Growing Pains at Zappos as It Undergoes Radical Change

By Kathy Gurchiek Jan 21, 2016

Zappos is known as much for its offbeat, fun workplace as for the shoes it sells online. In fact, “create fun and a little weirdness” is written in the Zappos corporate charter. Then Tony Hsieh, CEO for 16 years, decided the company had become too bureaucratic and should adopt a new paradigm—holacracy. The idea was to reclaim the company’s freewheeling culture, momentum and innovative pace.

The radical self-management system, implemented at Zappos in 2013, eradicated traditional corporate hierarchy; there are no managers for the 1,500 employees who define their own jobs. The initial result has been painful, according to various news reports, with dozens of employees quitting Zappos.

Exclusive: Zappos CEO Responds to Reports of Employee Departures after Radical Management Experiment
Zappos was blindsided with a slew of recent stories reporting that a new radical management experiment was backfiring, given that an (ostensibly) alarming 18 percent of its employees left the company since March. Reporter Greg Ferenstein reached out to Hsieh and his team for a response to the recent string of press and given my previous reporting, he agreed to answer questions via email. Here, Zappos execs defend restructuring, discuss employee departures.
(Ferenstein Wire)

At Zappos, Self-Management Is a Tough Sell
What is the radical self-management system called holacracy? Nothing about it is easy to understand.
(New York Times)
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Why Pain Is Inevitable for Zappos and Holacracy
In a traditional hierarchy, “the boss” drives the decisions and assignments. A holacracy is an effort to replace the traditional hierarchy with a more flexible, organic, network so different people can assume different roles, including being “the boss,” depending the circumstances and their skills and interests. In theory, it sounds great. In practice, not so much.

Why Are So Many Zappos Employees Leaving?
Zappos’ turnover rate for 2015 is 30 percent—10 percentage points above their typical annual attrition rate.
(The Atlantic)

3 Reasons Zappos Exodus Doesn't Spell Doom for Holacracy
For the sake of playing devil's advocate to the prevailing wisdom that holacracy is to blame for the turnover at Zappos, here are three reasons employee attrition doesn't necessarily spell doom for holacracy—at Zappos or anywhere else. For one thing, holacracy transitions are not supposed to fast or easy.


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