Holacracy Management at Zappos: Good or Bad?

by Torin Wetzel

Holacracy is an organizational style of management based upon a peer to peer system that empowers each employee, bound by the same rules, with decisions made locally. This style differs from the more traditional management rules. Holacracy empowers a single employee not to stay in a box and do the same things. Team work and jobs based on the work, not people are important aspects of this form of management. The purpose of the case study is to describe holacracy and how it is applied at Zappos.

“The goal of Holacracy is to create a dynamic workplace where everyone has a voice and bureaucracy doesn’t stifle innovation (Gelles, 2015).” This statement means that the traditional manager no longer exists and it encourages a sort of self-management. Zappos adapted this style of management because it added fresh new ideas and sparked more interaction between employees. Zappos employees can now find roles that interest them and address those things whenever they want. Holacracy is more about a certain job fitting the person rather than giving a job to a position. This style of management seemed to add a lot more passion and enjoyment with the employees.

The biggest strength of a holacracy is the empowerment of the employees. Each employee feels as though they have say, and the best part about it is, they do. Giving employees a voice in the company makes them work harder and have more satisfaction with their job. Holacracy also brings a sense of unity to the employees that is very important when working on new ideas or projects. A holacracy can turn work into a much more enjoyable experience because the employees really feel a part of the company. One employee Derek Noel even stated, “My worst day at Zappos is still better than my best day anywhere else, I can’t imagine going back to traditional hierarchy anymore (Reingold, 2016).” This just shows the type of impact that empowering an employee can have on their work life. Every companies wants their employees to feel this way. One weakness of holacracy is the former management positions having to adapt to the new style. Every employee is so used to management being one way that it can be hard to transition to a totally different style of management. Another weakness is the lack of seniority and performance evaluations. With traditional styles of management, those aspects can drive people to work harder.

I believe some Zappos employees have been resistant to the holacracy style of management because it does have some flaws. Having a lot of group work is great, but sometimes it is hard for people to know what adds up to a full time job if that is all you are doing. Also, working without individual recognition on projects that do well is also tough for people to swallow. There are some big motivational aspects of a job that are missing with a holacracy. Everyone being equal sounds nice, but can lack the availability for growth for some employees.

I believe that a participative style of management  with a little more structure would work well for Zappos. A style in which there are a lot of opportunities for group participation and employee development. In this management style, the employees have a voice, but there is still some structure within management. This increases motivation in both ways, through empowering the employee, and through the opportunity to move up in the company. Having multiple motivation factors can be very beneficial to a company. It seems like Zappos employees want to be able to converse and communicate ideas, but also want to be able to have a sense of pride in their own work. A participative version on management could bring both of those elements to the table.



Advantages and disadvantages of participative management. Retrieved September 23, 2016, from Management Study Guide, http://www.managementstudyguide.com/participative-management-advantages-disadvantages.htm

Gelles, D. (2015, August 31). At Zappos, pushing shoes and a vision. Business Day. Retrieved from http://www.nytimes.com/2015/07/19/business/at-zappos-selling-shoes-and-a-vision.html?_r=1

Gladwell, M. (2016). How it works. Retrieved September 23, 2016, from Holacracy, http://www.holacracy.org/how-it-works/

Reingold, J. (2016, March 04). How a radical shift left Zappos reeling. Retrieved September 23, 2016, from Fortune, http://fortune.com/zappos-tony-hsieh-holacracy/



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