Holacracy at Zappos

by Samm Stutzman

The days of the traditional management that we have all come to know now seem to be becoming a thing of the past. With big name companies like Google using new forms of management styles to spark more creativity in the workplace and receiving good results there is no surprise that other companies are looking to adopting the idea as well. Holacracy all began with a young man who wanted to start up his own company, Brain Robertson, who created Ternary Software and wanted to create a new form of management to go along with it . So after many trail runs of different ideas holacracy management was finally born and put into use. . Some small scale companies, like Ternary Software, have put into effect the holocratic system of management and have had successful results. While other companies, like Zappos, have not had the same results. The following post will examine both the benefits and challenges that come along with this type of style of management.


Holacracy can be defined as the managing style that derives off of the idea that no one is in charge and everyone is in charge. This is accomplished by no job titles being assigned to workers, rather workers have “roles”. These roles are always changing depending on what work is actually being done by the employees. An employee can be involved with multiple roles, and along with those roles can be apart of different teams that are working on the same role (Holacracy, 2016). Described by outsiders at the Harvard Business Review holacracy is “a form of self-management that confers decision power on fluid teams, or “circles,” and roles rather than individuals” (Bernstein, Bunch, Canner, and Lee, 2016). Not only is holacracy different in its way of having roles but also its way of looking at authority. In holacracy their is no hierarchy, but instead the teams as mentioned before decide on how it should be run. Each team could have a different set of rules compared to another, and these rules can change depending on the type of work being done (Holacracy, 2016). It is quickly recognizable that this style of management is much different than what is seen in more traditional styles. It would be easy to see how this drastic of a change can be viewed as overwhelming to employees.


The visionary who pushed the idea for holacracy to come to Zappos is Tony Hsieh, the man who has lead Zappos for the last sixteen years and is quiet the celebrity in the technology world (Gelle, 2015). Along with those accomplishments Hsieh has been able to keep Zappos as the fun, creative, and relaxed workplace that it started off as even as it began to expand to new, higher scales. Though as Zappos expanded it began to lose its innovation (Gelle, 2015). ” “We had gone from being a fast speedboat to a cruise ship.” one longtime employee said” (Gelle, 2015). Hsieh knew that Zappos needed a big change to stir things back up, in his own words “he needed to get weird” (Gelle, 2015). So when he stumbled upon the idea of holacracy style management in 2012 he knew this is what he was looking for.


A strength that came from this new form of management was that people who use to be at the bottom of the hierarchy in the traditional management style now felt like they finally had a voice. People began to feel more empowered to speak their ideas on what they felt should happen at the company. Though this was great for sparking new creativity in the workplace it also came with many downsides. One problem that Zappos ran into very early in the start of using holacracy was they were not sure on how to pay employees. How do you pay someone when they do not have a set job title? Another big problem that the company faced was that productivity began to slow. With all the meetings for “open talk” and to express ideas there leaves little time in the work day to accomplish actual work.


As time went on working under this type of management style many Zappos employees began to express their feelings about it, and most were not on board. Resistance of this very different type of management style can boil down to the fact that it is just so different from traditional styles. There are many benefits to working with the traditional management styles with hierarchies and set rules. For one it sets the stage for a very productive flow of work, where everyone knows their job and gets it done to their best ability. While with holacracy that exact knowing of what your job is, is taken out of the equation and many people struggle with that concept. “Holacracy is “a social experiment [that] created chaos and uncertainty,” says one Zapponian who left last year” (Reingold, 2016).


While Zappos in a very innovative company looking to have a unique image to set them apart it is clear that many employees are much happier with the traditional management style. Holacracy is creative new idea for management but only works effectively when all people are on board. A style of management like democratic would probably be the best fit for Zappos. With this form of management it holds all the structure that Zappos needs to get work done, but at the same time allows people’s ideas to be heard up the channels so they have a voice in the company too.

An example of the unique work spaces at Zappos that are suppose to spark creativity.


Bernstein, E., Bunch, J., Canner, N., & Lee, M. (2016, July/August). Beyond the Holacracy Hype. Retrieved September 21, 2016, from https://hbr.org/2016/07/beyond-the-holacracy-hype

Gelles, D. (2015, July 17). At Zappos, Pushing Shoes and a Vision. Retrieved September 21, 2016, from http://www.nytimes.com/2015/07/19/business/at-zappos-selling-shoes-and-a-vision.html?_r=1

How It Works. (n.d.). Retrieved September 21, 2016, from http://www.holacracy.org/how-it-works/

Reingold, J. (2016, March 4). How a Radical Shift Left Zappos Reeling. Retrieved September 21, 2016, from http://fortune.com/zappos-tony-hsieh-holacracy



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