Holacracy is a revolutionary technique of organization functioning that reformulates the authority of the executive hierarchy and delivers the power to lower chains, making everyone a commander. As a result, the workers of the company with holacracy are distinguished not by ranking but by roles they play in the organization. Unlike in the traditional corporation, the job appears to be more organized, only now slightly different. Holacracy includes a coherent set of regulations that establishes the roles of the workers and limit their responsibilities, authority, and anticipations. On this basis, the employees are able to function on their own; they can carry out their work without supervision from the upper manager.
Nowadays, the method of holacracy is driving many organizations of various standards and ranges. It gains popularity and proves its efficiency every day; more and more companies are considering implementing this method into its structures, including Zappos Shoes.
What Risks and Challenges Does Zappos Face in Implementing Holacracy?
The model of holacracy that has been embraced by the co-founder of the company Tony Hsieh is intended to adjust the whole organizational structure; he decided to enforce holacracy after Zappos grew steadily. Hsieh claims that the renewed model of the organization would allow the workers to feel more like entrepreneurs, not employees. “Research shows that every time the size of a city double, innovation or productivity per resident increases by 15 percent, but when companies get bigger, innovation or productivity per employee generally goes down,” he said (Frean, 2014, p. 8). He also added that his primary goal regarding the subject matter is to rearrange Zappos to function less like a directorial company and more like a city.
However, changing the whole technique of managing such a big company has its pitfalls. Zappos is an organization of nearly 1.500 workers that had been powered by a conventional hierarchical model of management since its establishment. Before discussing the risks and challenges of implementing the holacracy into Zappos, it is vital to determine the decisive advantages of the business. Hsieh underlines that the size of the company is directly proportional to the amount of bureaucracy connected to all levels of management. On the contrary, self-management is focused on advancing more swiftly, empowering employees, and becoming more conscious and compliant. Nonetheless, the company this big expects to have a particular bureaucracy in order to maintain specific regulations (Cook, 2014).
The second major problem with implementing holacracy into Zappos is the probable percentage increase of the workers who do not accept the concept of the manager-less workplace. “The biggest challenge is just the mindset change in living and working in a new paradigm. Learning the new paradigm isn’t the hard part. The hard part is ‘unlearning’ the old one” (Coleman, 2015, par. 13). However, the company and Tony Hsieh, in particular, do not have an exact or even expected number of workers that would decline or acknowledge the changes in management.
Another vital question that needs resolving is the ability to pay decent wages for the employees who will not receive regular job inscriptions. The founder of holacracy theory Brian Robertson cultivated a scheme, the key of which lies in the badge-based compensation. According to this system, assorted badges are given out to the workers; it is an identification of the skills of the employee and the roles assigned to them. Presumably, an inquiry of the new badge may lead to an increase in the salary. However, the badge system is still in development, so it is rather beforehand to embed it into a company as big as Zappos Shoes.
The last but not the least concern for the renewed Zappos Shoes are the settlements of the disputes between coworkers. Hsieh believes that one on one straightforward and candid discussion is the initial advance towards conflict resolution mechanism. Hsieh says that “1:1 open and honest conversations are the first steps of our conflict resolution process, which is still evolving. In my experience, that will generally address most issues if both parties are being open and honest” (Coleman, 2015, par. 18).
Chances of Holacracy Succeeding At Zappos
Tony Hsieh highlighted that with the growth of the company has diminished the development and innovations (Gelles, 2015). The co-founder of the company knows that Zappos Shoes calls for a renovation; however, in his opinion, simple team-building exercises will not suffice. Self-management is a system that is not uncomplicated to understand, as it differs significantly from the long-established organizational chart. To this day, holacracy endures being the exception rather than the rule in the workplace. Apparently, Hsieh is trying to invigorate the perception of the close-knit community, which was typical for Zappos Shoes Company about ten years ago. “Once you have that level of friendship, there are higher levels of trust,” he said. “Communication is better; you can send emails without fear of being misinterpreted; people do favors for one another” (Gelles, 2015, par. 26). Nonetheless, the concept of holacracy is far more complex than that; moreover, it is believed to take away the time needed to get substantial work done. Moreover, the company is still working on role-based compensation as well as the system of badges; the founders of Zappo Shoes are expecting to disclose other options regarding the salary system.
Based on all the aforesaid, we can come to the conclusion that Zappos Shoes is too immense of the company to implement the holacracy system. Nevertheless, if Tony Hsieh still decides to proceed with it, it would require a tremendous amount of time, money, and work efforts to embody the idea into reality. In addition, the workforce should be revised, as not all employees are ready to accept the self-managing system. In conclusion, I would like to underline that the chances of holacracy success in Zappos depend only on its workers, as the founder of the company is already set up only for the best outcome.
Advantages and Disadvantages of Holacracy over Traditional Structures
Holacracy has its pros and cons over traditional structures such as hierarchical or matrix structure. It is claimed to encourage “agility, efficiency, transparency, innovation, and accountability within an organization” (Robertson, 2015, p. 43). This system increases the involvement of the separate members of the company in the job process and allows them to express their ideas or apprehensions. As a result, the self-managing system declines the responsibility of the micromanagers and leaders for making every decision.
However, even though the holacracy system is claimed to be free from hierarchy, it still has hierarchical circles, which pass down the decision making and shadowing the whole picture. According to Havinal (2009), “a manager performs planning, organizing, directing and controlling to achieve the organizational objectives” (p. 12). In the holacracy system, managers are non-existent; it would take a lot of time for the employees to structure their work in a sufficient way. Moreover, the holacracy model does not have any concern towards the customer, unlike the matrix structure. So, based on everything said above, the matrix system would be the best match for Zappos Shoes.
References
Coleman, A. (2015). Holacracy: Startups can learn from Zappos, says CEO Tony Hsieh.Forbes. Web.
Cook, D. (2014). Ready for holacracy? Zappos says it is.Benefitspro. Web.
Frean, A. (2014). How holacracy killed the hierarchy in companies going flat-out for success. The Australian. Web.
Gelles, D. (2015). At Zappos, pushing shoes and a vision.The New York Times. Web.
Havinal, V. (2009). Management and entrepreneurship. New Delhi, Delhi: New Age International Ltd.
Robertson, B. (2015). Holacracy: The new management system for a rapidly changing world. New York, New York: Henry Holt and Company.