With such a strong commitment to company culture, Zappos continues to experiment with making the lives of their employees better. In the last ten years they’ve made a billion in sales and have basically been the Kleenex brand of quality customer service. Not to mention they encourage napping, which is awesome.
Since 2013, CEO Tony Hsieh has been working to put in place the managerial system of holacracy, which involves a system of self-governing teams and absence of job titles. Holacracy maximizes autonomy and does away with managers.
According to the Wall Street Journal, at least 300 companies have switched to holacracy within the last decade and 80% of those continue with the practice after one year. A number of well-established companies have made the switch to holacracy including gaming company Valve, article-sharing platform Medium, and Precision Nutrition.
Medium’s Jason Stirman has long been a proponent of progressive managerial tactics. Since his days at Twitter, he’s taken a more humanist approach, seeing employees not as resources, but as people.
“When you sit across a table from someone,” he said, “ask them ‘What’s going on in your life?’ That will always remove more hurdles than asking them ‘What’s blocking you at work?’”
Stirman’s managerial strategy seems more akin to those of an on-site counsellor (although, I’m sure he makes a little more than the average counselor, according to an infographic from Wake Forest University’s online counseling program). However, he clearly gets great results from using this strategy.
Stirman has seemingly nothing but good things to say about Medium’s adoption of holacracy. He refers to it as
“hands down, by far the best way I know or have ever seen to structure and run a company.” He goes on to say that end result of the company’s “hierarchy of circles” structure makes it so “everyone is always pulling toward the same promised land.”
Game developer Valve has been able to establish itself as one of the best in the business over their nearly 20 year lifespan. A good deal of their success has been attributed to the autonomy given to employees by their management style. They’re able to take the risks necessary for true innovation.
However, utilizing holacracy paved the way for a different kind of hierarchy to set up shop at Valve. In a 2013 Geekwire article, ex-Valve employee Jeri Ellsworth described the company structure as having a “hidden layer of powerful management” akin to high school-era cliques.
“There are popular kids that have acquired power, then there’s the trouble makers, and then everyone in between,” she said. “Everyone in between is O.K., but the trouble makers are the ones trying to make a difference.”
Ellsworth went on to describe a company paranoia that lead to the layoffs of employees who supposedly didn’t fit in with the company culture.
Installing holacracy has worked fantastically for some companies, but, much like anything else, it seems to depend on the personalities of the people involved.
As of the end of April, the full transition to holacracy is complete at Zappos. Hsieh offered a buyout to any employees who wanted to leave the company when the switch was made (at the condition that they jump through a few hoops). Employees who chose to leave received three months pay or if they were employees for more than four years, a month of pay for every year of employment. Over 200 Zappos employees, about 14% of their total workforce, took the buyout.
Another way to frame it is that 86% of their workforce said, “We’re in, let’s do it!”. It seems, however, that many people are looking at Zappos to fail as a way to say “I told you so!” Since Hsieh and Zappos have been gradually moving toward holacracy for the past couple years, it seems wrong to assume this last push is going to “Jenga!” the whole thing.
Number two on Zappos list of ten Core Values is “Embrace and Drive Change” and number five is “Pursue Growth and Learning.” So, as an organization, Zappos will continue to work innovation and risk taking into their company culture with no signs of stopping.
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This guest post was written by Reed Parker. Reed writes about nothing in particular. He just wants to feel better about getting an English degree.
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