Transforming HOLIS – A Journey to Self-Management and Financial Transparency

This blog post is part of 50+ case studies of self-managing organizations we created for the 2024 inaugural ZeroDX awards. These organizations embody the principles of RenDanHeYi in their work structures:

• Zero Distance to customer: Decision what to build is based on insights from the marketplace

• Autonomy: Small teams with full decision-making autonomy enable speed in execution

• Shared Rewards: Everyone in the micro-enterprise participates in its financial success.

Introducing HOLIS

HOLIS is a Japanese company managing 27 businesses, including golf equipment, costume rental, bridal services, and recycling shops, mainly located in Aichi Prefecture. The company employs over 500 employees and generates more than 7 billion yen in total business value. HOLIS began as a traditional top-down company and faced stagnant growth despite early successes.

To address this, CEO Takuya Katagiri led a radical transformation in November 2018, adopting a decentralized and autonomous model inspired by Reinventing Organizations by Frederic Laloux and Profit First by Mike Michalowicz. This approach introduced transparent money flows, aligning employee and organizational goals, which enhanced both employee satisfaction and management performance.

HOLIS now serves as a shining example of RenDanHeYi principles in action, with its decentralized structure, absence of middle management, and shared rewards that align employee incentives with customer satisfaction and cost management.

Organizational Structure

HOLIS has adopted a decentralized organizational structure characterized by self-management and the elimination of traditional hierarchies. This structure encourages employees to take ownership of their work, fostering a culture of collaboration and innovation.

The key features of HOLIS's organizational structure include:

• Role allocation system: Employees define their roles based on strengths and interests, allowing them to contribute meaningfully while identifying opportunities for growth.

• Advice process: Decision-making is no longer hierarchical. Employees seek advice from peers, fostering a culture of collaboration and continuous learning.

• Elimination of sales meetings and management plans: By abolishing rigid planning processes, HOLIS empowers employees to focus on innovation and core responsibilities.

Zero Distance to Client

The transformation at HOLIS aligns with the RenDanHeYi management philosophy, which emphasizes zero distance to the client by aligning employee interests with those of the organization and its customers. HOLIS achieves this through its innovative financial structure and transparent money flows, ensuring that employees are directly incentivized to enhance customer satisfaction and company performance.

Financial Structure and Transparency

HOLIS’s financial model, based on Profit First principles, uses five distinct accounts to manage funds:

1. Profit account: A portion of profits is distributed quarterly to employee shareholders.
2. Owner account: Covers earnings for the owners, including directors’ remuneration.
3. Tax account: Allocates funds for taxes.
4. Expense account: Includes business expenses, with leftover funds distributed as quarterly bonuses.
5. Repayment account: Reserved for loan repayments.

This structure encourages employees to manage costs effectively and maximize profitability.

Employee Incentives and Ownership

HOLIS’s incentive system directly ties employee success to organizational performance:

• Quarterly bonuses: Employees share in the balance of the expense account, motivating them to reduce costs and drive sales.

• Internal deposits: Employees can lend money to the company through an internal deposit system, receiving profit account distributions.

• Long-term benefits: Employees continue to receive profit account distributions after retirement, fostering loyalty and long-term thinking.

Internal Culture

HOLIS fosters a culture of autonomy by encouraging employees to take ownership of their roles and responsibilities.

The company values transparency, collaboration, and continuous improvement, allowing employees to thrive in an environment where they are trusted to make decisions and contribute to the organization's success.

The decentralized structure and financial transparency encourage innovation and effective cost management. Employees are motivated to reduce expenses and increase efficiency, directly impacting their financial rewards. This culture of innovation and cost-consciousness has led to significant improvements in company performance and employee satisfaction.

HOLIS's model promotes long-term thinking by incentivizing employees to consider the long-term viability of the company. To this end, it is of utmost importance to be constantly aware of customer satisfaction and to gain long-term repeat customers. Because the interests of employees are aligned with those of customers, there are fewer complaints and more satisfied customers. The internal deposit system and long-term profit distributions encourage employees to prioritize strategic decisions that ensure the company's continued success and profitability.

Conclusion

HOLIS’s transformation into a decentralized, self-managed organization with transparent money flows exemplifies the power of aligning individual and organizational interests. By embracing the principles of self-management and financial transparency, HOLIS has successfully enhanced employee satisfaction, increased profitability, and positioned itself for long-term success.