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Zappos CEO Pushes "100% Weird" Boss-less Model After Employee Exodus
Last month, Zappos CEO Tony Hsieh made what he would likely call a calculated error: he forced his 1,500 employees to choose between a seemingly unpopular ultimatum and free money. Hundreds chose the money.
Hsieh is in the process of implementing a “holacratic” corporate culture at Zappos. As a reminder, here’s what that means:
Holacracy is, in Hsieh’s words, “a system that removes traditional managerial hierarchies allowing employees to self-organize to complete work in a way that increases productivity, fosters innovation and empowers anyone in the company with the ability to make decisions that push the company forward.” So essentially, it’s a boss-less structure aimed at driving productivity and innovation by allowing employees to take ownership of their respective goals and responsibilities.
That sounds good in theory, but for whatever reason — perhaps employees want structure and guidance, perhaps they perceived the new system as antithetical to career advancement, or maybe all of the managers just quit — 210 people chose “the offer” over Holocracy.
“The offer” is Zappos lingo for a pay-to-quit scheme wherein the company offers to compensate employees who choose to leave, the idea being to retain only those who are truly dedicated to Zappos. Typically, only around 1-3% accept — this time around, the number was 14%.
New details are now emerging both about the employee exodus and about how effective the “bossless” system has been in terms of achieving the outcomes envisioned by Hsieh.
WSJ has the story:
Brironni Alex was so good at answering telephone calls and emails from customers at Zappos.com Inc. that the company promoted her to customer-service manager.
But when the online retailer adopted a management philosophy called Holacracy, she lost her job title and
responsibility for performance reviews. Since the end of April, Zappos has zero managers to oversee employees, who are supposed to decide largely for themselves how to get their work done...
Employees say the new system has been confusing and time-consuming, especially at first, sometimes requiring five extra hours of meetings a week as workers unshackled from their former bosses organize themselves into “circles” and learn the vocabulary of Holacracy.
Created by a former software executive, the philosophy is spelled out in a 30-page “Constitution” where doing a job is called “energizing a role,” workplace concerns are “tensions” and updates are made at “tactical meetings”...
Boss-free companies are the extreme version of a recent push to flatten out management hierarchies that can create bottlenecks and slow productivity. W.L. Gore & Associates Inc., the maker of Gore-Tex fabric, says it has more than 10,000 employees and annual sales of more than $3 billion but no traditional organizational charts or chain of command...
Tweaks to how employees work at the company’s headquarters in the former Las Vegas city hall are common. Employees from every part of Zappos frequently mention its second core value: “Embrace and Drive Change.”
Zappos began testing Holacracy with a small group of employees in 2013. Mr. Hsieh then declared at a company wide meeting that Zappos would get rid of bosses and put employees in charge.
The management philosophy replaces work teams with circles. Employees start or join a circle based on the type of work they want to do, and each circle has a “lead link” who is similar to a project manager with limited authority.
Day-to-day routines were thrown into doubt, too. In many companies, managers announce new projects and direct employees to meet specified deadlines. The bosses usually track performance, make crucial decisions and swoop in if problems erupt.
Holacracy-driven employees establish their own priorities and raise problems with the rest of their “circle.” Meetings end with an opportunity for employees to say whatever is on their minds. Ms. Jimenez says she has heard employees say: “We got a lot done” and “I can’t wait to eat my leftover pizza for lunch.”
Note the rather amusing bolded passage above wherein employees attest that this space-age, zen-like management philosophy which Hsieh swears will "increase productivity" has in fact been "confusing", "time-consuming", and on bad weeks, creates five hours worth of extra meetings because no one can understand what anyone else is saying.
In a further testament to just how efficient this new system isn't, Hsieh says implementation will take half a decade...
Mr. Hsieh says it could take Zappos two to five years to finish the transition.
...while those who stuck around think things have gone from 'we've got a McDonald's playplace in the office' eccentric to 'we may have inadvertently joined a cult' weird:
“Create Fun and a Little Weirdness” is one of 10 “core values” [at Zappos] and a conference room features a Chuck E. Cheese’s-style pit filled with small plastic balls...
Marques Smith, 31, who drives the company’s courtesy shuttles, found Holacracy hard to understand and “weird 100%."
Here's a handy Holacracy graphic to which you can refer should any of the above sound as convoluted to you as it apparently did to 14% of Zappos' workforce:
* * *
In the end, Hsieh isn't discouraged by the employee exodus because after all, not everyone quit:
“Another way to look at it is that 86% of employees chose to ... stay with the company.”
Right.
Kind of like how another way to look at a 20% decline in Greek bank deposits since December is that 80% of depositors didn't stuff their money in the mattress.
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McDonalds should try this. The food will still be dog shit but pay the employees $15 an hour. Do it for the children and illiterates.
Make this guy CEO
https://www.youtube.com/watch?v=hGsc5_WYchA
Manager slavery are a relic of the past.
"Brironni Alex was so good at answering telephone calls and emails from customers at Zappos.com Inc. that the company promoted her to customer-service manager.
But when the online retailer adopted a management philosophy called Holacracy, she lost her job title and responsibility for performance reviews. Since the end of April, Zappos has zero managers to oversee employees, who are supposed to decide largely for themselves how to get their work done...
Employees say the new system has been confusing and time-consuming, especially at first, sometimes requiring five extra hours of meetings a week as workers unshackled from their former bosses organize themselves into “circles” and learn the vocabulary of Holacracy."
ROTFL!
I run my company from the book "The E-Myth Revisited" out of print I think...
It talks about creating systems and putting undereducated people in those systems with training...... on how to DO the system.....and ....I pay these people MORE than tehey could make anywhere else with their limited education and experience....and they NEVER leave.
Employees don't give a fuck about the company...they just want to be told what to do....do it....and go home.
Tony Hsieh's is a neo-commie thinking he has invented something original. Bullshit.
Give the employee a wrench and show them what to bolt on and pay them well.
Neo-commie?
W.L. Gore & Associates dickhead.
There sure are some confused people here. One minute they are railing against serfdom, the next they are begging to be told exactly what to do.
"I don't want self determination, I want fascism that I can moan and whine about."
I once worked in a factory where there were no supervisors. Well actually we had two supervisors, but one always arrived drunk and slept all night. The other would disappear for most of the shift to get drunk.
Actually the place ran quit well.
This concept of "no bosses" is actually (to a degree) pretty common in software development. Development methodologies such as Scrum (which is used in many of the development departments at Google) utilize more of a self-organizing model in which the traditional "boss" roles are shifted more toward supporting roles for addressing items which are blocking progress on a given task - things like resource availability, communication issues with outside departments or companies, etc. The business side provides a prioritized list of general tasks (called Stories in Scrum), which are picked up by the development team at their discretion. You don't have bosses assigning work. The team members get together themselves for regular meetings to touch base on current progress, and to plan future work. It works really well when the employees are trained properly on how to function within the framework.
It is a fact that creation emerges best when individuals are free to act unilaterally (eg open source software, Wikipedia, free market vs planned economy, distributed intelligence, etc.). So how does a corporation compete with the newfound ability of individuals to assemble and produce over the Internet? Perhaps this holocracy thing is a step in the right direction, perhaps not. The collective advantage of individual liberty is precisely this kind of distributed trial-and-error. So I'm a bit disapointed that ZH would gratuitously criticize it, and regurgitate the obscurantist WSJ to serve its argument.
Wait until you see the latest MBA craze, "How to get blood out of a turnip". Unfortunately, this isn't one of my usual snide comments.
Similar to our work place here.
Free form, Heavy and Lite contributers.
Low moderation, Topics fed to our collective grinder.
Pay based on................well skip that.
Knowledge and perception base expanded.
I work in software under a traditional organizational structure that is overloaded with managers, directors, group directors, junior vps, vps, senior vps, etc. The actual work is done by a few do-ru's that operate with no manager input on what we are actually doing. We submit reports on what we are doing and meet with managers once per month. They "approve" vacation time and do reviews a couple of times per year.
The people that left Zappo's were managers that strived to become managers so they could control other people. I would venture that most of them were horrible at actually doing the work but are very good at bothering working people with no value added policies and procedures that reinforce that they are the bosses.
For the most part Bosses are unnecessary for professional workers, an perhaps in other less skill jobs too. At best there needs to a worker of group workers assigned to handle logistic issues (ie scheduling, problems that can't be handle with SOP (Standard operation procedures). The issue is in most organizations middle management gets in the way of productivity, since they tend to add necessary "busy" work in order to make themselves a role in the business so they are perceived as having value.
That said there are some good managers. These are the people that are willing to pitch in with the workers, and well as providing mentoring to aid other workers so they can increase their skill sets. Unfortunately most managers tend to prevent workers from growing because they perceive that as a threat to their own employment.
While I too thought this was funny at first, the "corporate culture" of today belongs on the shitpile of history.
True leaders have no place there.
What I find surprising is the claim that 80% are still functioning after a year.
Not bad results if this idea is so absurd.
In a NFP organization 80% could be considered a success. In a profit based company, 80% is a catastrophy. Zappo's plan is simply anarchy for dummies and is sure to fail. Most successful companies define roles, hire appropriately, and let people do their jobs. Then a "boss" reviews them, leading to increased pay, responsibility, etc. No boss means no growth. Just because there are bad bosses doesn't mean we should eliminate all bosses.
BTW, Zappo has adopted socialism in the workplace, a system that has never succeeded in world history but remails a liberal utopian goal.
Every circle has a jerk.
Cut those poor employees some slack.
It takes a lot of effort to learn to think for themselves.
I tried to call them, but got a recorded message that the circle hasn't decided who should pick up the phone. The background on hold music sounded like tribal drums on "survivor" ;-)
I love that video.
Bitches come over the counter and get a taste of pipe, and not the fleshy kind.
An excellent training video for "Don't Tread On Me" 101.
Liberty is a demand. Tyranny is submission..
"First seek easier to defend space or ground with a strategic retreat. See, this young man retreats into a narrow space that allows him to strike back with impunity. Now, when the aggressor tries to resume the attack, put them down again. Repeat until the aggression stops. This tactic can be seen to be employed by this young man on at least three occasions against his aggressor. Also notice how, between defensive strikes at the aggressors, he surveys the area for additional threats. Textbook application of self-defense."
speaks volumes about the quality of management at that company..
so all grievances immediately go right to the top? Hsieh's gonna be busy.....
(real life: i worked nearly a decade in a small high-tech firm run by a control-freak. he had no concept of delegation or management, and in spite of some huge technology developments and very large orders, we never managed to grow over 100 people...usually floating just above half that. it was a real fun high-tech sandbox with no chance of growing up, and all we did was create a market for our developments and fail to grow with them, opening up opportunities for competitors to float in and fill the niche. painful to watch...still going on.)
"That sounds good in theory..."
No, it doesn't. A business is not society.
Sounds like a good cirlce jerk. First "energizing role" would be to vote to double salaries. Collectivism always ends the same way.
Working from home......don't call me.
So how many of these "holacracies" have an owner doing it with their own money and how many are "leaders" doing it with someone else's money?
Let me guess.
Ivy League buttplugs were somehow involved here.
There's a bigger joke in there -- I'm sure of it. I haven't figured it out yet, but I am working on it.
I'm thinking something along the lines of Brown and Dartmouth representing ass to mouth.
Or maybe a proper Cornell cornholing.
Do they dig up old Windham Hill albums and meditate to them during work hours too?
Sooner or later (likely sooner), those circles will form their own cliques with all the hierarchies inherent to any other social group. It happens in kindergarten, elementary school, junior high, high school, university, and workplaces (managed or un-managed). And then the unwanted will be voted out of the clique.
The point is, a leader will always emerge from the pack.
Spoken like a true member of a slave race.
Piss off. The slaves are still working at Zappos. The non slaves (all 14% of them) quit.
As for me, I'm just pointing out the foibles of the slave race. Prove me wrong.
Oh...and piss off again.
The slaves indeed desire slavery.
suteibu
I agree with your assessment.
Even the Ancient Irish who were big fans of the circle of the people, had ovates, bards, druids, and a king for structure.
Ehm, I miss the weird part?
Exactly.
Every idea has its place.
During construction you may have to dirty the place and even destroy a few things. But the end could be a thing of beauty.
Why not wait before passing comments.
Wow. This CEO must be serious Utopian nut job. Businesses aren't a democracy. If you don't have qualified, good management, the worker bees simply can't be productive. How do you deal with idiots and under performers in an environment like that?
This all reminds me of other hilarious business models, like restaurants where the customers pay what they want. Let's see how long they are around.
Business doesn't require a whip to run effectively. Slaves tend to think they do though.
100 years of management theory and practice proved only one thing - having managers is about as useful as having herpes.
The society was saddled with just one more unproductive, parasitic (managerial) class.
Thankfully, managers can be replaced with a simple software nowadays.
Zappos has a flat org structure since years and is a hugely successful company, praised by both customers and employees.
Guess what dear manager? Worker bees always knew they don't need you, but now bee keepers are starting to getting it, too.
Be worried. But, I guess you'll manage it somehow... ;-)
This may only work in small companies where everybody has a piece of the pie. But even then some roles crystallize and someone is promoted to be in charge of X or Y, if the group has same intent.
Even in a high-school band of 5 people there is crap if someone doesn't take the lead.
Next time around the zany Zappos CEO is going to tell 'em that they have to speak Esperanto at work.
MORE COWBELL!!!
"Even in a high-school band of 5 people there is crap if someone doesn't take the lead."
Only if the band was shit to begin with. My HS band of ~130 souls could play a number of pieces, from memory, with no conductor, and it was just as tight as with one - and do so while performing a DCI-style field show. The conductor during field shows was there for show, not to really conduct, especially when half the time band members can't possibly look at the conductor anyways due to the direction they were moving on the field, and most of the other half they were too busy hitting marks and maintaining alignment to be gawking at the conductor (and then there's maintaining facing and having an instrument in your face and the conductor being tiny enough in the distance to be blocked out by instruments and other band members). And we would do this despite being spread out over a football field where speed of sound becomes a very real problem (as in it takes noticeable time for sound to go from one end of the band to the other which makes staying in sync a bit trickier than 5 people sitting in adjacent chairs -- practicing in an empty stadium so you also have an echo coming from two different directions makes things sound even more "interesting", though really doesn't add to the difficulty because the echo is so far out of sync it's not that hard to ignore).
Oh, and it's standard practice for small ensembles such as quintets to perform with no conductor at all, even for HS players.
So the one manager left has a span of control of 1,500 instead of the more usual seven. What great big balls he must have.
Maybe if the boss took every dime he made from being bought by Amazon, (and the inside money he has made off Wall Street) and gave it too all the employees he would be worthy of some praise.
Then if he decided to work as one of the employees only taking the same amount of money as other workers, he could be called a hero of the working class.
Instead what he has done is create a workplace where there is no advancement, the ones who do work have increased workloads, and there is no way to air grievances.
Holacracy was created as a way to jettison managers and the higher salaries they demand to increase the share of the pie that the corporate directors can take. If everyone gets to choose what work to do, and there are no managers, it is kind ofnhard to demand to get paid more than someone else. Socialism in the corporate world.
This is what happens when the Amazons take you over, a balless heiarchy ruled via flat structure.
ETA - Maybe the term should be a-hole-ocracy
I think the jury is still out on this one. Perhaps people need bosses, but maybe the co-op model or self-governance will work. There are no organizations on the plant more autocratic and less democratic than corporations. Corporations are psychopathic slave-owners. I'm rooting for the voluntary, self-governmance model to work.
I'm not sure what the Zerohedgie crowd is used to working at, (perhaps being managers at the Piggly Wiggly and yealling at meth heads all day to stock shelves), but in plenty of businesses the middle managers are total waste of space that need to be managed up by the workers and are spineless toward their directorial masters... So, for a while they were useful as a buffer to be bitchslapped from both ends but now higher ups see them as being the fat to cut..
Now.. how do you keep the next round of aspiring workers to not become managers and make voids of productivity everywhere? Hmmm Holacracy seems to fit the bill. Bascially all the workers do their stuff on their own anyway even with jackass managers around since the few that can manage and do the work usually realize they should start their own company.. this pay-to-quit works nicely for them to go give it a shot, and it works good for the worthless pig managers since they get a reason to run before showing everyone they can't do any work.. they just go hunt for another middle manager spot somewhere else
Dear Mr. Hsieh:
You're a fucking lunatic.
And time will show you that as well.
Sincerely,
A Concerned ZH Reader
His timing was off, that's all.
Too much lag, not enough gu
Why concerned? Mind your own business, libertarian!
Maybe he got rid of all the dead weight management who didn't want to work and produce nothing anyway.
Exactly.
If I worked for that company my group would demand wages in gold and tenure after 30days. Oh yeah, we would also declare ourselves a spinoff LLC and nix Zerocare (under 50 employees), and self insure with a good concierge MD. that gives huge discounts for payment in cash or gold.
Bitchez
I mean taking the money and moving on is the best thing to do.
As Ramdass said he took a college degree out of the fear. All cubicle work is slavery, unless you are total shit of a human being and suck your way up as middle management, or you own it.
You take the money, and get a new job and basically do the same thing you would do there. What's not to like?
wait, what do you mean "i ordered two shoes of the same size"?
I guess I'll go against the prevailing winds here, this couldn't be any worse than the horrific management I've endured the past 4 years, as a numbered cog in a Fortune 500 corporation.
No idea how that place was run, but if it was anything like my own employer, not many managers took the demotions.
...
The word holacracy is new to me.
But the system without hierarchy is not new.
In Indonesia, we have small restaurants run by a group of people. No leaders, all are workers, one cooks, one, prepares food, some serve. Anyone collects payment and also tips.
All are shared equally at the end of the day or week.
The system probably originated in south India, as they use same words to refer their restaurant.
It seems to me that if Zappos lost 210 employees they don't intend to replace, the company was already poorly managed.
as someone who hasn't sat through greek mythology lectures, you surmise that they are adopting a system that is alright philosophically but is doomed for failure... but they are phucked because all the talent left? ...you were saying?
Last time I looked, Zappos didn't actually make any products, just on-sold other manufacturers' shoes and clothes. I think he made a bold decision but it's not exactly the right company, or the right employees to do it with. Having said that, Zappos' customers are quite loyal which these days is almost unheard of outside Apple, so he must have hired and inspired some good people.
Trading someone else products is a service on its own. Some companies that manufacture products even have entire departments devoted to trading.
Trading isnt bullshit and neither are transport, distribution, marketing, warehousing, etc.
well said!
HI Tyler, the bottom line is that this is a way for management to put all the work, expectation and most of all, THE RESPONSIBILITY on to the shoulders of the rank and file employees. This is something that I saw back in the nineties where the dot-com companies would bring in someone and then add on to their list of tasks without any justification. They are able to get away with this because of the crappy economy. In fact, this will be the future as management finds a way to sell this to the K-12 kids coming up.
I will be gentle. Those psychotic, cash bloated, inbred retards and Wall Street perverts, in their wet Ponzi dream are fornicating with those mentally challenged Silicon Valley megalomaniacs, squirting “green” feces off their rotten minds onto in faces of hard working US taxpayers, calling it creative disruption, during their cerebral herpes induced seizures of sick imagination. That’s cruel.
Unable to get hard on with sex, booze and drugs they get high off orgasmic chaos and inhumane exploitation of their cheerleading serfs.
Interesting take on those parasites of reasonable mind I found at:
https://sostratusworks.wordpress.com/2015/01/08/smell-of-silicon-madness/
I couldn't have said it better myself lol. Management is way over rated and if you were to take away their constant and habitual bailout they would all go under wthin a year.
I'm actually thinking about getting a job there lol. Maybe in the financing department.
I've worked with bossses and I can assure you that none of them knew what they were doing. They used to hire losers who did nothing but hang around and kiss the bosses behind. In turn the bosses looked out for them and of course the bosses did everything they could to justify their place in the work field. So anyone who was actually productive was seen as the number one enemy. So the bosses themselves used to sabotage the work place then blame those employees they feared would supercede them.
You could only imagine the turn out rate and as far as enthusiasm it was all negative. Some employees fought back against the management by bringing in unions and doing some sabotaging of their own. That gave the management the chance to blame those they feared would take their job and of course get rid of them. That in turn caused a huge amount of people to leave when the company was the busiest. Yes, precisely the time the company needed employees the most.
The management never took responsibilty for their actions so they dropped the blame even on the very elect the brown nosers who looked out for them. The Vice President, the human resources department and even the owner of the company had to get involved just to bring production back online. So as you can imagine the company lost a whole bunch of customers and all the owner did was whine and moan for a bailout from Obama. Which of course Obama did bail out the company. Oh and they also complained that the country needed to bring in more illegal aliens and to look the othey way since the company couldn't find people even in a down market.
So can someone here please tell me how bad Zappo's really is for trying to do away with the number one problem in a company? The boss!
I think i understand the system, at least conceptually.
I do have one question though. What is the Holacratic term for Chapter 7 Bankruptcy?
Drum circle, kumbaya, new age bullshit. Zappos is the punch line to a joke yet written.
My Grandpa had this. It worked well. He combined the crops every year, fed the chickens, milked and fed the other cattle, and stored up for winter, or died. People now are useless and stupid, but put in front of them a situation they need to 'survive' and thier talents will come out. Let's say by a small base wage, plus a percentage of company profits.
sounds like a great place to work - I'd love to work there if I wanted a job.
most important question - how do they decide in holocracy WHO GETS PAID FOR WHAT AND HOW MUCH?
This makes sense if the company is failing and they are doing a reality TV show about the chaos to make money on the side.
Such a puzzle, these comments: so many seem to argue the absolute need for the BOSS to command their labor at a discount price for the privelege. No wonder we are wage slaves to the big boss banks and their owners. Boss says, "go to war and die for me." Y'all line on up, now.
You just figured this bit of human nature out? What do you think keeps organized religion rolling in assets and idiots? Most humans are instinctively insecure and long for an "authority figure" to guide them. If I had no moral compass, I would definitely start a church/cult. Talk about easy money.
why is this even making news?
1500 people and 300 bosses leave.
there were too many bosses, they had to fire 100 bosess and didn't want bad press so they tried a wierd idea to get 100 people to leave voluntarily , 200 leave, which is fine, but the PR backfired so actually its the PR that's there issue.