A very interesting case is developing in the business and leadership community. Zappos, the online shoes and clothes retailer is making some big experiments with their organization and the key is to replace the traditional corporate chain of command with a series of overlapping, self-governing “circles”.
Here you can find some articles that look into different views of this new approach to leadership.
Organize your company around the work that needs to be done instead of around the people who do it!
“The Las Vegas-based retailer is now going even more radical, introducing a new approach to organizing the company. It will eliminate traditional managers, do away with the typical corporate hierarchy and get rid of job titles, at least internally. The company told employees of the change at a year-end meeting, Quartz first reported.
The unusual approach is called a “holacracy.” Developed by a former software entrepreneur, the idea is to replace the traditional corporate chain of command with a series of overlapping, self-governing “circles.” In theory, this gives employees more of a voice in the way the company is run.”
• Zappos Says Goodbye to Bosses
Who should hire, fire and decide the pay?
“But surely someone must have the ultimate authority to hire, fire, and decide how much someone gets paid. Gonzales-Black acknowledges these areas are works in progress. But she believes authority for each can still be distributed in a holacratic way without the need for a final autocrat to say yay or nay. She says compensation is especially thorny, since pay is traditionally so directly tied to one’s rank. When work is divorced from title, fairness would seem to dictate you get paid strictly according to the jobs you do, rather than some abstract status, whether you’re a new hire or the CEO.”
• The Next Big Thing You Missed: Companies That Work Better Without Bosses
…But there is still a hierarchy and certain people have more decision authority than others.
“Organizations and people need hierarchy. While there is no doubt that some hierarchies are better designed than others, an interesting test is what happens when there is little or no consensus about who has more — and less — power. Gruenfeld and Tiedens describe a series of studies showing that when such agreement is absent (so the nature of the formal or informal pecking order is not clear), members become less committed to their groups, less productive and effective, dysfunctional competition for status emerges, and coordination and cooperation suffer.”
• Hiearchy is Good. Hierarchy is Essential. And Less Isn’t Always Better
What is your take on this?
Having already addressed this issue – http://www.customerthink.com/the-new-zomm-zappos-organizational-management-model – it’s interesting to observe the range of response holacracy at Zappos has received.
I’ve seen lots of commentary on whether, and how well, the model (which originators have identified as a ‘tool’) will work in an organization of this size. One such article described the analytical work of Jan Klein, from the MIT Sloan School of Management (http://www.businessinsider.com/zappos-holacracy-unlikely-to-work-2014-1). Klein has noted that most companies trying holacracy have given up after six months or so, Why? Employees don’t self-regulate very well, and they leave rather than trying to continue working within the system. There is, as well, something of an ‘Animal Farm’ feel to this tool, where HR and certain company executives hold sway over employee compensation.
From my perspective, the biggest issue, apart from employee functional effectiveness and comfort, is the potential impact on customer behavior. There’s another blog coming, reflecting a Forbes article by Steve Denning, which will cover this.