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Zappos Goes Flat, Gets Rid of Managers

The trendsetter of quirky corporate culture is headed toward a massive restructuring. Could it work for your business, too?
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Zappos has long been a role model for corporate culture. Entrepreneurs regularly make the pilgrimage to the company's Las Vegas headquarters, to learn about Zappos's commitment to being "a little weird," its over-the-top customer service, and even its policy of offering new hires $2,000 to quit. But according to a new post from Quartz, Zappos is about to implement its most radical policy yet, one that may be more difficult for other managers to emulate. Namely, Zappos is about to get rid of managers, altogether.

According to the post, Zappos CEO Tony Hsieh, the originator of the company's commitment to quirkiness, announced at an all-hands meeting in November that the 1,500 employee company would be restructuring into what is known as a "Holacracy," in which there are no job titles and no managers. The term, which originated in 2007, comes from the Greek word "holon," which, writes Quartz's Aimee Groth, "means a whole that’s part of a greater whole." In other words, each part of the group is autonomous, but also reliant on the larger group. 

Instead of having managers and subordinates, Zappos will be made up of 400 "circles," or teams of people who work together and take on various roles within those circles. Zappos is a unit of the online giant Amazon.com, which acquired the company in 2009.

The move, writes Groth, is Hsieh's attempt to prevent bureaucracy from infiltrating Zappos, while maintaining a startup culture within what is now, a quite large organization.

As John Bunch, the Zappos employee leading the transition, told Groth, "One of the core principles is people taking personal accountability for their work. It's not leaderless. There are certainly people who hold a bigger scope of purpose for the organization than others. What it does do is distribute leadership into each role."

Though Zappos may be the largest company to adopt a flat structure, it's certainly not the first. Inc. columnist Jason Fried, founder of the software firm 37Signals, wrote about his company's commitment to flattened management back in 2011, saying, "It frees us from the often toxic labor-versus-management dynamic, in which neither party truly understands what it's like to be on the other side."

Fried explained that rotating management duties on a weekly basis helped to minimize conflict because it made employees "more empathetic toward one another."

Of course, this brand of management, or lack thereof, is not without its risks. Not only is it tough for existing managers to cede control, but it can be equally difficult for junior employees to find equal footing with people who used to be their superiors. Some research even shows that people may subconsciously prefer hierarchical structures. There's even more research pointing to evidence that clearly defined hierarchies enhance productivity when it comes to tasks that demand cooperation.

It remains to be seen how Zappos will pull off this transition, but if the company does it well, something tells me we're about to see a lot more startups with a lot fewer managers. 




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