This post is part of the People’s Insights monthly briefs issue of February 2014.
Zappos.com, the online shoe and clothing retailer, has been a company that many look up to for its employee-centric culture. It has also been included in Fortune’s 100 Best Companies to Work for list for five years in a row.
In December 2013, Zappos created a fresh round of buzz when it announced it would be ditching its traditional organizational structure to adopt Holacracy – a flat organizational structure where there are no job titles and no managers.
Twitter cofounder Evan Williams is one of the new system’s early adopters, which he has implemented in his company Medium (which has a staff of 50 people). Zappos, with its 1,500 employees, will be the largest company to date to implement Holacracy.
What is Holacracy?
Invented in the early 2000s, Holacracy focuses on the tasks a company needs to accomplish rather than a standard reporting structure. The system is based on the idea that people management isn’t easy or productive. It moves away from managers by relying on the potential of self-organization and by assigning progression, compensation and performance reviews to a specific group of “People” people. Employees are assigned responsibility of various tasks and must self-organize themselves to complete the task in the best way, keeping in mind purpose and profit. Workers are authorized to make decisions around tasks they are accountable for.
Video: Zappos embraces Holacracy
The Holacracy Constitution 4.0 explains in detail the various new terms and features like roles & circles, which replace the more traditional ‘titles’ and ‘departments.’ Circles are required to be run democratically and openly and follow new procedures for processes like meetings and decision-making, as detailed in the constitution.
CEO Tony Hsieh who built Zappos opted for the new structure to ensure that bureaucracy does not get in the way of actual work. Quartz reported:
“The company will be made up of different circles—there will be around 400 circles at Zappos once the rollout is complete in December 2014—and employees can have any number of roles within those circles. This way, there’s no hiding under titles; radical transparency is the goal.”
10% of Zappos employees are currently under the new system, and all 1,500 employees will be by December 2014. John Bunch, who is helping lead the transition of Zappos’ new structure, noted:
“While people have latched on to the idea that Zappos is getting rid of managers, what the company is actually doing is ‘decoupling the professional development side of the business from the technical getting-the-work-done side.’”
Zappos became the darling of the HR world with its non-traditional, bold and effective moves (like when it offered $1,000 to its new employees to quit). Zappos’ support for Holacracy might help boost the popularity and adoption of the new structure.
02 February – People’s Insights Monthly Briefs by MSLGROUP
About People’s Insights
100+ thinkers and planners within MSLGROUP share and discuss inspiring projects – that are driving engagement with stakeholders – on the MSLGROUP Insights Network. Every month, we pick the best projects and analyse conversations around them, on the MSLGROUP Insights Network itself and also on the broader social web, into an insights report. Every quarter, we compile original insights from the MSLGROUP global network into the People’s Insights Quarterly Magazine.
In our first year and half, we focused on inspiring consumer projects around social data, crowdsourcing, storytelling and citizenship. We synthesized the insights to provide foresights for business leaders and change-makers in the ten-part People’s Insights annual report titled Now & Next: Ten Frontiers for the Future of Engagement, also available as a Kindle eBook and an iPad app.
In 2013, we launched “The Future of” series with a focus on Citizenship, Money and Employee (Re)Engagement. In 2014, we continue to track inspiring projects that are shaping the future of engagement, with a focus on reputation, employee engagement and citizenship.