Question

Read the following case and answer the question at the end:

As Zappos made its push toward holocracy, Hsieh decided to ramp up the efforts to an even higher level: Teal. Hsieh sent out a 4,700 word e-mail to all employees entitled “Reinventing Zappos: The Road to Teal.” Teal, supposed to be the next stage of development after holocracy, is characterized as “A new kind of organization designed to enable ‘whole’ individuals (not narrow professional selves) to self-organize and self-manage to achieve an organic organizational purpose.” In the memo, Hsieh essentially told the remaining employees to get on board or get out. Hsieh was not happy with the progress that had been made up to that point and wrote, “in order to eliminate the legacy management hierarchy, there will be effectively no more people managers.” John Bunch, the employee in charge of the move to teal says, “Teal is the goal; holocracy is the system.”
Hsieh even went as far as to offer the equivalent of three months’ worth of salary to employees who would quit the organization if they didn’t feel they could fit in. Over 200 employees (14 percent) took him up on the offer—a massive number of people given Zappos’s normal turnover rate of 1 percent annually. Clearly, not everyone felt comfortable in an organization with no clear leadership structure and very little to no legitimate power. One departed employee called holocracy “a social experiment [that] created chaos and uncertainty.” Others felt like “more employees are feeling like favoritism [and management issues are] becoming a bigger problem.” CEO Tony Hsieh remains undaunted. Hsieh says, “The one thing I’m absolutely sure of is that the future is about self-management.”
The move has not been bad for everyone. Less experienced individuals with less expertise have felt energized by their ability to speak up and have a voice. One employee whose prior boss blocked a job transfer stated that as soon as he figured holocracy out, “I was like, ‘Actually, my boss can’t tell me that.’” Jake McCrea, who teaches new hires about Zappos culture, states, “Holacracy is like a sport or a new language. You can read about it, you can hear people tell you about it, you won’t understand it until you start using it.” Even through all the issues, Hsieh stated, “I’ve been surprised at how hard it is to let go of the psychological baggage. In retrospect, I would have probably ripped off the Band-Aid sooner.”

Do you think leadership skills would be more or less important at Zappos under holocracy? How so?

Answer 1

The type of influence that is the most important at Zappos under Holacracy is the ability to influence employees under their effectiveness using the tacit of ingratiation and inspirational appeal. These tactics influences employees due to their values and emotions of their work, these tactics would work the best at Zappos since their main foundation is their cultural values.

The type of influence that is the most important at Zappos under Holacracy is the ability to influence employees under their effectiveness using the tacit of ingratiation and inspirational appeal. ... While you do need personal skills due to being in close corners to other employees, leadership skills are less important.

I recently started working with Blinkist - a growing Berlin startup that's in the middle of building a unique company culture. Their discourse on Holacracy and leadership made me take a closer look:

Ever since Zappos ‘converted’ in 2014, Holacracy has been making headlines. Why would you want to do it? How does it work? Can it even work? And as a logical consequence, more recently: What about leadership in Holacracy?

The task for organizations is still the same as it used to be: to create an inspiring workplace where people can thrive. Traditional organizations use managers as agents to achieve that, which more often than not, proves to be challenging – the responsibility for an individual to act task-oriented and people-oriented at the same time, to focus on the bottom line, and equally provide inspiration for the team, frequently clash.

The most obvious characteristic of Holacracy is: There is no manager responsible. Instead the responsibility for the task – the management aspect – is spread across all shoulders. The big opportunity Holacracy presents is, to do the same thing for leadership.

Zappos is experiencing problems implementing holacracy in their organization due to the unforseen rise of favoritism and management issues. This has lead to a significant percentage of employees actually leaving the company for more traditionally structured ones. Also, Zappos has fallen off of Forbe's list of best companies to work for, after consistently being on the list for years. The major step Zappos can take to implement the new structure more effectively is to listen to the concerns of it's current and former employees and take quick action, before it's too late.

It is widely acknowledged that people leave managers, not companies. However, Holacracy, a new management framework that empowers organisations to self-manage without managers is gaining steam around the world. Holacracy is used by over 1,000 companies across industry verticals in Dubai, Shanghai, Amsterdam, Bengaluru, London, Las Vegas and Africa. BusinessLine caught up with Brian J Robertson, the creator, trainer and author of Holacracy, to find out more.