American online retailer Zappos has removed the traditional hierarchical construction filled with managers, as this structure is deemed to be too bureaucratic and too rigid to function well. The hierarchy will be replaced with “a series of overlapping, self-governing circles”.
From hierarchy to holacracy
“As we scaled, we noticed that the bureaucracy we were all used to was getting in the way of adaptability”, according to John Bunch in an interview with The Washington Post. The Amazon subsidiary therefore decided to get rid of all managerial layers in order to keep its customer-geared company philosophy. It will now employ “holacracy”, a system devised by former software entrepreneur Brian Robertson.
His system replaces the traditional decision pyramid with a series of overlapping, self-governing circles of employees. Each of these circles performs certain functions, with each employee possibly working in several circles. That way the company is built around the work that needs to be done and not around the people doing that work. In theory, it gives the employees a higher level of participation in how the company works.
First large company to adopt system
Zappos is the first large company to apply this “natural” organizational structure. The company has 1,500 employees, 10 % of whom have been introduced into the new system. Bunch believes the entire company will be working in the new structure before the end of the year.
Specialists point out that there may be flaws in the practicability of “holacracy”, as the elimination of a hierarchical management structure may prove difficult to execute. “Show me any group of five human beings or five apes or five dogs, and I want to see the one where a status difference does not emerge”, Bob Sutton, professor at Stanford’s Graduate School of Business, said.
Sutton does underline that it is a good idea to eliminate friction and internal competition as much as possible, but he feels it is important to create “situations where you’re clear who has decision authority.” Without that, you “get more politics”.
(translated by Gary Peeters)