Zappos Goes Manager-Free, Employees Leave in Droves
If you’ve ever had a bad boss, you’ve probably fantasized about a working life without managers. How much would you get done, if you didn’t have to deal with the politics, the inane requests, the useless meetings designed to further their goals at the expense of your own? But before you ponder making a leap to a company with a flatter management structure, keep this in mind: Zappos, the online shoe retailer known for speedy delivery and top-notch customer service, just made the move to a manager-free structure – and nearly 14 percent of employees liked the idea so much, they took a buyout instead.
(Photo Credit: ShashiBellamkonda/Flickr)
Zappos has been gradually rolling out holacracy, a “self-governing” system without managers or job titles, since late 2013. In the new structure, circles replace hierarchy, and employees can fulfill several roles at once.
Proponents of holacracy claim that the system offers greater flexibility for employees and a stronger focus on work, ultimately creating greater transparency and productivity. Critics, however, point out that a flat system can be disconcerting for American workers, who are accustomed to keeping their eye on the next step in their career path, and may be less efficient at weeding out people who aren’t pulling their weight.
Plus, like any system, it’s only as good as the people behind it. If holacracy is sound, and people practice it in good faith, it could be a wonder, but without employee buy-in, it’s doomed to fail.
Which is the logic behind Zappos CEO Tony Hsieh’s decision to offer severance to workers who aren’t “all in.” In an internal memo reprinted in Quartz, he explained:
As previously stated, self-management and self-organization is not for everyone, and not everyone will necessarily want to move forward in the direction of the Best Customers Strategy and the strategy statements that were recently rolled out. Therefore, there will be a special version of “the offer” on a company-wide scale, in which each employee will be offered at least 3 months severance (and up to 3 months of COBRA reimbursement for benefits) if he/she feels that self-management, self-organization, and our Best Customers Strategy and strategy statements as published in Glass Frog are not the right fit. (For employees that have been with Zappos for 4 or more years, the offer will be 1 month for every year worked at Zappos, along with up to 3 months of COBRA reimbursement for benefits.)
Taking the buyout was no easy feat, either. GeekWire notes that even getting to the section with the severance offer meant reading through a lengthy email, containing two essays about the virtues of holacracy, and watching a two-hour-long video on the same, created by Frederic Laloux, the author of Reinventing Organizations.
“After that, they needed to either read Laloux’s book (which was provided for free in digital form to all Zappos employees) or write a letter explaining that they did not intend to do so,” writes Blair Hanley Frank. “Only after that would they get three months’ severance and 3 months of COBRA benefits, unless they were a Zappos employee for more than four years, in which case they would get one month of severance for every year with the company.”
Even with all that, 210 out of 1,503 employees took the deal. Depending on your perspective, that’s either great for Zappos, which presumably only has holacracy-pro (or memo-averse) employees left, or bad for flat management structures, which sound so tempting in theory, but aren’t necessarily a panacea for all that ails modern companies.
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