Why did "Office Space" become a cult movie? Perhaps because so many people recognize their own office in the toxic work environment, the useless boss, the lifers like Milton. It's also the appeal of the "Dilbert" comic, the misery of the traditional hierarchical office with pointy-haired bosses.
That's why Zappos is so interesting. The online shoe retailer has been owned by Amazon since 2009 and CEO Tony Hsieh has always followed a different path, from living in a trailer to turning traditional management practices upside-down, now embracing a system called Holacracy. The pitch:
The traditional hierarchy is reaching its limits, but “flat management” alternatives lack the rigor needed to run a business effectively. Holacracy is a third-way: it brings structure and discipline to a peer-to-peer workplace.
Zappos isn’t the first to use it (more than 300 companies do), but it's the largest, so if it has trouble, it’s news, prompting articles in The Atlantic with titles like Why Are So Many Zappos Employees Leaving? And in fact, 18 percent of the company’s staff have taken buyouts and are leaving Las Vegas. In the article, Bourre Lam describes how some employees are confused and upset:
But there was a result of Holacracy that the company didn’t anticipate (but probably should have): confusion. Self-governing produced a bit of a mess, with some workers telling reporters that they weren’t sure how to get things done anymore. The New York Times reported last year that those in charge of payroll, for instance, had trouble determining salaries after titles had been banished, and some employees wanted a boss to consult when making important decisions.
Now I spent far too much of my weekend reading up about Holacracy and I too am confused. I tried to make my way through its constitution (which should have a warning "DO NOT READ WHILE OPERATING HEAVY EQUIPMENT") and still do not understand it, but I learned enough to know that it's not just “flat” management with no bosses; it's a different kind of management. Even they say on the website:
Holacracy is a new way of running an organization that removes power from a management hierarchy and distributes it across clear roles, which can then be executed autonomously, without a micromanaging boss. The work is actually more structured than in a conventional company, just differently so. With Holacracy, there is a clear set of rules and processes for how a team breaks up its work, and defines its roles with clear responsibilities and expectations.
But as strict as those rules and processes are, Roger Hodge writes in the New Republic that it follows from the belief that people are inherently creative, and that “old-fashioned management hierarchies stifle innovation, because they naturally generate informal rules and cliques of powerful insiders, which is inefficient and demoralizing, so a new and better system would be founded on clear, transparent rules.”
Some people thrive in traditional hierarchies, reporting to a boss, having a ladder to climb through the organization to reach the next level. Others are stifled and miserable. Holacracy appears to work for the latter group. Hodge writes that “watching a well-run Holacracy meeting in action can be revelatory, because when everyone knows the drill, it eliminates much of the time-wasting verbosity and psychological microgram that often turns workdays into an endless series of unproductive jaw-sessions.”
A lot of middle managers are seriously threatened by Holacracy and are taking the generous buyout offer from Zappos. Hsieh doesn’t seem to be particularly upset by the numbers leaving. It’s a big change, and it’s a big severance, and having been in Las Vegas for CES, it's an easy place to leave if you have any options. (Hsieh is spending a huge amount of his fortune on trying to make it liveable, and I wish him luck on that too.)
Jeff Bezos, now the owner of Zappos, is probably looking at this exercise with some bemusement, given his reputation as the boss from hell. Hodge concludes in the New Republic that Zappos is not alone in trying to “make the workplace more humane and meaningful, to imbue companies with joy and a higher purpose.”
But if it does fail, if Amazon clamps down and assimilates the happy-wacky Zapponian culture and absorbs all those smiles and hugs and high-fives into its vale of tears, the rest of the reform movement will suffer. The stakes are pretty high, at least for people who would prefer not to spend their days in a live-action Dilbert comic strip.
Really, Zappos is nothing more than an online shoe store with a very high profile because of Tony Hsieh and his happy-wacky culture. He keeps experimenting and innovating and yes, the company keeps growing. Change is hard, it’s not for everyone. But this experiment is one to watch, a window into a different way of working. I, for one, hope it succeeds.