Eliminating Managers: The Zappos Experiment

The famous online shoe company, Zappos, is installing a “holacracy” within its company, entrenching the retailer’s quirky reputation. In the past, CEO Tony Hsieh has encouraged and put in place many untraditional practices that other companies have embraced. For instance, Hsieh offered a $2,000 “exit plan” for new employees who did not take to the company’s offbeat, “zany” culture. So what is this holacracy, and what does that mean for Zappos?

Holacracy is defined as a system that lacks organization structure or management hierarchy. It removes power from concentrated areas and redistributes it (along with duties) among autonomous employees who will not have any sort of overseeing “micro-managing” supervisor. Zappos will be eliminated manager roles, job titles, and hierarchy.

Hsieh sent out a company-wide memo, 4,700 words long, describing the unconventional idea. In the memo, he offered another exit plan not unlike that offered for the company’s culture. If the employee meets a certain criteria set, then they may be eligible for a 3 month severance. If they meet the eligibility requirements, then the must also ready a book called Reinventing Organizations and watch an almost two hour YouTube video from the books’ author for the severance.

The Washington Post analyzed, “…it’s a way to help employees cope with radical change—while, in the process, filtering the employee pool of the least engaged folks.” Though the system is not for everyone, the company contends there’s “a lot of faith in the vision” and hopes to ensure the future health of the company.

Source: Washington Post & TLNT.com