Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

Sarah Lozanova headshot

Sociocracy: An Organizational Structure for Distributed Leadership


Many organizations are governed by top-down or command and control management. This management approach is based on the notion that the boss has all the answers and that the employees will be slackers if not kept in line (also known as Theory X by psychologist Douglas McGregor). By contrast, Theory Y depicts employees as intrinsically motivated with a participatory approach to problem-solving.

Although the latter may sound like a good idea--helping to bring out the best in employees--it is difficult to implement on a factory floor or in an office setting. It requires a cultural shift that isn't prevalent in schools, government and organizations. Sociocracy, or Dynamic Governance, is an organizational structure developed by Gerard Endenburg, a Quaker born in the Netherlands who was the CEO of Endenburg Elektrotechniek during a downturn. Sociocracy provides a non-authoritarian organizational structure that empowers people to make decisions within their domains, and fosters trust and effective decision-making.

Sociocracy organizes participants in circles, has feedback loops and uses consent (not consensus) decision-making. Circles elect delegates to represent their circle as a member of a higher circle. The top circle in a corporation would include the CEO, the board, and at least two members from the general management circle, with all members participating fully in decision-making. The organizational structure assumes that all participants have a piece of the "answer" or a special contribution, thus encouraging all voices to be heard.


Many hierarchical organizations have a decision-making body that creates policy and relies on other employees below them to enforce that policy, regardless of buy-in. In sociocracy, consent is reached when there are no "paramount objections" to a proposal, which occurs when it conflicts with the organizations aims or mission.

"Everything is done with an aim," explains Jerry Koch-Gonzalez, while leading a sociocracy workshop for Belfast Ecovillage. "The greater the divergence of the group [regarding the aim], the harder it is to work together."


These semi-autonomous entities use consent decision-making within a given domain and are given freedom within defined parameters. Individuals make decision in matters that directly affect their work and leadership is distributed. The group determines by election which individuals have specific roles or functions, such as delegates or facilitators, and for what length of time. The circles aren't isolated bodies, but rather two members of a circle participate in the higher circle (double linking) and the circles are linked in a non-hierarchical manner. There guiding principles provide the structure for sociocracy, but transparency is the necessary ingredient.

Feedback loops

Policies are in effect for a specific period of time and will be evaluated at or before the given time period ends. The policy can then be ended, revised or continued, depending on the feedback. This practice allows of reflection and continuous improvement over time.


All members of the organization need access to information--such as meeting agendas, minutes and organizational policy--for sociocracy to thrive. The exceptions to this would be proprietary knowledge or information that presents a security threat to individuals or clients. All members of circles must feel empowered to raise concerns, for sociocracy to function. A tool in achieving this is rounds at a meeting, where all participants have the opportunity to speak about a proposal, asking clarifying questions, giving quick reactions or suggesting amendments to a proposal.

"All these things support everyone having a voice," explains Gonzalez. " Nobody can be ignored. Feedback loops allow people to keep learning."

Beyond the walls of a single corporation, sociocracy can be applied to link various stakeholders. For example, small farmers can gather to form a cooperative business to negotiate contracts with retailers or shipping rates with transportation companies. Woodbury University utilizes sociocracy to foster trust and collaboration between departments. Nonprofit organizations are using sociocracy to boost participation and incubate innovative ideas and Mondriaan, a large mental health facility in the Netherlands is using it to create distributed leadership. Cohousing communities, including Belfast Ecovillage and Pioneer Valley are attempting to reduce the time spent in meetings for all members by delegating tasks to small groups.

Image credit: Flickr/Baltic Development Forum

Sarah Lozanova is a regular contributor to environmental and energy publications and websites, including Mother Earth Living, Green Building & Design, Triple Pundit, Urban Farm, and Solar Today. Her experience includes work with small-scale solar energy installations and utility-scale wind farms. She earned an MBA in sustainable management from the Presidio Graduate School and she resides in Belfast Ecovillage in Midcoast Maine with her husband and two children.

Sarah Lozanova headshotSarah Lozanova

Sarah Lozanova is an environmental journalist and copywriter and has worked as a consultant to help large corporations become more sustainable. She is the author of Humane Home: Easy Steps for Sustainable & Green Living, and her renewable energy experience includes residential and commercial solar energy installations. She teaches green business classes to graduate students at Unity College and holds an MBA in sustainable management from the Presidio Graduate School.

Read more stories by Sarah Lozanova

More stories from Investment & Markets