No boss? No job title? Self-organizing management systems sound great.
But it turns out Zappos employees like the old hierarchy
When Zappos’ Tony Hsieh decided in 2012 that the Internet shoe retailer would adopt a new non-hierarchical management structure called Holacracy, he did what many powerful people wouldn’t consider for a second: He gave up power. (Or, at least, his title.)
But, as it turns out, some Zappos employees actually miss having someone at the top.
On January 8, the company’s chief operating officer announced that 18% of the company’s employees took Hsieh up on an offer he announced last March: If you’re not on board with Holacracy concept, take a three-month severance package and head for the doors. (The offer, like much in Holacracy-oriented nomenclature was somewhat opaque. The company called it the “Teal” offer, a reference to a term for the perfect state of self-organization — on the color spectrum beyond green — coined by author and management consultant Frederic Laloux.)
Zappos was the largest, most high-profile company to adopt Holacracy, a system that eschews job titles and the traditional command-and-control approach, using instead a self-organizing system of roles and overlapping “circles” of responsibility. The approach leans on the idea that individuals within organizations are empowered when there’s no official “boss,” and when everyone is working toward a common goal.
Hundreds of smaller firms and nonprofits are adherents. (Roughly 350 use GlassFrog, the cloud-based software that Holacracies use to run their organizations.)
“Part of what make Zappos so unique is you have this fairly large organization, attempting to make this change,” said Bradley Staats, an associate professor of operations at the University of North Carolina-Chapel Hill. “When you typically see this it’s with originations that started with this system and grew up with it. That’s why everyone’s watching with fascination.”
Developed in 2007 by the software engineer Brian Robertson — whose book on the subject is a must-read for employees at Holacratic organizations — the approach dovetails handily with the egalitarian ethos of many startups. It’s the antidote to the power mavens that dominate classical business hierarchies, the antithesis of Donald Trump.
Roughly 260 of Zappos’ 1,500 employees, though, have decided it’s not for them, a reaction that critics have attributed to a somewhat paradoxical problem. Hsieh was the boss — and still is, despite his titles as “ratifier of the Holacracy constitution” or “lead link” — and essentially declared that the new system was non-negotiable.
“The idea of a participatory system of management being imposed from on high strikes me as sort of inconsistent with the idea of decentralization and employee empowerment,” explained Jeffrey Pfeffer, a Stanford Business School professor who’s written extensively on management systems and organization theory.
Though Robertson launched Holacracy formally in 2007, the approach has democratic-minded predecessors.“We really saw the rise of self-management teams in the 1980s,” Staats noted.
Later, Danish hearing-aid maker Oticon launched its “spaghetti organization” in 1990, and IBM has adopted elements of Agile software development system, which originated formally in 2001 and espouses some of the same self-management thinking as Holacracy. Both have conceptual links to Toyota’s famed “lean management” system, which goes back decades.
But Holacracy also has competition from other branded management systems or concepts, which some critics say positions it as a faddish.
“Nine-tenths of the approximately 100 branded management ideas I’ve studied lost their popularity within a decade or so,” said Julian Birkinshaw from the London Business School notes, in an interview with the Economist.
But, for now anyway, Holacracy seems to be the non-hierarchical management approach du jour, even as some management experts see its potential flaws.
“You get the potential for a great deal of autonomy but that can come at a cost,” Staats noted. “Sometimes with self management you can go from having one boss to everyone being a boss and everyone watching you.”
Harry Kraemer, a professor at Kellogg School of Management and former CEO of Baxter International, said that in his experience “employees are less sensitive to the structure and hierarchy and more sensitive, and focused, on whether they have a boss who cares about them and takes the time and interest in their development.”
He said the biggest reason an employee leaves an organization “is because of a dysfunctional relationship with their boss, not issues with the overall organization.”
And whether Hsieh calls himself “ratifier of the holacracy constitution” or not, he’s still the boss.
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