SurfersBy now, you’re likely familiar with Zappos’s latest push of the envelope – or whacky stunt, depending on how you feel about the company’s approach to organizational culture: instituting a holacratic management philosophy.

And how has Zappos’s radical transition turned out? The company is still in the process of fully implementing holacracy, but word is that 14 percent of Zappos’s employees have opted to take the company up on its famous severance-pay offer and leave the organization behind.

Does this mean holacracy is shaping up to be a misstep for everyone’s favorite eccentrically experimental employer?

Not necessarily, says Greg Moran, CEO of Chequed.com.

When You Change the Culture, You Change Who Fits

“Whether you feel that holacracy is a good idea or a bad idea, it is a massive culture shift. It’s not right for everybody,” Moran says.

Holacracy is very different from the sort of rigid, clearly defined hierarchical structures most of us are used to. In holacracy, authority is distributed and dynamic. Who does what and who is in charge largely depend on the task at hand. (This is a very, very brief summary of holacracy. If you want to thoroughly acquaint yourself with the system, check out Holacracy.org.)

Management styles and operational processes are foundational to the culture of an organization. When they change, the culture will necessarily change as well. Given that Zappos’s existing employees were hired to thrive in the previous culture, it should come as no surprise that some of those employees find they can’t thrive in the new holacracy. Changing the organization’s culture means changing the idea of what “cultural fit” means for Zappos.

In other words: of course Zappos lost employees! It wasn’t always a holacracy, and now that it is one, it needs employees who thrive in the holacratic culture. Those who don’t thrive in such a culture should strike out for companies with cultures in which they will thrive.

“That’s one of the things that organizations don’t necessarily think about when embracing not just holacracy, but any kind of radical management philosophy,” Moran says. “When you radically shift the culture, you are radically shifting the type of person who succeeds in that environment. The person who is going to embrace it and adopt it and be successful is going to have a very different profile than the person who was successful in the previous culture.”

Holacracy’s Not For Everyone — But Who Is It For?

PresentWant to follow Zappos’s lead and make a transition to holacracy, or start a company that operates under holacratic principles? Then you need to make sure you’re hiring the right people, people that fit in with a holacratic culture.

Moran believes that employees who work well in holacracies are “flexible, entrepreneurial, and adaptable.” Above all, however, employees in holacracies should be somewhat extroverted and have solid leadership skills.

“One of the things that really seems to be a critical element of any kind of self-directed organization is, in order to influence the outcome, you can no longer rely on a manager to make those decisions,” Moran explains. “You really need to be forceful and be comfortable being forceful. Not everybody is like that.”

Without strong leadership skills, Moran says, employees would be “lost in the maze of committees and decision-by-committee” that can attend holacracy.

How to Hire the Right People for Your Holacracy

When it comes to the holacratic hiring process, Moran says that employers need to really look at personality as a major factor — if not the single most important factor.

“In any kind of hiring process, you always have to balance personality with job skills and experience, but I think in a holacractic organization, that balance shifts greatly,” Moran says. “You obviously need the experience to get the job done, but if you don’t have the personality characteristics to function in that environment, it has to be a deal-killer.”

In this way, hiring for holacracies differs quite a bit from hiring for traditional companies. Those who make the hiring decisions at holacracies have to really overweight the importance of candidate personality types. They don’t really have much leeway.

“In a more traditionally run organization, you can pick somebody who maybe doesn’t have all the characteristics of the culture fit exactly right,” Moran says. “You can take that person, and they … can be a successful individual contributor. In a holacracy, that’s gonna be pretty tough for the person to function in the environment [if they don't have all the characteristics for the culture fit].”

How can employers be sure they’re hiring the right people for the holacratic environment?

Personality assessment tools can be invaluable, Moran says: “They can help you get a real gauge of a person’s personality and culture match.”

More important than personality assessments, however, is effective employer branding. Employers need to be upfront and totally transparent with job seekers about what holacracy is like.

Meeting“[You have to] help the candidate to self-select either into or out of the culture — because it’s just not right for everybody,” Moran says.

A good way to do this is to build education modules on holacracy directly into the selection process. This helps job seekers learn what holacracy is, how it works, and the system’s pros and cons.

Moran also suggests bringing candidates into the office via shadowing programs, so they can experience holacracy firsthand before deciding whether or not they want to work in that environment.

“Get those candidates on site, let them spend time in the organization to see how it really works,” Moran says. “Make sure they fully understand what they’re getting themselves into.”



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