Zappos Loses 14 Percent Of Its Workforce After 'Holocracy' Implementation

12/05/2015 11:23 AM IST | Updated 15/07/2016 8:25 AM IST
Charley Gallay via Getty Images
LAS VEGAS, NV - MARCH 27: CEO Tony Hsieh speaks onstage at CinemaCon’s final day luncheon and special presentation during CinemaCon, the official convention of the National Association of Theatre Owners, at Caesars Palace on March 27, 2014 in Las Vegas, Nevada. (Photo by Charley Gallay/Getty Images for CinemaCon)

Las Vegas-based online shoe retailer Zappos has decided to implement a radical new management structure, which eliminates all hierarchies. There will be no bosses and no job titles.

This radical approach turned out to be too much for some of its employees to accept, and 14 percent — 210 out of 1,503 — of them have decided to quit, reports Fast Company. The company offered three months of severance and benefits to all those who refused to accept the new system. While the number of exits is significant, most of the employees have agreed to stick on.

This new hierarchy-less structure, called Holocracy, has gained in popularity with some tech companies, but nowhere more than at Zappos whose CEO and founder Tony Hsieh has championed it. Hsieh decided to roll out Holocracy across the organisation, and that effort will soon be complete. Other companies that have opted for it can be seen here.

Hsieh sold Zappos to Amazon for $1.2 billion in 2009, and received about a third of that value mostly in stock. Since then he has earmarked $350 million for creating an utopian world in downtown Las Vegas, away from the glitter of the more prosperous parts that the city is famous for, and where everyone would become smarter and happier. He bought 60 acres of land and 100 buildings in the area around it to create a startup city for businesses to set up shop. Zappos' headoffice was also moved there.

Hsieh's offer is only for those employees who agreed to understand Holocracy and then decided to opt out. Those who worked for over four years will be paid 1 month for every year worked at Zappos plus three months of reimbursements.

It is unclear if Holocracy would work for Zappos. "Whether this was a mistake or an essential transition will take months if not years to figure out, but it's a pretty safe bet that many of the people who would have been significant internal objectors to change are now gone, and the 1300 who are staying are on average more committed to making it work, said Clay Shirky, a widely published authority on the Internet's effects on society, on Quora.

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