Zappos' new 'Holacracy' management system: No managers, no hierarchy - or you can leave

One US firm has a radical new policy and if you don't like it, you're paid off. How have the workers reacted?

Jena McGregor
Tuesday 12 May 2015 19:34
All in it together: Zappos has acknowledged that selfmanagement is not for everyone
All in it together: Zappos has acknowledged that selfmanagement is not for everyone

In March, Zappos' CEO Tony Hsieh issued an ultimatum of sorts to his employees. If they didn't feel like they could get behind the US online clothing store's radical new management system – in which there are no traditional managers or job titles – he would give them until 30 April to decide whether they wanted to leave in exchange for at least three months' severance pay.

The company said that it was offering the option to eligible employees so as to expedite the new system's adoption.

Now that the deadline has passed, it turns out that 210 employees, or about 14 per cent of the online retailer's 1,500 workers, have taken Hsieh up on it. Zappos confirmed the number, though declined to specify how that number breaks down among its sales representatives and executives.

The high number of departures perhaps shows how hard it is for employees to pass up the chance to receive three months' pay for no work, whether they like the new management system or not – especially when an expanding job market means it's getting a little easier to find a new job.

It also could be a sign that a sizeable chunk of employees just didn't warm to the unconventional approach.

John Bunch, who is helping to lead the company's transition to the new system, wrote in an email to me: "The offer was a big incentive to leave Zappos and people took the offer for various reasons.

"Some Zapponians took it because they are not in line with the vision of the company, others took it to pursue other passions including starting businesses. Ultimately, however many people took the offer is the right number because they are doing what is best for them and for Zappos." In Hsieh's earlier memo, he acknowledged that "we haven't made fast enough progress" toward the new system and recognised that "self-management and self-organisation is not for everyone".

Other reports have cited employee frustrations with the new system, which includes a complex structure and lingo.

The radical approach to management that Zappos is aiming for includes a trademarked concept called "Holacracy". In it, traditional corporate hierarchies are replaced with self-governed teams known as "circles" in an effort to make the organisation more agile and innovative.

Hsieh's goal, as he outlined it in his March memo, is "to make Zappos a fully self-organised, self-managed organisation by combining a variety of different tools and processes".

To that end, he's asked employees, as a first step, to read a book called Reinventing Organisations and watch a lengthy YouTube video by its author.

The current offer is not the first the company has made to employees. Zappos has long had a standing offer in place for new workers: If they decide they're not a good match with the company's culture, they can get $2,000 (£1,280) to quit. In 2004, Hsieh also offered to help pay for employees to return to San Francisco if they decided its new headquarters city, Las Vegas, wasn't a fit.

In March, Bunch said in an interview with The Washington Post that "there have been some people who've embraced those changes with open arms, and other people for whom maybe it [hasn't] resonated as strongly." Now, apparently, we have some idea of how many.

©The Washington Post

Structural survey: Unusual ways to work

John Lewis

All 93,800 of the permanent employees at the John Lewis Partnership (which includes Waitrose) are partners and they ultimately own the retailer's stores and supermarkets. All staff, from chairman Charlie Mayfield down to part-time shelf-stackers, receive the same annual salary percentage payout, which rises or falls in line with its financial fortunes. This year it was 11 per cent.


It was reported last year that Mark Zuckerberg's company will cover employees' egg freezing procedures, reimburse their daycare and/or adoption fees, as well as throwing in $4,000 (£2,550) in "baby cash".


Many employees have had to relocate to keep their jobs, but online investing firm Scottrade will actually consider opening offices in areas to which employees want to move. So far the St Louis-based company has opened more than 20 new sites.

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