Service of Holacracy

May 26th, 2015

Categories: E-Commerce, Employees, Management

 

Confusion

“Holacracy is a radically different management system that changes how an organization is structured, how decisions are made, and how power is distributed. 300+ organizations are already running with holacracy”– http://holacracy.org/

 

 

zappos 1The policy at Zappos, according to Rachel Emma Silverman, has been to pay a month’s salary to any new hire who wants to quit because Tony Hsieh, whom Silverman called “the leader,” only wants employees who are “truly excited” to work there. From one to three percent accept the offer. Now, for the same reason, he’ll pay at least three months severance to any employee who isn’t comfortable with a change in management structure and 14 percent—210 people–accepted the severance. Zappos is an online retailer, originally headquartered in San Francisco and now in Nevada, that sells shoes and clothing.

In her Wall Street Journal article “At Zappos, Some Employees Find Offer to Leave Too Good to Refuse,” I first heard about Holacracy. Silverman wrote: “The exodus comes amid the company’s transition to an unusual management structure called Holacracy, in which employees essentially manage themselves, without traditional bosses or job titles.”

Leaving the companySilverman continued: “The company has acknowledged that the transition to this new form of self-management has been a difficult one. In March, Mr. Hsieh sent a 4,700-word memo to staff stating that Zappos, an independent subsidiary of Amazon.com, was taking too much time switching to this new management structure.” That’s when he offered the severance.

On May 20th, Silverman wrote a front page Wall Street Journal article, “At Zappos, Banishing the Bosses Brings Confusion,” which goes into the concept more fully. In the second article Silverman quotes 26 year old Brironni Alex: “I am managing the work, but before I was managing the worker.” Silverman continued: “Ms. Alex says the changes give her more time for a workplace diversity committee and to perform on the Zappos dance team.” Alex is also on the team to convert the company to the new management system.

The article was illustrated by a wall of cut-off neckties because of the retailer’s “no neckties allowed” policy. I saw this at a steakhouse in Dallas, Texas some 20 years ago so I was surprised a company that tries to distinguish itself by being hip fell for such a tired idea.

It’s unusual enough to motivate employees to stay by paying them to leave. It will be interesting to follow the success of the self-management style which is great for self-starter types that most people claim they are during job interviews. Entrepreneurial types would also excel.

Have you heard of Holacracy before? Do you know anyone who has worked in such a management system? Have you instituted a new system or worked at a company that did? What was it like? Do you think people make such changes to keep employees alert and on their toes?

confusing management chart

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8 Responses to “Service of Holacracy”

  1. Aloysius P. Baumgartner Said:

    No I had never heard of Holacracy before, but I spent a lifetime in big corporations being subjected to various systems running the gamut from “Management by Objectives” to “Six Sigma.”

    The only thing these crackpot ideas accomplish is that they make management consultants and business school professors a lot of money.

    I worked for a chairman of the board once who used to say privately that a sure way to tell that a company was going to get into trouble was if somebody wrote a book about the new management tool it was using. He was right.

  2. Jeanne Byington Said:

    Aloysius,

    I represented a company that in the day was going wild about Six Sigma. I couldn’t get a single person there to explain to me in a few clear sentences what it was. I didn’t think that the Holacracy website did a very good job in defining itself, either.

    As neither Zappos—nor Amazon.com that owns it—have written about Holacracy that I know of but instead a Wall Street Journal reporter covered the company’s connection to it, maybe Zappos will get a pass and speaking of pass, hopefully management will know when and if to change to another less adventuresome structure. I suppose if enough customers order loafers and get a pair of clogs in the mail, that will be a sign.

  3. Martha Takayama Said:

    Is it possible that this is just hokum? Is it a restructured version of traditional anarchy? Is it the ultimate consequence of individualism, self-expression and self-fulfillment? How was it invented? Is there any long-term data on its effectiveness? Does the Harvard Business School have case studies about it? Am I thoroughly out of touch with present day reality. Just for the record, I am not a Zappos customer.and by and large find their unsolicited email offerings very unappealing.

  4. Jeanne Byington Said:

    Martha,

    I didn’t read Rachel Emma Silverman’s entire second article which pretty much hit on the same points as the compact first one. I also didn’t study the Holacracy website. That said, while the latter boasts 300 companies on board, I don’t know about independent studies and results. I know that my personality would not do well in chaos and that I’d consistently be trying to make order and would very soon be asked to leave.

    Clearly someone was able to convince Tony Hsieh of Zappos that the strategy is valid. Whether or not he/she believes it is, or has built something, as Aloysius suggests, that is a great way to make money, only time will tell.

  5. Donna Boyle Schwartz Said:

    Donna wrote on Facebook: Fascinating experiment.

  6. Jeanne Byington Said:

    Donna,

    Too bad they can’t divide the company in half and compare results. I’ve seen so many of these strategies that boasted of practically being the second coming tip toe out the door to be replaced by the next one that I won’t get too excited until I hear that it worked and why.

  7. Lucrezia Said:

    Sounds like an excellent idea, but as in any business, it will flourish or go bust depending upon the quality and zeal of the employees.

    The name may be new, but the general concept isn’t. The highly successful Marriott chain treats its employees as shareholders, making it possible for a hard working chambermaid to retire in style. In a perfect world, this might well be the best way to go.

  8. Jeanne Byington Said:

    Lucrezia,

    I like the concept that a person who is hired and doesn’t go along either with the Zappos culture or its new management style is compensated when they quit, although this has nothing to do with Holacracy. I imagine that some personalities will do very well in an unstructured environment as long as they are also honest, hard-working and get along with others. If the person who is responsible for wrapping or shipping the packages moves 40 a day before and 5 when he/she is the boss making time for dance class, it won’t profit the company or customers. Same with the person who likes to work late at night in a team that largely works 8 a.m. to 4 p.m. making the majority wait for him/her to complete a task so that they can finish their projects.

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