Zappos Has Ditched Its Management—Should you?

 Many of you will be surprised by the news that Zappos has decided to ditch its managers or management hierarchy in favor of a flat organizational structure. This is nothing new in itself, but what makes it so intriguing is that Zappos, the darlings of innovative HR practices, have decided to make this move into this pretty much uncharted territory. It’s not hard to see why Zappos, the same company that pays disengaged staff to quit, might be prepared to engage in such a radical initiative, but its motivator was not just to be different, but a belief it would lead to a more productive and engaged workforce. There is, of course, evidence to suggest that holocracies (as they are known) work as shown in this HBR blog, which lists several small non-profits and software start-ups (WordPress ) that are Holocratic. The list also highlights a 10,000 strong company called W.L. Gore that is also a kind of holocracy. So, holocracies work, but they have not been proven on an industry wide scale. Hierarchies are the norm.

But, the question that will be on many HR professionals lips might be, should we do it? Should we ditch management to improve shareholder value? The answer to this question would be not without serious aforethought and planning, because that’s what Zappos did, i.e. planned it.

It’s easy to think that Zappos just came up with this overnight and waved a magic wand. It didn’t. The company adopted the system with the help of a specialist consultancy called HolocracyOne, which underlines the scale of the task that is required to shift from hierarchical to holocratic. This is why the project is occurring in phases. According to this Mashable release, they have been phasing this in since April 2013 and just 10 percent of the company works this way now. They expect to complete the full migration by the end of 2014, and with the slippage and delays that plague just about every change project, I expect it to run well into 2015. Even at the point when it’s completed, it’s arguably still an experiment, that is, a structurally contained Amazon experiment, since Zappos is owned by Amazon.

So, if you did want to consider this in your organization, and I am not discouraging you from doing so as I think the whole project is very exciting, you might want to consider some outside consultancy and change management support. Ideally, you should try it as an experiment in a low-risk, contained unit of your business to see if you can make it work in a small department.

But, there is another consideration. In a perfect world, you’d consult your employees about it, because the Zappos workforce, (through years of innovative management interventions) was clearly primed for this, another wacky innovative initiative. Your organization may not be. In fact, this research from Stanford confirms what many of you will suspect: Many employees actually prefer hierarchical relationships over equal ones. And perhaps this is why they conclude that the successful organizations achieve a balance between hierarchy and equality.

So, I think a clear planning stage would be to assess the working style preferences of your business by surveying and talking to your employees to perhaps see how resistant or accepting your organization is likely to be to a holocratic working style. This should inform you as to how pragmatic a holocracy may be in your organization. Who knows, perhaps a holocratic business unit or department could work well alongside a hierarchical unit or department, meaning you could enable some certain areas of the business to be holocratic giving employees the option to transfer in and out as desired.

So, in conclusion, I don’t think we should all ditch management in response to the Zappos incursion into holocracy; it wasn’t a knee jerk reaction for them. But I do think it’s worth pondering whether holocratic management in whatever form could bring productivity and staff engagement benefits to specific areas of your business.