Editor’s note: This article was first published in March 2013. Its figures are as of 2013: Valve valued at $4 billion and employing 400 people.
Imagine a company with no bosses, no senior management and no human resources department. Bonuses, firings and hirings are decided by consensus among colleagues. Now imagine that this company is among the leaders in its market and is valued at $4 billion. It is no joke: this company exists. It is called Valve, and it is one of the leading creators and developers of video games.
The company says it has a flat management model with no hierarchy, even though it currently has 400 employees. Its model is based on what several people at the company have described as the principles of anarcho-syndicalism: in other words, the free association of workers with one another.
Anarcho-syndicalism is an economic theory with roots in the 19th century that sets out a form of government in which a self-organised workforce achieves its goals directly. In essence, socialism with no centralised government other than the unions.
In practice, this means that after an internal process in which a self-organising committee hires a new employee, he or she is free to join and move between any of the company’s projects, or to start one of their own.
Mobility within the company is essential, according to one of its workers, because they have shown that an employee who is free to use their creativity is far more efficient than someone whose work is limited or restricted.
Hiring and firing can be set in motion by something as simple as a conversation between two employees in a corridor, since a decision needs two people (what they call peers). And bonuses, which can sometimes be as much as ten times a base employee’s salary, are subject to peer review, with no designated leaders making the decision.
Although many might think this kind of flat management could lead some people to take advantage, the truth is that these companies depend heavily on people who genuinely believe in the social norms that govern them. According to people at Valve, most companies need bosses because they have not hired the right staff: if you hire someone responsible and committed to a project, they will know what they have to do and will not need someone to remind them every day. “We all have a common goal, which is to be the best in our market, and so far we are achieving it,” said one Valve employee.
Valve was founded in 1996 by Gabe Newell and Mike Harrington, both former Microsoft employees.
It is a curious way to run a company, to say the least, and perhaps a little surprising that it has been so successful.
Featured image: SounderBruce from Seattle, United States, CC BY-SA 2.0, via Wikimedia Commons.
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