Manager Identity Crisis: Supporting Leaders Through the Holacracy Transition

The manager identity crisis in Holacracy transitions is one of the least understood yet most consequential challenges when introducing self-organization. When companies abandon their hierarchical structure in favor of role-based authority, leaders lose not just their formal position—they lose a central part of how they define themselves.

Research shows a nuanced picture: While some managers successfully adapt, a significant portion leave the organization. At Zappos, voluntary turnover after the Holacracy implementation was 14-18%—well above industry average [1]. The question isn’t whether managers struggle, but how organizations can support them through it.

Why Traditional Managers Struggle

The Loss of Identity Anchors

Managers in hierarchical organizations define themselves through three central elements: title, direct reports, and decision-making authority. Holacracy eliminates all three at once. The “Head of Marketing” becomes someone who fills various roles—without the identity-forming title, without the team that “belongs to them.”

Research Insight: A three-year field study showed that managers in self-organized structures had to actively relinquish their authority and titles. The expected “chaos phase” didn’t materialize—but only in organizations with strong support cultures [2].

The Function Remains, the Form Changes

Studies show that organizations can function without formal middle management [3]. The key insight: Manager functions don’t disappear—they distribute across roles. Coordination, conflict resolution, strategic alignment remain necessary. Only the person performing them is no longer defined by hierarchy.

This explains why some former managers thrive in Holacracy: They find new roles where their skills—coordination, facilitation, strategic thinking—are still needed. Others, whose identity was more strongly tied to formal status, have a harder time.

What Research Shows About Adaptation

Success Is Context-Dependent

The largest empirical study on manager transitions (N=445 employees) identified three critical success factors [4]:

1. Authentic Leadership: The perception that the transformation is genuine
2. Effective Communication: Transparency about reasons and process
3. Real Trust: Pre-existing trust culture as foundation

The decisive finding: “Support programs” alone don’t guarantee successful adaptation. If top management doesn’t authentically embody the transformation, neither training nor coaching helps.

The Navigation Problem

A study on middle managers in transforming organizations showed that successful adaptation depends on how managers learn to “navigate” the new system [5]. They develop new strategies:

• Influence through expertise instead of position
• Facilitation instead of delegation
• Coaching instead of controlling

Managers who see this shift as an expansion of their repertoire—not a loss—adapt more successfully.

Typical Crisis Patterns

The Controller

Former leaders whose management style was based on control have the greatest difficulties. In Holacracy, there’s no way to “override” decisions or “steer” teams. The governance process replaces personal authority with structured decision-making.

Symptoms: Attempts to establish informal hierarchies; frustration about “slow” decisions; withdrawal from active participation.

The People Manager

Managers who defined themselves through their relationship with “their team” lose this bond. In Holacracy, people don’t belong to other people—they fill roles in circles. Personal development conversations, mentoring, the protective function—all must be rethought.

Symptoms: Feeling of uselessness; seeking informal mentor relationships; difficulty giving feedback in new structures.

The Status-Oriented

For managers whose professional identity was strongly tied to visible status symbols—title, office size, attendance at “important” meetings—Holacracy is a fundamental threat. Roles have no inherent hierarchy. A Lead Link has responsibility, but no higher status.

Symptoms: Attempts to collect roles with “higher prestige”; frustration about flat communication structures; active resistance to the system.

Support Strategies That Work

1. Transition Coaching (Not HR Training)

Research shows that HR systems must be adapted to support Holacracy transitions [6]. But standard training isn’t enough. Former managers need individual coaching that:

• Directly addresses identity questions
• Explores new ways of exerting influence
• Makes successes in new structures visible

2. Role Identification as Process

The role mapping process is particularly critical for former managers. Instead of “assigning” them roles, they should be actively involved in design. The question isn’t “What role do you get?” but “What work is valuable, and how do we structure it?“

3. Lead Link as Transition Path

The Lead Link role offers former managers a structured transition path. It retains strategic responsibility—resource allocation, priorities, role assignment—without the operational control mechanisms of traditional management.

Important: Lead Link as transition path, not final destination. The goal is for former managers to increasingly take on other roles and let Lead Link responsibility rotate.

4. Skill Reframing

Many manager skills are valuable in Holacracy—they just need to be reframed:

Traditional Competency	Holacracy Application
Delegation	Role design and assignment (as Lead Link)
Performance Management	Feedback in retrospectives
Conflict Resolution	Facilitator role
Strategic Planning	Purpose work in the circle
Team Building	Circle health

5. Gradual Implementation

Studies identify four different implementation paths [7]. Radical changeovers (“Big Bang”) increase manager identity crisis. Gradual approaches—pilot projects in individual departments, step-by-step transfer of decision authority—give managers time to adapt.

Setting Realistic Expectations

Not Everyone Will Adapt

The Zappos data is clear: 14-18% voluntary turnover after Holacracy introduction [1]. A significant portion of this was former managers. This isn’t a catastrophe—it’s honest self-selection.

Some managers are so deeply rooted in hierarchical identity that no support helps. The organization’s ethical responsibility is to create fair conditions, not to “convert” everyone.

Wellbeing Challenges

Research shows that self-organized structures bring their own wellbeing problems [8]. The cognitive load of distributed decision responsibility can lead to burnout—especially for former managers who now have broader responsibility without clear boundaries.

Retrospectives and explicit workload conversations aren’t nice-to-haves but essential for sustainable transitions.

SI Labs Perspective

After over ten years of Holacracy practice, we’ve observed: The most successful manager transitions happen when:

1. The crisis is acknowledged as normal—not as a sign of weakness
2. Time is given—12-18 months for deep adaptation
3. New successes become visible—celebrating first wins in new roles
4. Honesty prevails—if it doesn’t fit, leaving isn’t failure

The identity crisis isn’t a bug—it’s a feature of fundamental transformation. It shows that real change is happening, not just superficial structural adjustment.

Conclusion

Manager identity crises in Holacracy transitions are real, frequent, and must be taken seriously. Research shows: Successful adaptation is possible but not guaranteed. It depends on organizational support, authentic leadership, and individual willingness to change.

Organizations introducing Holacracy should treat manager transitions as a standalone change project—with dedicated coaching, realistic timeframes, and acceptance that not everyone will make the journey.

The good news: Managers who successfully adapt often describe the experience as liberating. They discover new forms of influence that don’t depend on formal authority—and find in that a more stable professional identity than ever before.

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Sources

[1] Velinov, Emil, Zoran Todorović, and Janez Damij. “How Mercedes-Benz Addresses Digital Transformation Using Holacracy.” Journal of Organizational Change Management 34, no. 5 (2021): 1125-1150. DOI: 10.1108/jocm-12-2020-0395 [Case study | Qualitative interviews | Citations: 23 | Zappos data cited]

[2] Lee, Michael Y., and Amy C. Edmondson. “Building Shared Purpose without Managers: How Can Holacracy Work?” Academy of Management Proceedings 2020, no. 1 (2020). DOI: 10.5465/ambpp.2020.20972abstract [Field study | 3 years | Quality: 45/100]

[3] Foss, Nicolai J., and Peter G. Klein. “Managers Matter Less Than We Think: How Can Organizations Function Without Any Middle Management?” Journal of Organization Design 11 (2022): 69-80. DOI: 10.1007/s41469-022-00133-7 [Conceptual paper | Theory | Citations: 13]

[4] Afshar Jahanshahi, Asghar, et al. “Turnover and Recommendation Intentions in the Post-Implementation Period of Radical Decentralization.” Journal of Organizational Change Management (2022). DOI: 10.21818/001c.37162 [Empirical study | N=445 | Key paper on manager transitions]

[5] Ahearne, Michael, Son K. Lam, and Florian Kraus. “Navigating in a Hierarchy: How Middle Managers Adapt Macro Design.” Journal of Organization Design 8, no. 7 (2019). DOI: 10.1186/s41469-019-0046-9 [Qualitative study | Multiple cases | Citations: 52]

[6] Meijerink, Jeroen. “Lost in Holacracy? The Possible Role of e-HRM in Dealing with the Deconstruction of Hierarchy.” Advanced Series in Management 23 (2019): 115-127. DOI: 10.1108/s1877-636120190000023006 [Conceptual paper | HR systems | Quality: 40/100]

[7] Pfister, Jan, and Birgit Hartmann. “Change the Way of Working: Ways into Self-Organization with the Use of Holacracy.” European Management Review 18, no. 1 (2021): 45-58. DOI: 10.1111/emre.12457 [Qualitative study | N=43 organizations | Citations: 43]

[8] Jurvelin, Mira. “Work Recovery in Self-Managing Organizations.” Master’s Thesis, Aalto University, 2019. URL: aaltodoc.aalto.fi [Qualitative study | N=3 companies | Wellbeing focus]

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Research Methodology

This article synthesizes insights from 8 peer-reviewed studies and professional articles from our research database of over 655 academic papers on self-organization and organizational design. Studies were selected based on:

• Methodological rigor: Empirical studies with transparent methodology preferred
• Thematic relevance: Focus on manager-specific experiences in transitions
• Citation impact: Higher-cited works weighted more heavily
• Recency: Studies from 2019-2023 prioritized for current practices

Limitations: Available research on manager-specific transitions is limited. Many studies measure organizational outcomes, not individual manager experiences. Turnover data rarely differentiates between manager and non-manager attrition.

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Disclosure

SI Labs has practiced Holacracy for over ten years and supports companies through transformations. We have personal experience with manager transitions—both successful and failed. This perspective informs our assessment but should be considered a potential source of bias. We have included studies showing critical findings, including high turnover rates and wellbeing problems.