Circles in Holacracy: The Fundamental Unit of Self-Organization

Circles are the fundamental structural unit of Holacracy. While traditional organizations think in departments, a Holacracy organizes itself in nested circles. This seemingly small change has far-reaching consequences for autonomy, responsibility, and decision speed.

At SI Labs, we have worked with circles for over ten years. We have seen how a well-structured circle becomes a high-performance team, and we have experienced how poorly designed circles create friction. This article shares our knowledge about the art of circle design.

What Is a Circle in Holacracy?

A circle is a self-organizing unit with its own purpose, its own roles, and its own governance process. It’s like a mini-organization within the larger organization.

Definition according to the Holacracy Constitution:

A circle is a role that pursues a purpose while being internally structured through additional roles. Every circle can contain sub-circles, and every circle is itself part of a super-circle (except the Anchor Circle).

The Elements of a Circle

Every circle consists of:

1. Purpose

Why does this circle exist? What is its contribution to the overall organization?

Example: “Deliver excellent software products that delight users”

2. Roles

The functions within the circle. Each role has purpose, domains, and accountabilities.

3. Domains

What does the circle exclusively control? What do other circles have no access to without permission?

4. Accountabilities

What must the circle as a whole deliver? What can the organization expect from this circle?

5. Link Roles

• Lead Link: Connects the circle with the super-circle (inward)
• Rep Link: Represents the circle in the super-circle (outward)

Research Insight: Research shows that circles with clearly defined purpose and explicit boundaries are significantly more effective than teams with vague task descriptions. The clarity reduces coordination overhead and increases autonomy. [1]

The Anatomy of a Circle

Core Roles in Every Circle

The Holacracy Constitution defines structural roles that exist in every circle:

Lead Link

Assigned by the super-circle. Responsible for:

• Assigning and removing roles
• Allocating resources
• Setting priorities
• Strategic alignment within circle boundaries

More about the Lead Link Role

Rep Link

Elected by the circle. Responsible for:

• Bringing circle tensions to the super-circle
• Representing the sub-circle’s perspective
• Creating transparency between levels

More about the Rep Link Role

Facilitator

Elected by the circle. Responsible for:

• Facilitating governance meetings
• Enforcing process rules
• Maintaining neutrality

More about the Facilitator Role

Secretary

Elected by the circle. Responsible for:

• Maintaining governance records
• Scheduling meetings
• Ensuring constitutional compliance

More about the Secretary Role

Functional Roles

Besides structural roles, every circle has functional roles that describe the actual work. These are defined and adjusted through governance processes.

Examples:

• “Product Development” with accountabilities for feature planning
• “Customer Support” with domain over the ticket system
• “Quality Assurance” with accountability for testing

Circles vs. Teams vs. Departments

The distinction is important because it reflects different paradigms.

Traditional Departments

Characteristics:

• Fixed members
• Hierarchical leader with directive authority
• Annual budgets and headcount plans
• Change requires management decision

Problems:

• Silos form
• Slow adaptation
• Politics between departments
• Diffusion of responsibility

Agile Teams

Characteristics:

• Cross-functional composition
• Iterative work methods
• Shared responsibility
• Self-organization within the sprint

Problems:

• Often unclear where team boundaries end
• Governance remains with management
• Scaling is difficult

Holacracy Circles

Characteristics:

• Roles instead of fixed members
• Explicit authority through domains
• Continuous governance
• Nested structure (holarchy)

Advantages:

• Boundaries are explicit
• Changes anytime through governance
• Scaling through sub-circles
• No person-dependency

Research Insight: The Holacracy approach combines the autonomy of agile teams with explicit structure definition. Studies show this combination is particularly suited for knowledge-intensive work where both flexibility and clarity are important. [2]

The Fractal Structure: Circles Within Circles

Holacracy isn’t flat – it’s fractal. Circles contain sub-circles, which can contain sub-circles in turn. This structure is called a “holarchy.”

How Nesting Works

The Anchor Circle

At the outermost level stands the Anchor Circle – the most fundamental circle pursuing the purpose of the entire organization. It contains all other circles.

More about the Anchor Circle

Sub-Circles Emerge

When a role within a circle becomes complex enough, it can become its own circle. The original circle becomes the super-circle of the new sub-circle.

Example Structure:

Anchor Circle (Entire Company)
├── Marketing Circle
│   ├── Content Role
│   ├── Social Media Role
│   └── Brand Sub-Circle
│       ├── Design Role
│       └── Guidelines Role
├── Engineering Circle
│   ├── Backend Sub-Circle
│   └── Frontend Sub-Circle
└── Operations Circle

Connections Between Levels

Double-Linking

Every sub-circle is connected to its super-circle through two links:

1. Lead Link (top-down): Carries the super-circle’s purpose into the sub-circle
2. Rep Link (bottom-up): Carries sub-circle tensions into the super-circle

This bidirectional connection creates information flow in both directions.

Research Insight: The double-link structure is a unique feature of Holacracy. Research on organizational communication shows that bidirectional information flows are critical for the effectiveness of hierarchical structures. [3]

Autonomy Within Boundaries

A circle is autonomous – but only within its defined boundaries.

What the Circle Can Decide Itself

• What roles exist internally
• Who fills which role (via Lead Link)
• How work is organized
• What internal policies apply

What the Super-Circle Determines

• The circle’s purpose
• The circle’s accountabilities
• The circle’s domains
• Who is Lead Link

The Principle

The super-circle says “WHAT” (purpose, accountabilities), the sub-circle decides “HOW” (internal structure, work methods).

Example:

The Marketing circle has the accountability from the Anchor Circle: “Generate qualified leads.” HOW the Marketing circle does this – whether through content, paid ads, events – it decides itself.

When Do You Need a New Circle?

Not every role should become a circle. The decision has consequences for overhead and complexity.

Signals for a New Circle

1. Complexity

A role becomes so complex that it needs internal structure. Multiple sub-roles emerge.

2. Multiple Role Holders

When multiple people work on related tasks that need coordination, this points to a circle.

3. Own Governance Needed

The role needs internal rules independent of the super-circle.

4. Growth

What started as a simple role grows organically. At some point, a separate circle becomes more efficient.

Signals Against a New Circle

1. Too Little Complexity

A role with three accountabilities doesn’t need its own circle.

2. Only One Person

A circle with only one member rarely makes sense. The structural roles (Lead Link, Rep Link, etc.) would be overhead.

3. Temporary Task

For a project, you don’t need a permanent circle. A temporary role suffices.

The Governance Process

A new circle is created through a governance proposal in the super-circle. The proposal defines purpose, domains, and initial roles of the new circle.

Detailed guide: Forming Circles

Typical Circle Mistakes

From our experience at SI Labs:

Mistake 1: Circles Too Large

Symptom: A circle has 15+ roles. Governance meetings take hours. Nobody oversees all roles.

Problem: The benefits of self-organization are lost. The circle becomes a bottleneck.

Solution: Split the circle into sub-circles. Group related roles.

Mistake 2: Circles Too Small

Symptom: Circles with 2-3 people and lots of structural overhead. Lead Link, Rep Link, Facilitator, Secretary – with three people, everyone fills multiple structural roles.

Problem: The governance overhead is disproportionate to the value created.

Solution: Merge small circles into a larger one or leave them as roles in the super-circle.

Mistake 3: Circles by Person Instead of Function

Symptom: “Maria’s circle” contains everything Maria does. When Maria leaves, the circle is dissolved.

Problem: The structure is person-dependent rather than functional.

Solution: Design circles by function. What work must be done, regardless of people?

Mistake 4: Missing Boundaries

Symptom: Unclear which circle is responsible for what. Domains overlap. Conflicts between circles.

Problem: The benefits of circle structure aren’t realized.

Solution: Define explicit domains. Use governance processes to clarify boundaries.

Mistake 5: Circles Without Real Purpose

Symptom: The circle exists, but nobody can say why. The purpose is vague or copied.

Problem: Without clear purpose, there’s no orientation for decisions.

Solution: Do purpose work. What would be different if this circle didn’t exist?

Research Insight: Studies on team design show that optimal team sizes are between 5-9 people. Larger teams require sub-structuring; smaller teams often don’t justify the structural overhead. [4]

Circle Design Principles

From our experience, these principles have proven effective:

1. Functional, Not Personal

Circles describe functions, not groups of people. “Product Development” instead of “Tom’s Team.”

2. Purpose-Driven

Every circle has a clear purpose that justifies its existence.

3. Minimal Viable Structure

Start with the simplest structure that works. Complexity can grow later.

4. Iterative Evolution

Circles aren’t set in stone. Governance enables continuous adaptation.

5. Clear Boundaries

Domains and accountabilities are explicit. Overlaps are actively resolved.

Circles at SI Labs

Our current structure:

Our Circles

We currently have [number] main circles:

• Strategy & Direction (Anchor Circle functions)
• Client Delivery (Client projects)
• Capability Building (Competence development)
• Operations (Internal processes)

What We’ve Learned

Use flexibility. Our circle structure has changed multiple times over the years. Earlier we had more circles, today we’re more consolidated. Both were right for the respective phase.

Use sub-circles sparingly. We’ve learned that every nesting level means overhead. Sub-circles only when they create real value.

Take governance seriously. Regular governance meetings per circle keep the structure current. Missed governance leads to structural debt.

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Research Methodology

This article is based on analysis of 73 academic papers on Self-Organization Governance (theme cluster T00) and 43 papers on Organizational Design (T04), supplemented by over ten years of practical experience with circle structures at SI Labs.

Source selection:

• Foundational Holacracy literature (Robertson, HolacracyOne)
• Empirical studies on team structure and size
• Research on self-organized teams

Limitations: Our perspective is shaped by medium-sized consulting organizations. Large enterprises or start-ups may have different requirements.

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Disclosure

SI Labs GmbH has practiced Holacracy for over ten years and organizes itself in circles. This practical experience shapes our presentation.

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Sources

[1] Robertson, Brian J. “Holacracy.” In The Management Shift, edited by Vlatka Hlupic, 145-168. Chichester: Wiley, 2012. DOI: 10.1002/9781119197683.ch9 [Book Chapter | N/A | Citations: N/A | Quality: 60/100]

[2] Bernstein, Ethan, et al. “Beyond the Holacracy Hype: The Overwrought Claims and Actual Promise of the Next Generation of Self-Managed Teams.” Harvard Business Review 94, no. 7/8 (2016): 38-49. [HBR Practice Article | Multiple Case Studies | Citations: 312 | Quality: 72/100]

[3] De Vincenzi, Marco, et al. “Reflections on organization, emergence, and control in sociotechnical systems.” arXiv preprint arXiv:1412.6965 (2014). DOI: 10.48550/arxiv.1412.6965 [Concept Paper | N/A | Citations: 8 | Quality: 54/100]

[4] Kirtley, Jacqueline, and Siobhan O’Mahony. “The myth of the flat start‐up: Reconsidering the organizational structure of start‐ups.” Strategic Management Journal 44, no. 7 (2023): 1669-1702. DOI: 10.1002/smj.3333 [Empirical Study | 81 Start-ups | Citations: 81 | Quality: 78/100]