Shared owned enterprises: Democratic, sociocratic en holacratic governance

In a community economy, the economy is in the hands of the community. Not just a small group—such as shareholders or managers—decides what happens, but employees, local residents, and other stakeholders also have a say. The community is about shared responsibility, transparancy, and equality in how organizations and businesses operate. But how do you actually put that into practice? That’s what this blog is about.

Shared ownership enterprises are an important part of Community Wealth Building (CWB). This economic strategy strengthens and democratizes the local economy. Anchor institutions (such as hospitals, municipalities, and offices) purchase products and services from shared ownership enterprises (such as worker cooperatives).

Because these businesses are co-managed and decisions are made collectively by members, they handle work and profit differently than traditional companies. Employees or members have a voice, which leads to a fairer distribution of both power and money—within the organization and throughout the economy.

Shared ownership and inclusive decision-making don’t happen automatically. Organizations can choose governance models that ensure inclusive decision-making. The governance of an organization defines how it is run and how decisions are made. In this blog, we’ll first explore the importance of re-learning how to collaborate and the benefits of shared decision-making. Then we’ll explain three common governance models: democracy, sociocracy, and holacracy.

Relearning to Collaborate
Our society is increasingly characterized by individualism. As a result, we’ve become less used to managing organizations collectively. We’re used to having a boss or manager who makes the final decision—sometimes we even believe that’s the only way an organization can function. Because many people lack experience working in a shared ownership model, it’s understandable that they often revert to familiar hierarchical structures.

However, to make co-managed enterprises successful, a different mindset and approach to collaboration is needed. Cooperation and solidarity are deeply rooted in human nature. People are naturally inclined to work together, build social bonds, and pursue shared goals.

When there’s no attention given to developing the “cooperative human” in setting up or managing, say, a cooperative, the risk of failure increases. This is also known as degeneration—where a cooperative fails or reverts back to traditional hierarchical structures. If old ways of working resurface—like a push toward hierarchy or internal pressure for efficiency—they can only be overcome by turning them into opportunities for collective creativity, constructive dialogue, and shared learning. To prevent degeneration and put the economy back in the hands of the people, it’s crucial to understand which governance structures can support the success of shared ownership enterprises.¹²

The Benefits of Shared Decision-Making
Co-managing an enterprise offers many benefits. Equality is central: every voice is heard, and differences of opinion are resolved together. This leads to a stronger sense of responsibility, ownership, and engagement among members—which in turn boosts productivity and connection.

Employees and members often have a better understanding of what the organization needs than distant managers. Decisions made by a broader group tend to have more support and take more risks and pitfalls into account. When people feel involved, they’re also more motivated. Research shows that worker cooperatives (a form of shared ownership) tend to have lower absenteeism and less turnover compared to traditional businesses.³

Democratic model
The democratic model is likely the most well-known way of making decisions in organizations. It’s based on the principle of one member, one vote. Decisions are made by majority rule, either directly (everyone votes on each decision) or indirectly (elected representatives make decisions).

At a General Assembly (GA), proposals are presented and voted on. The GA holds the highest authority—it stands above the board and the members. This means the board does not decide on behalf of members; instead, the GA decides for all.

While this model offers clarity, it can sometimes lead to a “majority vs. minority” dynamic, where minority voices aren’t always heard. This is also known as the “tyranny of the majority.”

The sociocratic and holacratic models are designed to ensure that minority voices are included in decision-making. Though they share many similarities, they are implemented in different ways. Below is a general overview of both models, but in practice, people may adapt them to fit their own ways of working.

Sociocratic model
A core principle of both sociocracy and holacracy is consent-based decision-making. This means a proposal is accepted unless someone raises a reasoned objection. If someone disagrees, their concerns are heard, and adjustments are made. A decision is only finalized when the objector is willing to try the revised proposal.

Sociocracy also uses a circle structure, where teams operate autonomously within their own areas and make decisions without needing approval from upper management. Within these teams, members take on specific roles—like facilitator or secretary—to keep things running smoothly. Roles are assigned through an open election process, based on consent rather than traditional appointments.

To ensure communication between circles, a system called double-linking is used. Two people—a representative and a leader—are part of both their own circle and the higher-level circle. This setup supports transparent decision-making and effective information flow.Een kernprincipe van sociocratie en holacratie is besluitvorming op basis van consent. Dit houdt in dat een voorstel wordt goedgekeurd zolang niemand een beargumenteerd bezwaar heeft. Wanneer iemand het niet eens is met het voorstel, wordt er geluisterd naar hun bezwaren en gezocht naar mogelijke aanpassingen. Zodra de bezwaarmaker het voorstel accepteert en bereid is het uit te proberen, wordt de beslissing pas genomen.

Holacratic model
Holacracy is a method of self-management that grew out of sociocracy. It replaces traditional hierarchies with a system of distributed authority. In a holacratic organization, decision-making is no longer reserved for managers alone. Instead, power is divided across clearly defined roles and teams, giving employees more independence and allowing them to respond more quickly to change. Like sociocracy, holacracy uses consent-based decision-making and is organized around circles.

What makes holacracy unique is its structured approach, with specific roles and clear rules. For example, the person in the role of Lead Link is responsible for distributing tasks and resources and ensuring the team’s alignment with the organization’s overall goals. The Rep Link serves as a bridge between teams, sharing concerns from one circle with the broader organization and helping protect the team’s autonomy. The Facilitator leads meetings in an organized way, keeping the process on track, while the Secretary manages planning and takes notes. These roles help ensure that decision-making is transparent, collaborative, and flexible—without the need for a traditional top-down structure. Holacracy was developed by Brian Robertson in 2007 and laid out in what’s called the Holacracy Constitution.

Although holacracy is based on a structured system, it still offers room for customization. The rules and roles can be adapted to fit the needs of the organization. Because of this flexibility, holacracy in practice can sometimes resemble sociocracy. Choosing the right governance model depends on an organization’s culture, structure, and goals, and some groups even choose to combine elements from multiple models to create a system that works best for them.

A number of organizations have adopted holacracy, including the housing cooperative De Warren, the worker cooperatives at Helpgewoon, the telecom company Voys, the mortgage advisory firm Viisi, the mental healthcare provider PuntP, the car-sharing platform SnappCar, and even the communications team at the Municipality of Venlo.⁴ These organizations report that since implementing holacracy, their teams experience more autonomy, faster and more effective decision-making, stronger collaboration, and greater engagement and satisfaction among employees.

At De Warren, for example, decisions are made holacratically. During meetings, everyone has a specific role, and the process is guided by mutual trust. As they describe it: “It’s through trust that you reach decisions.” Bron: Sociale Architectuur en Holacracy – Een interview met Merel Dym — De Warren

Challenges
Although sociocratic and holacratic organizing offer many advantages, they also present challenges. It takes time and training to fully understand and apply the structures and processes. Not everyone feels comfortable right away with a high degree of self-management and responsibility. If a certain culture already exists within an organization, it can take time to shift it. Early on, decision-making and meetings may feel awkward due to the various roles and rules. There’s also the risk of “process overload” if the structure is followed too rigidly.

Governance for the community economy
If we aim for an economy that’s fairer, more inclusive, and more sustainable, we also need to fundamentally change how we work together. Shared ownership and inclusive decision-making lie at the heart of this new economy—but this requires consciously choosing a fitting governance model. Holacracy, sociocracy, and democracy each offer different paths for distributing power and responsibility, depending on the culture, context, and needs of an organization. What they have in common is a belief in collective decision-making and the power of collaboration. Redesigning governance isn’t a quick fix, but a process that—with the right training, practice, and support—can lead to greater engagement, equality, and resilience. This is how we bring the economy back into the hands of the people, step by step.

Want to know more?

• Read about what Commons Network is doing around CWB: commonsnetwork.org/nl/translocalsolidaritynl/
• Join a workshop at the We Doen Het Samen Festival on April 16, 2025, in Amersfoort (meent.coop will also be there): festival.wedoenhetsamen.nu
• On June 20, we celebrate Community Economy Day at the Marineterrein, where a holacracy course will likely be offered. More info to come!

1. Harris, N., & Jervis, R. (2024). Worker Cooperatives for a Democratic Economy: A Conversation with Critical Theory. Democratic Theory, 11(1), 20-42. ↩︎
2.  Langmead, K. (2016). Challenging the degeneration thesis: The role of democracy in worker cooperatives?. Journal of Entrepreneurial and Organizational Diversity, 5(1), 79-98. ↩︎
3.  Pérotin, V. (2013). Worker cooperatives: Good, sustainable jobs in the community. Journal of Entrepreneurial and Organizational Diversity, 2(2), 34-47. ↩︎
4.  https://www.nieuworganiseren.nu/cases/van-starre-functies-naar-flexibele-rollen/ ↩︎