Table 1 Characteristics and advantages of SMOs

Radical Decentralization of Authority

People in self-managing organizations need not answer to a manager with broad discretion over their workdays, including assigning tasks, overseeing their completion, and setting their salaries and advancement prospects.

By doing away with traditional management structures, self-managing companies can sidestep the power dynamic inherent in a position of authority. Even though “managers” may no longer have a formal role in self-managing organizations, management is still performed without managers. Monitoring progress toward organizational goals, establishing organizational structures, and offering feedback to employees are still crucial to the success of SMOs. In SMOs, these powers are delegated formally to individuals in a fashion that is neither permanent nor boundless nor tied to any particular position in the organizational structure.

Formal System

A self-managed organization represents a formal structure that specifies how power is distributed within the organization.

For example, Morning Star, a Woodland, California-based agribusiness and food processing company, formalized its approach by outlining organizational principles for how employees should interact with one another and a method for resolving workplace problems known as the “Gaining Agreement” procedure. Morning Star established a self-management institute as a think tank and educational institution to “define, refine, and promote the ideas and instruments of self-management in organizations.”

Pan Organization

In a self-managed organization, decentralization is not confined to the frontline staff or a specific team. The statutory regulations bind all employees, from the lowest-level workers to the highest-ranking executives.

For instance, the explicit norms defining Zappos job authority apply to entry-level employees and C-suite executives. Morning Star also has a policy where all employees, including the CEO, can and do enter bilateral contracts. At Valve, CEO Gabe Newell has no more power than any other developer to decide which games get made.