Zappos says 18% of company has left following its radical "no bosses" approach
A little less than a year ago, Zappos CEO Tony Hsieh made his employees a deal. If they couldn't get behind the online retailer's radical new management system called "holacracy" -- which doesn't have traditional managers or internal job titles -- he would give them at least three months' severance to leave. By May, the company said about 14 percent of the company, or 210 people, had left.
And now, the company has updated that number, saying in a recent post on the company's website that 18 percent of the company, or 260 people, have headed for the exits. In the post, chief operating officer Arun Rajan said the total percentage grew after about 50 employees from a tech group decided to take the company up on its offer. "While we have lost a number of folks, it is important to note that we have a significant group of highly talented individuals who will be staying to help move Zappos forward," Rajan wrote in the post.
But whether these workers left because they couldn't pledge allegiance to holacracy or because they recognized their jobs were out of favor is unclear. The publication Quartz reports that Rajan said in an interview that the majority of the recent group who left are managers who didn't fill critical roles within a company that no longer has traditional supervisors, as well as that it might have had to do some layoffs if there weren't enough people who took the buyout offer. (An email to the company to confirm details was not immediately returned.)
The recent post updating employees on the departure includes the sort of obscure lingo that can make the system challenging to learn or even understand. The no-bosses, no-titles concept at Zappos, which has garnered repeat media attention in an attempt to examine how it's all going, replaces the traditional corporate hierarchy with a series of overlapping, self-governing "circles." The post suggests people direct any questions to one of these "circles" rather than an individual, and also discusses the "teal" offer, a reference to Hsieh's goal of reaching a state of "self-management" and "self-organization" advocated in the book Reinventing Organizations. Employees had to read the book to be eligible for the buyout offer.
The concept of such a voluntary buyout is not a new one for Zappos. He famously offers new employees $2,000 to leave if they realize they're just not that into the company's zany culture. (Amazon CEO Jeff Bezos, who owns The Washington Post, began doing something similar for some of his employees after Amazon acquired Zappos in 2009.)
Hsieh appears willing to lose employees who aren't a good fit because he sees "self-management" as a strategy, rather than simply an experiment in radically extreme management. In Lillian Cunningham's recent story for The Post about Hsieh and his effort, he described the restructuring as a way to help Zappos expand beyond online shoe and clothing retailing and into new industries. Taking away bosses, he said, is a way to "really just have everyone at Zappos act like an entrepreneur," busting up the bureaucracy that can frustrate and drive out a company's most innovative employees.
His intention, he told Cunningham, is to make Zappos' customer service the brand hallmark that helps him grow into other industries, much like Virgin's "hip and cool" brand led it beyond music and into other fields. Among the ideas that have been brainstormed: a Zappos hotel, an airline, and "even crazy stuff, like porta-potties." For now, at least, such brainstorming may be happening with fewer people.