Flatlining for the better?
Zappos Tony Hseih has dispensed with hierarchy; is the idea more than just a trend?
During a corporate event in Miami Beach last September, Zappos CEO Tony Hseih ruminated on the need to trust and empower employees. The 40-year-old wunderkind venture capitalist, made famous for developing an outside-the-box corporate culture that encourages new hires to take generous buyouts if they grow unhappy at the billion dollar online shoe retailer, hinted at more workplace changes in the offing.
“We’re proud of the culture we’ve created. And we’re going to keep going in that direction,” Hseih said then.
As the New Year approached, the next step in that direction became clear. Zappos announced that it would adopt a “flat” organizational structure, wherein it will strip managers of titles and elevate non-management employees, adopting an anti-hierarchal approach that will eliminate all job titles. Hseih said Zappos was set to become a “holacracy,” a self-governing company that encourages work groups to organically emerge and solve problems, set strategies and execute initiatives. Power will be distributed more evenly; lower tier employees will be placed on even footing with bosses.
Power will be distributed more evenly; lower tier employees will be placed on even footing with bosses.
It may sound like anarchy in the making, but the system has its proponents. Twitter cofounder Evan Williams has instituted holacracy in his newest venture, publishing platform Medium.com, as has Whole Foods CEO John Mackey in his company’s nonprofit. In theory—and often in practice—with authority and decision-making taken away from the top of the pyramid and distributed throughout self-organizing teams, profits will increase. Those in the c-suite often bristle at the mention of holacracy, what with its inherent socialistic tenets.
But a business killer on an economic scale may be a bottom-line booster when deployed inside a corporation. After all, how often have you felt that the head honchos, who have no idea how your job is done, are making egregious mistakes that are obvious to you and your department? What if you were empowered to overrule those mistakes before they were enacted? In a holacratic company, with a flat structure, it wouldn’t just be your right—it would be your responsibility.
Hseih is counting on his newly-flat Zappos to stave off the chilling effects of bureaucracy that often confound growing companies. From a lean startup in 1999 to a 1,500-person workforce, Zappos’ meteoric rise was predicated on making the customer first and being the “uncorporate” corporation. Hseih hopes the restructuring will increase its agility, efficiency, transparency, innovation and accountability. •
This article appeared in the Feb./Mar. issue of Poder Hispanic Magazine. Check us out at poder360.com, and follow @PoderMagazines.
