by Sarah Van Wagnen

Zappos; one of my absolute favorite shoe websites, is a company that has recently decided to radically define its inward structure. This new system is called Holacracy, and the biggest question surrounding this radical new idea is if it actually works. By looking deeper into Zappos experience, conclusions can be made about how this is working within the specific company. This form of self-managment system has caused the company many trials and errors over the last few years since its installment.

Holacracy is a “complete, packaged system for self management in organizations” (Holacracy, 2016). Within this style of organization, every employee has a say. There is no top or bottom, everything works horizontal. Communication occurs through circles and “links” are the messengers between each team. No one has only one job, instead you invest your time in multiple different areas. Employees choose their own circles and projects as well.

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The goal is to create innovation and eliminate bureaucracy to allow new ideas to thrive. This is much different than traditional styles of management where each employee has one specific job. Communication flows upwards and downwards and only higher positions have a say in the organization.

Zappos decided to try Holacracy when the company grew and lost its innovation. Something needed to change, and CEO Mr. Hsieh, “seems to regard Holacracy as a way to revive the close-knit community feeling that made the company so special 10 years ago” (Gelles, 2015). After a very rough start, Mr. Hsiech gave his employees an ultimatum. Either accept the new system or leave, and take a nice compensation. 14% of his employees decided to take the offer and leave instead of embracing Holacracy.

The system has shown both strengths and weaknesses. While a lot of opinions can be heard and shared, not much work has been actually getting done. Many are also unsure of their role in the workplace, and do not really know exactly what they should be doing. When people split their time and attention between many different projects, it can easily becoming overwhelming and hard to focus. Holacracy could lead to the unlocking of self-management potential but it seems to be a long and painful road. During meetings employees are asked to share tensions, and to use the same set language rules established by Holacracy. In a Forbes article Groth explains that “asking employees to all speak the same language in the name of giving them a voice raises a red flag. Does Holacracy ultimately push employees into groupthink?” (Denning, 2015). With these strict rules regarding communication, workers may begin to all think the same way about each new idea.

Some employees have been very resistant to this change, “employees were shocked and frustrated by the numerous mandates, the endless meetings, and the confusion about who did what” (Reingold, 2016). I think this was hard for workers to adapt to because so much change was being thrown at them all at once. There wasn’t much of a trial period, the whole thing was forced on them. One employee had a career goal of becoming VP of human resources, but that opportunity no longer exists at Zappos. She was unsure what her job was now so, “an avid runner, she became lead link of the Healthy, Happy Zapponians circle, which is starting a race series for employees. But is having an experienced HR executive spend much of her time on a road race really the best use of Delaney—for her and for Zappos?” (Reingold,2016). Without her career goals, Delaney isn’t using her full potential within the company.

Since the redesigning of company structure not only has Holacracy been the goal, but the next step referred to as Teal,”Laloux assigned a color to each type: orange for modern corporations such as Walmart, and green for what he views as more evolved operations, like Starbucks. Teal … characterized by self-management, bringing one’s “whole” self to work, and having a purpose beyond making money” (Reingold, 2016). Mr. Hsieh sought advice from Laloux, who believes history has created different ways for people to organize themselves. Although some employees believe this system will eventually workout, there may be a better option for Zappos.

Holacracy has grown on a few employees, and they believe their teams are functioning much better than at first. However there may be a better option for Zappos. A type of participative human resources management could be very effective. This would still allow for a very open communication pattern while also giving employees higher levels of loyalty and commitment. This is not as radical as Holacracy because there is still management, but new ideas can be expressed freely. This could give Zappos back its edge, without confusing employees to the point of exhaustion.


Denning, S. (2015, May 23). Is holacracy succeeding at Zappos? Retrieved September 21, 2016, from

Gelles, D. (2015, July 17). At Zappos, pushing shoes and a vision. The New York Times. Retrieved from

Holacracy. (2016). How it works. Retrieved from

Reingold, J. (2016, March 4). A move to “self-management” has shaken online shoe retailer. Can it regain its mojo? Fortune. Retrieved from


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