by Sabrina Mills
The purpose of this case study is to see how holacracy style management has helped or hindered the work environment at Zappos. Holacracy is a different style of management than at most traditional companies, so of course, their are going to be problems as well as improvements. This case study is to see how holacracy has affected the people at Zappos.
Holacracy is a more free kind of management style. Instead of having set heads, or people who set all of the rules and are in charge of everything, everyone has a voice. So even the smallest of positions has a say in how things are run. Through a transparent rule set and a tested meeting process, Holacracy allows businesses to distribute authority, empowering all employees to take a leadership role and make meaningful decisions (How It works).
Zappos started the transition to Holacracy is 2013.The first department to try it was Human Resources (Gelles). Mr. Hsieh knew his company needed a fix. He worried that Zappos was becoming more bureaucratic and losing some of its spark (H) . But at Zappos, conventional team-building exercises would not suffice. He needed to get weird (Gelles). So Mr. Hsieh attended a conference in Texas and got the idea of Holacracy from a man named Brian Robertson. After pestering him with questions, he knew that holacracy was they way he wanted to go.
Strengths of the Holacracy style of management is that everyone has a voice. A former call center employee. Ms. Kelly said “A person who just takes phone calls can propose something for the entire company.” (Gelles). No one has to just go with whatever their higher ups say and then keep quiet. And everyone is part of a team. The teams make up the departments and work together to make ideas and help contribute to the way the company is run. This is called Distributed Authority. Authority is truly distributed to teams and roles. Decisions are made locally (How it works). There are also transparent rules. This means that everyone has the the same rules. Even the CEO. And the rules are visible for everyone to see (How it works).
But like most styles of management, there are downsides to Holacracy. Ms. Kelly also said that the procedural formality of Holacracy, the ever-expanding number of circles and the endless meetings were a drain on productivity. “It’s taking time away from getting the actual work done” (Gelles). With all those meetings, anyone can propose an agenda. So with anyone proposing an agenda, sometimes the important things can get skipped over, or neglected. Another downside is compensation. Without a set job description, or a set role in a company, it’s hard to know who earns what. So Zappos came up with badging. Just like Girl Scouts, people can earn, say, a Java Coding badge or a Merchandise Planning badge by fulfilling certain requirements. Zappos says it will pay at the market rate for each skill, but every job comprises many skills (H). But in other companies, it’s harder to figure these things out.
Some Zappos employees may have been resistant to the change because they were used to a more traditional style of management. Some people prefer to have set roles and have people above them to keep the company going. Others also have dreams of being a head of something. In Holacracy, their aren’t big head positions like that. An example of this is Hollie Delaney. She was Head of people experiences before the change, with hopes of someday becoming a VP of Human Resources. She no longer had the muscle to make things happen. She could no longer do that at Zappos (H). Others are resistant because with anyone being able to make agendas for meetings, productivity goes way down. People start to feel like they aren’t getting enough done with all of the meetings that go on.
Other management styles that would work well at Zappos are more traditional styles. One that would work well is Consultative. Consultative is a system where there are still people at the top, but employees are still allowed to input and have a say in what happens.
How It Works. (2016). Retrieved September 23, 2016, from http://www.holacracy.org/how-it-works/
Gelles, D. (2015, July 15). At Zappos, Pushing Shoes and a Vision. Retrieved September 23, 2016, from http://www.nytimes.com/2015/07/19/business/at-zappos-selling-shoes-and-a-vision.html?_r=1
H. (2016). How a Radical Shift Left Zappos Reeling. Retrieved September 23, 2016, from http://fortune.com/zappos-tony-hsieh-holacracy/