The Wall Street Journal reports: Like many tech companies, Valve Corp., a videogame maker in Bellevue, Wash., boasts high-end espresso, free massages and laundry service at its offices.

One thing it doesn’t have: bosses

Valve, whose website says the company has been “boss free” since its founding in 1996, also has no managers or assigned projects. Instead, its 300 employees recruit colleagues to work on projects they think are worthwhile. The company prizes mobility so much that workers’ desks are mounted on wheels, allowing them to scoot around to form work areas as they choose.

Welcome to the bossless company, where the hierarchy is flat, pay is often determined by peers, and the workday is directed by employees themselves.

So, how does anyone get things done?

“It absolutely is less-efficient upfront,” says Terri Kelly, chief executive of W.L. Gore, the Newark, Del., maker of Gore-Tex and other materials. Her title is one of the few at the company.

“[But] once you have the organization behind it…the buy-in and the execution happen quickly,” she adds.

Companies have been flattening out their management hierarchies in recent years, eliminating layers of middle management that can create bottlenecks and slow productivity. The handful that have taken the idea a step further, dispensing with most bosses entirely, say that the setup helps motivate employees and makes them more flexible, even if it means that some tasks, such as decision-making and hiring, can take a while.

At Valve, there are no promotions, only new projects. To help decide pay, employees rank their peers—but not themselves—voting on who they think creates the most value. The company declined to provide information about how much salaries vary.

Any employee can participate in hiring decisions, which are usually made by teams. Firings, while relatively rare, work the same way: teams decide together if someone isn’t working out.

As for projects, someone typically emerges as the de facto manager, says Greg Coomer, a 16-year veteran of Valve who works on product design. When no one takes the lead, he adds, it’s usually a sign that the project isn’t worth doing.

When colleagues disagree on whether to keep or scrap products, the marketplace decides, Mr. Coomer says. “When we honestly can’t come to an agreement—that’s really very rare—we ship and find out who was right. Over time we’ve become comfortable with the idea that we might be making a mistake when we do that; our customers know that if we screw up, we’ll fix it,” he says. [Continue reading…]