A lot of people hate their boss.

The folks at Portland startup Treehouse hate the boss, too. Any boss. Every boss.

How it works

Project assignments

: Any Treehouse employee can propose a project by submitting it on an internal company website. If enough of their colleagues sign on to help the project goes forward. If it doesn’t attract others’ interest, it’s abandoned. Executives don’t make go/no-go decisions, but do select certain projects as key to Treehouse’s strategic priorities.

Employee review

: Workers evaluate one another each quarter, rating everyone they’ve worked on a project with (typically five to 10 people) on a scale of 1 to 5. Employees are asked to evaluate colleagues’ judgment, communication, working style and skill level. Good reviews are they key factor in deciding who gets raises. Consistently bad reviews start a process that can lead to firing.

Allocating resources

: Treehouse’s co-founders set monthly budgets and hiring targets for each department. The teams in each department do the hiring themselves.

So, last summer, the company eliminated its managers altogether. The 61-person tech-education business converted almost everyone into a front-line worker. Treehouse gave all employees the authority to propose their own projects, to choose what they work on and to rate one another.

Treehouse says it’s increased productivity and employee enthusiasm by freeing workers from managerial oversight and giving them the information and latitude to do their jobs the way they see fit. Employees pick the projects they want to pursue and proceed only if they can get others to join in.

Treehouse isn’t a commune. It has a chief executive, Ryan Carson, who sets the company’s direction with his co-founder Alan Johnson and Treehouse’s board.

Below that, though, middle management is completely gone. That’s a radical step but the Portland company isn’t the first or only one trying it. Businesses have long sought to limit managerial overhead costs, and a handful of others are taking that to extremes with the no-boss workplace.

Academics say the approach has merit, at least at small companies. And Treehouse’s investors – who have collectively put close to $12 million into the business – say they’re on board with the experiment.

Six months in, the no-boss workplace is indeed still an experiment. Carson acknowledges the possibility that obstacles will emerge as the work force grows and it grows more complex to coordinate tasks and projects.

So far, though, he calls the results encouraging.

Ultimately, Treehouse’s decision to do away with bosses is a philosophical one. Carson said he trusts in his employees, so he trusts them to make good decisions.

“Let’s design the system for optimism rather than pessimism,” Carson said. “Let’s design it so that a few people will take advantage of it, but most people won’t. Because they’re good.”

Founded in 2010, Treehouse produces online education courses designed to teach people high-tech skills as an alternative to a long and expensive pursuit of a college degree.

Treehouse moved its headquarters from Bath, England to Portland last year; most employees are in Orlando, Fla., where the company has a video-production office that turns out its courses. Carson is among a dozen working in the headquarters office in Northeast Portland. (Treehouse picked Portland to save costs over other U.S. tech hubs, and because Carson and his family wanted to live close to outdoor activities.)

Treehouse has raised $11.75 million in outside investment, most recently in a $7 million round led by Kaplan Ventures, the investment arm of the educational services company. It says revenues are running at an annual rate of $8.5 million.

The notion of remaking Treehouse’s management structure emerged last spring, when word filtered up that some front-line employees didn’t feel their voices were being heard – and that one planned to boycott an all-hands meeting as a result.

So Carson and Johnson, his co-founder, Alan Johnson, began hashing out a way to get employees more involved in making decisions.

“Maybe we just have too many managers,” Carson recalls musing. “Maybe they’re feeling disempowered at the bottom.”

Treehouse only had seven managers below the executive team, but that was more than 10 percent of the work force.

Other businesses without bosses

"Most of what we call management consists of making it difficult for people to get their work done." -- Peter Drucker, famed management consultant and author

Companies have long sought to eliminate layers of management, in part to improve communication within a business and in part to reduce the expense of paying managers who do not directly contribute to a company’s productivity. “Flatter” organizations have fewer layers between the front-line employees and the executives at the top.

A 2003 study by the National Bureau of Economic Research found a sharp increase in the number of managers reporting to the CEO, and a 25 percent decline in the levels of management between division heads and the CEO.

A few companies have taken that to extreme, the way Treehouse has. Here are some examples:

W.L. Gore

: The Delaware company behind Gore-Tex has a “lattice” structure. Employees are “associates” and bosses are “sponsors.” Projects are led by those working on them. Gore has more than 10,000 employees and annual revenue of more than $3 billion.

Valve

: The video game maker, based in Bellevue, Wash.,

that described “Flatland” – an organizational structure that encourages small groups that make decisions collaboratively. Employees’ desks are on wheels so they can easily rearrange their workgroups to join new projects.

GitHub

, a San Francisco web hosting company, applies the conventions of open source software projects to its management structure. Employees choose what they work on, and projects go forward based on their appeal within the company.

So Carson and Johnson began asking themselves more fundamental questions about business and their employees: Do they employees need supervision? Can they manage their time effectively on their own, without a boss to tell them what to do?

Treehouse put the question directly to employees in an internal, online forum.

“The company just argued it out,” Carson said. “There were very strong feelings both ways.”

The initial post proposing the no-boss idea produced 447 comments. Employees eventually lined up strongly in favor of the switch, according to Carson, but the seven managers were split. Some were enthused about returning to the jobs they were hired for; others feared a loss of direction.

Under the new system, work at Treehouse is organized around projects that employees propose in an online forum. Proposals that gain a following move forward and pick a manager; those that don’t get traction are abandoned.

“There’s still going to be leaders at Treehouse,” Carson said. “There just aren’t titles. The only way you can be a leader is if you lead and people want to follow.”

One key to making the new system work: Carson said Treehouse is committed to sharing lots of information about the business with its employees, so they can make educated decisions about how to proceed. Many other Portland startups do that, too, including online banker Simple, data network manager Puppet Labs and mobile software developer Urban Airship.

Additionally, Treehouse’s founders execs will give an official blessing to projects that fit with strategic priorities – a step employees requested, Carson said, to give them more guidance on what the business requires. He said he hadn’t expected employees would want that.

“People wanted a wide fence to operate in,” he said. “But they do want a fence.”

You might think Treehouse’s investors would be wary of unorthodox practices – especially since the company revamped its structure before clearing it with its backers. Carson sprung the news on them at a board meeting. But Kate Eberle Walker, a vice president with Kaplan Ventures in Chicago, said she was excited when Carson announced the change.

“He was really talking not just about teaching people technology skills but making them more effective in their jobs by using those skills,” she said.

Treehouse’s project-based structure makes particular sense at an education-oriented company, Walker said, because so many educational programs are based on similar collaborative projects. Whether it’s students or employees, she said, people do well when they’re picking what they work on and working together.

“When you give them the opportunity they will create work for themselves, effectively, and put more effort into it,” she said.

The no-boss workplace sounds like a departure, but it’s not so different from how lots of small, companies operate, according to Berrin Erdogan, a management professor at Portland State. She likes to see enterprising companies trying imaginative approaches to management.

“Startups start out flat anyway. They can’t afford to be otherwise,” she said. “Innovation comes from not having to too many structures, rules, protocols to begin with.”

There are certainly potential drawbacks, though. Erdogan said studies have found that great managers can add great value – and she cites a 2009 Google initiative called Project Oxygen that identified key ways managers can lay out a clear strategy and career path for employees, and improve their results.

At a company like Treehouse, Erdogan said, the business will depend on finding workers who have imagination and initiative. A company that requires employees to continually advocate on behalf of their own projects won’t fit with every kind of worker.

“Your employees need to be selected for this or trained for this. This will not come to everyone naturally,” she said. “It could be an introvert’s nightmare.”

There’s a real risk, she said, that good ideas could be supplanted by appealing ones.

“It can turn into a popularity contest,” Erdogan warned. “People who are most passionate about an idea may not have the right idea.”

Treehouse is well aware there may be pitfalls, especially as the company’s work force grows. Carson is wary of the employee evaluation process consuming too much of workers’ time. And he’s concerned that the peer review process may be less dependable as the company expands and the executives are less familiar with the work of individual employees.

“The worry is, as you scale, how do you get people to honestly evaluate each other? Because we’ll rely on that,” he said.

Again, though, it comes back to Treehouse’s basic philosophy. Carson said he believes in his employees, so he believes he can trust them.

“We’ll still make bad choices,” he said, “but at least they’ll be made by people who choose to make them.”

-- Mike Rogoway; twitter: @rogoway; phone: 503-294-7699