In late 2013, online retailer Zappos announced it was abandoning a traditional top-down management structure in favor of one that empowered workers to make their own decisions and eschewed traditional job titles.
In the years since, numerous articles have covered Zappos' bumpy road in implementing this new work management structure, known as "Holacracy," including a buyout offer last year that resulted in 18 percent of the company leaving.
At a South by Southwest Interactive panel on Sunday, John Bunch, an employee with Zappos, and John Stirman, who helped implement Holacracy at Medium told tales from the trenches of working in the "bossless" system. (For the record, Medium decided to abandon Holacracy recently and Stirman now runs a new startup, Lucid.)
The talk was moderated by Wall Street Journal reporter Rachel Silverman.
Here's 10 Things to Know about working in this new system.
1. It's not really bossless. Stirman said although they did not have formal titles like "manager," there were definitely people who are leaders. And it isn't a totally flat hierarchy. "Yes, there was no role called boss, but there were clearly leaders who were in charge of getting things done and leading people," he said.
2. It helps your workforce adapt to change. We've all heard the saying "the only constant is change." One of the biggest reasons Zappos has embraced Holacracy, Bunch said, is because they wanted a workforce that could adapt better to change. Both Stirman and Bunch said it helped their respective companies become more nimble.
3. It works better if your workforce is centralized. At Medium, Stirman said they found it challenging to implement Holacracy, and especially conduct meetings, through videoconference. It's really built around a workforce that is somewhat centralized.
4. It is complex. One of the downsides to Holacracy is it can be difficult to learn and understand at first, Stirman said. Understanding Holacracy requires reading a 40-page PDF document that is written in legalese. One of the biggest drawbacks to the new system is teaching new employees Holacracy, he said, which amounted to a "tax" on the company because it required such an investment of time.
5. It can be a selling point for recruiting. This seems counterintuitive given how many people recently fled Zappos. But Stirman said for people in middle management it was exciting to come to a place like Medium, where they would have more decision-making power that at workplaces that use a top-down management approach.
6. Try adopting small parts of Holacracy at first. If your company is interested in adopting this new system, Stirman suggests trying small pieces at first, rather than swallowing the whole thing at once. He especially likes the way Holacracy teaches you to run meetings, and he still uses this meeting technique at Lucid.
7. It's not for everyone. It favors people who like to make their own decisions, Stirman said. "Not everyone is entrepreneurial or comfortable making decisions," he said. At Medium, younger workers especially said they were not comfortable being entrusted to make decisions. They wanted a chance to learn the ropes first. Employees were told it was OK to make bad decisions because they can learn from it, Stirman said. "It's really hard when you're a young engineer and a young designer and a big question comes across your desk - it's this big cognitive weight," he said.
8. It is challenging to allocate your time. Bunch said at Zappos they found that figuring out how to allocate your time was difficult. A boss typically instructs employees on which project to work on when. "You have a system where there are no bosses, no direct answers coming from one particular person," he said. Zappos attempted to address this by creating a tool - called "Chedda" to help workers manage their time.
9. Badges help. Bunch said at Zappos they created badges (think like Girl Scout badges) that align with learning certain skills or completing tasks. These badges help encourage workers to learn new skills that, under the old traditional top-down system, would have been out of their reach. This badge system is aligned with compensation, so accumulating badges helps you earn more. “What we’re trying to do is align people to pursue their passions in a way they grow and learn and help the company the best they can," Bunch said.
10. People didn't leave Zappos because of Holacracy. Bunch disputed that the reason so many people left Zappos recently was because of Holacracy. He said of the 18 percent who left the company in their most recent buyout, only 6 percent said it was because of the new "bossless" system. He theorized that some people just wanted the opportunity to do something different, and that for some Zappos workers the buyout was equal to one year's salary.