Here’s a deal for you: no managers, no job titles, no traditional hierarchies, and if that doesn’t jive with you, there’s a nice severance package waiting. Do these add up to a worker’s paradise? Or a social experiment doomed to fail?
US e-commerce company Zappos is giving it the old college try. Although their trade is keeping people supplied with shoes, the business is becoming better known for spruiking some unconventional management practices. Back in 2013, CEO Tony Hsieh (pronounced Shay) announced he was tearing down more than just cubicle walls when he switched the entire company over to a concept called holacracy. Workers made the switch a few departments at a time, starting with its HR and recruiting teams, until the whole company transitioned over in 2015.
The system is less like a pyramid (a top-down approach) and more a series of overlapping circles, where individuals have no official ‘boss’, but rather a system of checks and balances on shared responsibilities. Employees can choose which circles they belong to, what projects they work on and all proceedings, including meeting agendas and timecards, filter through the holacracy software, Glass Frog.
Although other businesses use holacracy, Zappos stands out for being one of the biggest companies to implement the program. It’s also one of the first to have systems in place and a culture that is consistently voted as one of the world’s best. Therefore, what happens at Zappos has implications for the future of workplace structures in other sectors and other companies.
But what do their employees think? Turns out, many liked having someone at the top. Hsieh delivered an ultimatum to employees in April 2015: accept holacracy, or take the money and run. Roughly 200 employees, or 14 per cent of the workforce, took him up on his offer. Since then, that number has risen to 18 per cent.
But whether these employees left because they didn’t like holacracy or because their roles became obsolete is unclear. In an interview with Quartz magazine early last week, COO Arun Rajan reported that 75 to 85 per cent of employees who left were managers.
Feedback from those who stayed has not been all positive, either. Complaints include frustrations with the new system’s complex structure, where circles (250 and counting) can be disbanded and reformed at any time. Meetings are endless, say some, and no one is sure how to definitively work out pay structures for a system with no job titles and fluid roles. And then there’s the lingo: domains, tensions, roadblocks and #mentors all take on new meaning, and ‘manager’ is for all intents and purposes barred from Zappos vocabulary.
It’s not all bad, though. Because all functions and activities are hosted online in a single location, it’s easy to make everything transparent and accessible. Empowerment is another incentive.
“A person whose job it is to just takes phone calls can propose something for the entire company,” says current employee Danielle Kelly in an interview with The New York Times. “It’s empowering everybody to have the same voice.”
Hsieh acknowledges that the transition hasn’t been smooth, but he is on a mission to test the limits of organisational reformation. Over time, he hopes holacracy will bring the company back to what made it a top-tier workplace: a sense of community that leads to friendship and trust in the office.
Proof of the system’s success is slow-going, but for now those spearheading the transition within Zappos are taking baby steps. Meanwhile, other companies will have to wait and see if it’s worth taking the leap.