Holacracy Management Style at Zappos

by Kenzie Fischer

Zappos.com is an online clothing store based in Las Vegas, Nevada. The CEO at Zappos, Tony Hsieh, learned about Holacracy style management in 2012 and decided it was exactly what the company needed. Some companies have undergone the changes of the holacratic system of management and have come out successful. But other companies, like Zappos, have not been so lucky.

The Holacracy system was developed by Brian Robertson, the founder of Ternary Software in 2007. A Holacracy is defined as a system of organizational governance where everyone is in charge (Holacracy, 2016). In this organizational structure, employees have roles instead of job descriptions. An employee’s role follows a format, a purpose, and certain activities to perform. Although a Holacracy has a flexible structure, it does provide a clear, formal system. It still features organizational “roles”. These roles are differentiated from the people filling them and no manager decides what roles are created. Once each role is filled, each person has the authority to execute their position accordingly.

So far, a number of firms across the US have decided to go holacratic. Holacracy is believed to increase agility, efficiency, innovation, and accountability within the company. This approach encourages the employees to take initiative and gives them the chance to express their concerns or ideas. Managers have said that this system has reduced the burden on leaders to make every single decision. According to Tony Hsieh, Holacracy makes individuals more responsible for their own thoughts and actions. Kristy Meade, an employee at Zappos, believes that Holacracy helps prevent usual gender- biased behaviors. It “provides protections that create an environment in which some actions based on unconscious bias are not possible” (Gelle, 2015). Another advantage of the holacratic model are fewer conflicts within the company. By removing the job titles, it prevents the risk of conflicts between employees and managers.

zappos-team1

Tony Hsieh has lead Zappos for the past sixteen years; he was the visionary who pushed the idea of developing the Holacratic system. Mr. Hsieh has managed to make Zappos a fun and creative place to work. As the company grew, innovation decreased. “We had gone from being a fast speedboat to a cruise ship,” one long- time employee said (Gelle, 2015). Hsieh knew the company needed to mix things up a bit, so when he stumbled on Holacracy, he knew it was exactly what he wanted.

The changes were made at Zappos in 2013. At first, the transition was going really well. Hsieh explained, “Once you have that level of friendship, there’s higher levels of trust. Communication is better; people do favors for one another” (Gelle, 2015). Another employee claimed that it empowers the employees to have the same voice. As time went on with this approach, the workers began to show their true feelings. “It’s taking time away from getting the actual work done,” said Kelly, an employee (Gelle, 2015). Nonetheless, Zappos is continuing the Holacracy. Holacracy has empowered some people and hamstrung others (Reingold, 2016). One Zappos employee called Holacracy a social experiment that created chaos and uncertainty.

While Zappos is a very creative company searching for a unique image to differentiate them from others, it is obvious that most employees are much happier with the traditional management setting. Within all the havoc, there are signs of optimism at Zappos. Employees are keeping an open mind about this approach and are doing their best to work with the company. Holacracy is a new idea for management, but is only effective when everyone is interested. While Zappos is now a fun work environment, it also allows employees ideas and concerns to be heard by the company.

 

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=2

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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