How Innovative Ecommerce Retailer Zappos Changed After It Eliminated Managers

Eliminating bosses doesn't sound all that radical in the context of the ostensibly egalitarian culture promoted by many, if not most, tech companies.

But as the following article explains, an entirely management-free structure can be disorienting to employees and former managers in ways that may or may not improve results.

The Zappos experiment is not yet old enough to draw conclusions. That 18% of employees left - hundreds in the first month - and that the company survived is a testament to its personnel. Whether the turmoil was worth it - and whether it will ultimately persevere may give those who claim to embrace disruption an object lesson in what it really feels like. JL

Richard Feloni reports in Business Insider:

The transition may have been emotionally turbulent and a steep learning curve, but has no desire to go back to the old way of doing things. "I don't know what it would be like to work at a normal, structured company anymore. You wouldn't have the same empowerment and understanding of your own work and your own purpose without having all of these things in place that make it easy."
Zappos has spent almost a year fully operating under Holacracy, a unique self-management system that gets rid of traditional manager roles and job titles.
Last March, the online retailer's CEO, Tony Hsieh, told employees that they could either embrace self-management or leave with a severance package. He'd begun implementing the system two years before, but a couple hundred employees had yet to switch over, and he felt that it was time to "rip the Band-Aid off." Ultimately, 260 people, or 18% of the company, decided to take the offer and quit.
The move created tension and confusion, but also helped identify the true believers, the employees who would help Hsieh realize his vision of a faster-paced, more innovative Zappos.
One of those employees, Danielle Kelly, had to figure out how to be successful as a manager in a company that no longer believed in traditional management. The transition was difficult and sometimes frustrating, but ultimately it changed her view of how companies and workers should function.
Kelly joined Zappos in 2012 as a customer-service representative, and within a couple of years she was managing the call center's operations. It was during this time, in early 2014, that Holacracy made its way to her team.
When a team converts to Holacracy, members lose their titles and jobs are distilled into "roles," which comprise a "circle" that serves a particular function. For example, the marketing circle may contain the role of copy writer.
If it makes sense given the context, then the team's former manager becomes its "lead link." But instead of managing specific people, lead links manage the roles in their circle, setting goals and seeing that they are achieved without demanding that they be accomplished in a particular way. Each employee may take on multiple roles.
Samantha Lee/Business Insider
Kelly was one of the former managers who became a lead link. As is the norm, Kelly and her team spent weeks figuring out how to restructure their jobs and learn Holacracy's lingo and protocols.
"It took a lot of time [away] from your normal job at first," she told Business Insider, and she sometimes felt like she was participating in an experiment that was leading nowhere. "You don't see the benefits when you're in the chaos of trying to make it work."
But a few months in, she hit a turning point, and she soon became a convert to Holacracy.
In Zappos' 2014 fourth-quarter all-hands meeting, Hsieh announced that he was brainstorming ways to introduce flexible scheduling to the call center. Kelly was in charge of logging call-center employees' hours and was intrigued by the idea of letting them create their own schedules, as long as they fit all their work in.
She met with Hsieh to discuss his thoughts on the matter and decided to start a new circle, Open Market, dedicated to creating a tool that would allow this proposed scheduling system to function. She connected with Zappos Labs in San Francisco, and the resulting software is still used by all call-center employees.Kelly remembers the day Hsieh made the companywide severance offer as being simultaneously exciting, confusing, and scary.
"Who were we going to lose? Where are they going to go?" she remembered thinking. After taking time to calm down, she decided that she enjoyed her work and wanted to stay.
And although that period was stressful for everyone at the company, Kelly found another opportunity to use Holacracy to create something. As the lead link of the Teal Kit circle, which is dedicated to creating self-management tools, she led the push to create the Role Marketplace, a tool that allows employees to see all of the unfilled roles in a particular circle, a feature that was especially useful after a couple hundred employees left within a month.
The transition may have been emotionally turbulent and a steep learning curve, but Kelly has no desire to go back to the old way of doing things.
"I don't know what it would be like to work at a normal, structured company anymore," she said. "It seems like you wouldn't have the same empowerment and understanding of your own work and your own purpose without having all of these things in place that make it easy."