be successful.
Meroticracy (a system where power and benefits are given based on talent and achievements) ensures that individuals can contribute and succeed regardless of their social status. But bureaucracy threatens meritocracy.
In a formal hierarchy, it’s risky to question the competence of a superior. However, leaders’ competence is often exaggerated. Bureaucracies overvalue administrative expertise – the ability to develop plans, budgets, and reports, and allocate resources, but what matters for a company's success is creativity and technical expertise.
We’re not saying that managerial work is unimportant; it’s vitally important… As a rule, though, administrative competence is unlikely to lift a company above its peers.
In a meritocracy, power is dynamic, and hierarchies are natural. Compensation is matched to contribution: like Erik Schmidt, a Google ex-chairman, wrote, “Pay outrageously good people outrageously well, regardless of their title or tenure.”
A community is not just a group of individuals who report to the same boss. It’s a group of people sharing the same values and having the same purpose. They closely communicate, feeling free to ask questions and admit mistakes. They are accountable to each other. Their relationships are based on respect – everyone knows they matter. Finally, a true community creates a sense of a family – because a family is an environment where you will be loved and accepted, regardless of all your faults.
For an organization to be open-minded means the ability to see new opportunities. Gamel & Michele Zanini mention four habits that can help companies keep their minds open:
Venture capitalists understand that you have to kiss a lot of frogs to find your prince or princess.
Trying to avoid risk, we reach the opposite effect – we magnify it. Organizations should work to extend their boundaries. For example, Toyota employees contribute around a million suggestions per year, and these suggestions are not just ideas – they’re reports on experiments.
Gamel & Zanini use the word “paradox” for the alternatives that “are both mutually desirable and mutually exclusive.” In practice, it means we have to deal with two conflicting ideas. However, we can escape the “either/or” thinking.
A business can be both efficient and innovative – because we can both exploit and explore. Freedom and control seem mutually exclusive, but we can build an organization that is good at both. Handelsbanken, a Swedish bank, it’s both radically decentralized and operationally disciplined, and this was made possible thanks to separating the “what” and “how”. In the back, familiar benefits (“what”) were delivered in a new way (“how”).
There already exist companies that challenge the idea that bureaucracy is indispensable. They break down the old rules and show us that “brave new work” is not a concept of the distant future – it’s already around us.
A great example of such an organization is Nucor – an American steel leader. Since 1969, the company suffered only 1 unprofitable year. Its secret is its remarkable culture, based on freedom and responsibility.
Let’s look at its main characteristics to see how humanocracy works in action.
The company functions as a confederation of seventy-five divisions, each of which is responsible for creating the demand for its products and retaining customers. This enables employees to engage in entrepreneurial activity – they have to look for commercial opportunities.
Rewarding productivity: There is a system of bonuses in the company. To increase the bonus, employees have to produce more steel. This means they must use their ingenuity to lower costs and speed up the workflow.
Less politicking: Simple understandable goals, as opposed to team-level KPIs, minimize gamesmanship, with its side effects such as favoritism and lack of trust.
Selective hiring: Nucor hires people for a career, not for a short-term project. It looks not only for people who’d have specific skills but for those who are resourceful and have self-management abilities.
Cross-training: Nucor team members are trained for a variety of roles. For example, new members in the melt shop department rotate through multiple crews to understand the entire production process.
Encouraging personal growth: Every team member has a personal development plan with career goals.
Learning exchanges: Employees make visits to sister plants, during which they share experiences.
Transparency: Every team member has access to performance metrics and commercial data.
Job security: Nucor has never laid off its steel workers.
Few status symbols: There are no company cars or club memberships.
Reverse accountability: Managers are accountable to employees.
Peer support: Colleagues intervene when someone needs support, without the help of a supervisor.
Capital spending: Team members have a huge financial autonomy, which lets them make purchases without consulting the management – the only thing which is needed is the colleague’s input (not even approval.)
Bureaucracies are not easy to destroy. They are familiar to us, well-defended by those who’ve got power, and they still serve their purpose. Trying to reorganize a systemic structure like that in one sitting sounds ambitious, but can prove impossible. This is why it’s more logical to dismantle bureaucracies slowly, implementing, and cementing big changes step by step.
To learn more about the concept of humanocracy, you can also listen to a podcast from “Brave New Work,” Episode 47, Humanocracy w/ Michele Zanini.
