Zappos gets rid of management

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)