A Company with No Managers—How Would You Fare?

by Phil Stott | May 11, 2015

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For those of us who cover careers, Zappos and its CEO Tony Hsieh are more than watchwords for hassle-free shoe-shopping: they're consistently pushing the boundaries of organizational design. In other words they're at the forefront of defining what it means to be a company, and an employee, in the age we live in—with Hsieh assuming the role of one of the leading org design thinkers of that age. As such, what happens at Zappos may well come to have an influence on how the rest of us live and work—and how we define the boundaries between those concepts—in years to come.

As reported by Business Insider recently, the company's latest gambit has been to offer buyouts to its entire 1,500-strong workforce as it seeks to evolve towards "a self-management organizational structure known as Holacracy, [which it has been pursuing] since 2013." Apparently, some 200-plus employees—around 14% of the firm's total workforce—have taken Hsieh up on the offer, including the HR director who had been tasked with managing the transition.

In a memo announcing the change to employees, leaked by Quartz, Hsieh informed employees that

"As of 4/30/15, in order to eliminate the legacy management hierarchy, there will be effectively be no more people managers. In addition, we will begin the process of breaking down our legacy silo’ed structure/circles of merchandising, finance, tech, marketing, and other functions and create self-organizing and self-managing business-centric circles instead by starting to fund this new model with the appropriate resources needed to flourish. Functions that were previously silo’ed will be embedded inside these business-centric circles instead — this structure will require fewer roles that primarily manage expectations and drive alignment across legacy silos."

But what about the managers, I hear you cry? Apparently, those who are "in good standing" will continue to receive their full salaries until the end of 2015, while the firm assists them with transitioning into whatever roles can be defined for them as part of the Holacracy process.

Now, before we go any further, I know that many of you are thinking of a word starting with B: whether yours ends with "aloney" or something a bit stronger is on your conscience, but I think it's an understandable reaction either way—we're clearly dealing with a serious shift to the way that most businesses carry out their affairs. Shifting to self-management carries a bunch of risks, and those of us who have never had a job without someone to be accountable to might find it difficult to imagine what will replace that accountability.

However, a little further down his memo, Hsieh provides a couple of sources for his employees to read on the concept of self-management. One of those, by Frederic Laloux, notes the following:

"The right question is not: how can everyone have equal power? It is rather: how can everyone be powerful? Power is not viewed as a zero-sum game, where the power I have is necessarily power taken away from you. Instead, if we acknowledge that we are all interconnected, the more powerful you are, the more powerful I can become. The more powerfully you advance the organization’s purpose, the more opportunities will open up for me to make contributions of my own."

To me, that reads like a manifesto for "managing" Millennials—a group that is notoriously reticent towards hierarchical organizations and the concept of paying your dues, and which is strongly represented within the Zappos organization.

Could it be, then, that Zappos has the answer to all of the hand-wringing that we've seen in recent years about how the Millennials are going to cope out in the "real" world? Or will the next thing we read about Zappos' culture be as a case study of how it brought the organization down?

Let us know your thoughts—and how you think you'd fare at a manager-less organization—in the comments below.

Read More:

Vault: 

Is Preserving Company Culture More Important than Profits?

If All Companies Were Like Zappos...

Business Insider: Zappos employees — 14% of the staff — take buyouts after CEO ultimatum to embrace self-management or leave

Quartz: Internal Memo: Zappos is offering severance to employees who aren’t all in with Holacracy

Filed Under: Consulting | Job Search | Salary & Benefits | Workplace Issues

Tags: work life balance

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