210 Zappos employees – 14% of the staff – take buyouts after CEO ultimatum
businessinsider.com
businessinsider.com
It was unclear what his intentions were. To determine loyalty to the company, possibly. But what actually happened was that people who were good at their job, and could find work elsewhere, left. So they would have had all of the top talent leave the company and the remaining employees would be the people who did just enough to get by. The company is still trying to make amends with the employees.
And in Zappos' case, I get why they offered severance deals. They were embarking on a radical experiment in organizational structure, and not everyone is going to be on board with it. Rather than having a bunch of people at the water cooler talking shit about the changes, you offer them money to leave so that people who aren't on board with the changes get out of the way.
I would guess that many of the people at Zappos who took the deal were managers themselves. If you're a middle manager, you have skills around managing people but maybe not so much with doing the actual work. If your skill set doesn't align with the new job you're being asked to do (which is effectively a demotion), and the company offers you a buyout to leave, what would you do?
Besides managers who are looking to jump ship and pretend to do work somewhere else, a lot of professionals are on the list- lawyers, accounting people. I imagine some of these people will show up on Amazon's roster in the near future.
Little presumptuous isn't it?
My assumption would be that those are the people that this move is attempting to push out.
its possible the commenter i was responding to was referring more to the "rah rah" aspect of zappos as a whole, rather than religious zeal re: this new organizational concept. those are different things in my mind, also both are exhibited by the directive "to all employees: read this book and indicate you have done so".
anyway it isnt a comment on whether or not the zappos idea itself is useful and/or just another fad coated with new terminology (i have no idea). just that when you can identify someone else as engaging in religious zealotry, its fun to consider what that zealotry is being compared to, which probably turns out to be something like "everybody knows its supposed to be this way", aka. some sorta implicit religion.
I imagine most developers could find a job with similar pay in a month or maybe one and a half, so the reasons would have to be strong enough that you'd give up an extra 10% in salary, or even being able to take a 3 month long vacation.
On the other hand, if they recently had to move to Vegas I wonder how hard it is to find work there and I can totally see people not wanting to move again so quickly.
Of course, those who have reservations about working where they are, should take the severance package, but that's the point.
Also, I am a bit surprised that we are discussing 3 months of pay as a magnanimous, almost foolish, concession from management, whereas in many places around the world that kind of compensation is law mandated when you lay-off people without reason.
Geographic area heavily influences this. Last time, I spent 8 weeks with almost no nibbles (and then suddenly had two companies fighting for me on the 9th week).
I've got mouths to feed. And when you interview for your new job, you are going to be asked why you took the buyout. "LOL 3 months salary" isn't a good answer.
On the other hand, if you've been contemplating a job change, take it.
By your definition, what is a tech company?
You can be a tech company and sell commodities, Amazon is an example of that.
If Zappos can experiment with a new leadership style, maybe it produces desirable results that can be replicated elsewhere. Maybe it fails miserably. What's likely to happen is that there will be things that work and things that don't, and I guarantee Amazon is interested in that. Because of all the things I've heard about Amazon (many of them good), I've never heard that it's a great place to work. Their turnover is high, so maybe they're looking for ways to reduce it while not losing the culture of urgency (though some would say fear) that makes them so good at executing on things.
Of course, if it's a total failure, Bezos will likely fire Tony and trash the entire idea.
Each change creates winners and losers. The losers will be around that water cooler. You can't manage this before the trajectory is flown. Best of luck to all involved.
There's that element directly, but I think even more powerful is the sense to the employees that they are consciously opting in to staying. They are literally passing up a (small) pot of gold in order to stay in the new structure. The mere fact of choosing in such a way (even if that's the default choice) will tend to increase commitment in the inevitable dark moments of the transition.
Corporate loyalty has been dead for many, many years.
The higher-ups in be corporations have yet to get that memo.
The one case that it isn't is perhaps companies like google where an employee gets the founders award, which is millions of $$$ of stock options that vest over a relatively large stretch of years. I know a guy who won this award and he is google for life.
If I was a hiring manager, seems totally reasonable to me.
I haven't heard of any developers who make 400k. Then again, I suppose you never said this was for developers, so is there another job where this actually applies?
My last 2 job changes were in the 20 - 40K increase range.
250K is not unheard of. I guess this caps out somewhere, but if the US immigration keeps H1Bs under this control than we are going to soon experiencing 300K wages.
Do you know if it's easier to get promoted when switching jobs? I have a hard time believing that since I think you would have had to accomplish something significant on several projects to get to principal, but if you switch companies it's very hard for them to truly the impact of what you did.
When you are applying for a new, higher, role having enough experience at your current level, being sure enough of yourself and demonstrating the ability to create value within the test period will be more than enough for most companies out there.
When trying to get promoted internally you have to deal mostly with office politics. In a way, the quality of your work is only a small part. And, if you are good enough, it can go against you, I know people that have been skipped for promotions for years because their managers knew that the whole department depended on them.
Of course, there are exceptions and I admire those companies, but they are just that: Exceptions.
In SF this can be achieved quick, enough if you demonstrate your knowledge during the interview loops. For certain positions they also ask for previous experience but those positions more of the management side I think. If somebody walks in and writes good code we are willing to hire even into senior position, I don't care too much about the history. I have seen a candidate walking in to the interview from a grocery story where he worked as a cashier. Not only he got hired based on the interviews but he became one of the top performers on the team.
I think it is definitely easier to get "promoted" by changing jobs, especially if you are in a meritocratic environment, like some of the startups in SF.
Do developers in finance require any unique skills? Also is there anything special one would have to do to break into the finance industry?
There are finance startups where the above doesn't apply, but they don't pay like the banks do.
Then again, that's the only time I've ever done it, so I can't really say at all whether that trend might continue (almost certainly not).
The speed with while a typical ~100k dev role gets promoted or awarded payrises to become a 200k position is _much_ slower that the dev who cherry-picks better opportunities when that arise, and works out close-enough-to-truthful explanations for any resulting 6 or 12 months roles (usually with ex-colleagues who'll give references backing up your post-role-claim that it was a 6 or 12 month contract role, not a permanent position.)
In medieval times, the vassal paid homage and swore fealty in a commendation ceremony, and the lord granted him a fief. The vassal had a duty to aid his lord, and the lord had a duty to protect his vassal. The vassal gave loyalty, and got a secure income in return. It was a permanent relationship. To dissolve it, you had to use an axe, rather than a pink slip.
Corporate loyalty died when management culture forgot that the company owes duties to its employees in addition to its shareholders. Defined benefit pensions became defined contribution retirement plans. Then the employer contribution disappeared. Health insurance plans dwindled from all medical expenses paid to you paying 80% of the premium, $30 co-pays at every turn, and deductibles that are met midway through the twelfth month of the plan fiscal year, then reset. Training programs evaporated. Severance packages got smaller, or vanished. Even the amount of notice I get whenever permanent layoffs are to occur has become days, rather than months.
So there are no more loyal vassals. We are all mercenaries now. I'll start sending out resumes if I so much as notice that the building has a new janitor.
H. R. tells new hires:
"How great it is to work here!"
Give me cash, not lies.
A few years later it turned out the "good profits" were actually accounting fraud. The company tanked and everyone lost their job. But Nortel had a fairly good pension system, so the people who had worked there for 25 years or more were fine, right?
Well, the company feared that while they were tanking the "best and brightest" executives would leave. Oh my! What to do? They were allowed to siphon the pension money into "executive retention bonuses". Of course this didn't stop the company from ultimately running out of money, but it did get rid of a large part of the pension money.
Investigate your pension scheme and make sure you understand what will happen to your money should the company go out of business. Especially find out where the pension system is ranked as a creditor. No company is too big to fail.
As for me, I only worked there for 5 years and left when it was at its height. After I quit I got a letter from Nortel stating that my minimal benefits were not worth it for them to administer. They were going to keep my pension money and I was welcome to sue if I didn't agree. I guess as it turned out, it didn't make much difference...
Look at the airline industry. Plenty of pensions have been restructured during the string of bankruptcies. Pensions are guaranteed by a federal body, but only up to ~$50K/yr I believe. You'll never get less than that, but you $100K/yr pension might get cut in half and the gov't will say "that's the best we can do".
These things should always have been administered by 3rd parties and required to be fully-funded.
No "executive" can look at so much money "just lying around doing nothing" without wanting to get their grubby little hands on it.
Very sad for a lot of people
What a buy-out does is take money out of the equation. It makes it so that everyone who is there for financial reasons has a financial reason to leave. This can be logical if the company has little to offer financially, as in, for example, a company that's in bad shape during the financial crisis. The only employees who're left are those who are not in it for financial reasons - the true believers in the company, those who like their coworkers, and those who want to gain skills. Those people will be a lot happier when they don't have to listen about their financially-motivated colleagues grousing about how the company is going under, and they'll be more productive when they're happier.
The CEO's fatal mistake was that he forgot that his board is financially motivated. From their perspective, he's acting insane, because why would anyone stay at a company for reasons other than money? And they're his bosses, so they can have him removed. For this to have worked, he probably should've taken the company private, or at least packed the board with people who bought into his vision for what kind of company it should be.
The board's fatal mistake was in removing the CEO. By offering buyouts, he had just aligned the company in one direction. By removing him, they suddenly took the company in a different direction - one that they had less than zero capital in, because the CEO's previous actions had alienated everyone who might've helped them.
In both cases, the failure was in understanding that people are different and may have different motivations, and that a company survives based on how well it can hold together people who all have their own goals and worldviews and motivations.
Imagine your employee base graphed on two orthogonal dimensions: their performance level, and their motivation for working for you. (In reality, "motivation for working for you" is actually many dimensions, and performance is likely to be somewhat correlated with certain motivations, but this illustrates the point at least.) The buyout offer doesn't affect people who aren't financially motivated, so take them out of the equation, and look only at the folks who are strictly financially rational.
You can loosely group them into high-performers (those who are known achievers, who always have an offer in hand as soon as they make overtures toward searching), mid-performers (those who pretty much amble along, and for whom the job search provokes intense anxiety, because they typically have to put in 3-6 months of full-time searching to find a new position), and low-performers (those who don't do anything and everyone already knows it). In most companies, the distribution of these is roughly 10-80-10. You can fire all the low performers; the point of bucketing them into the "low performer" category is that their underperformance is obvious enough that they leave a documented paper trail that makes this unambiguous. And in a company that's run into financial difficulties, the top 10% has probably already left, because they continually get job offers and when your company is going down the tubes, it's to their advantage to take them. That means that most of your financially-motivated employee base probably fits into the middle range, the folks who are average employees and will have average difficulty finding a new job.
The point of a buy-out is to reduce the anxiety levels surrounding getting that new job to the point where anyone who is unhappy at your company but isn't sure they have enough money or skills to go elsewhere ends up taking the leap.
Unless you're not confident enough that you'd be able to get a job in those X months, either because of your skills or there not being jobs around.
Also, even if you like your coworkers, or want to acquire skills, if the ship is going down and you feel confident enough that you'd be getting another job quickly, then you might jump ship anyway.
"a tenure-based package to leave the company"
People who have been longer with company are also more likely to be older than average employee. So I think he wanted to get rid of "old" people who would "slow down" company and be unfit for its "new and vigorous" culture?
The longer you've been with us, the more you've likely contributed and we should recognize that as we part ways. The longer you've worked with us, the more life upheaval the separation represents. The longer you've worked with us, the more personal relationships you have developed, perhaps with the same people making the decision to eliminate your position. A generous severance (which IMO requires a tenure component) sends an important signal of stability to the employees who remain AND makes it easier for managers (who are of course humans themself) to make the decision to eliminate the position of a long-tenured but "surplus to ongoing operations" employee.
What's the alternative? The person who joined 6 weeks ago gets the same package as the 10-year veteran? That seems worse all around to me.
When you don't know how to run a business, cut costs and call the result a profit. Then take the bonus for "hitting the target", and pull the golden parachute ripcord.
For what it is worth, managing staffing levels is one of the hardest things to do in a large organization because the visibility of contribution is so low. You have the quiet guy who gets things done everywhere but is invisible, and the useless guy who keeps up a very believable patter of what they are getting done. If you layoff people just based on the optics of the situation you screw yourself.
Who will maintain teams without people whose specific role is maintenance?
So you wind up with good engineers, and all the bad management and support that couldn't find jobs elsewhere, and that works out real well, you betcha...
As one of my co-workers explained it: If you're incompetent you can get a great payout and then go be someone else's problem.
Most of the Uk's mobile networks was designed and built by ex bt people who took redundancy
I remember this being an issue with General Motors near bankruptcy (2008) too. They couldn't lay off union workers, and figured it would be cheaper to offer them buyouts than keep paying their above-market salaries.
There too, people pointed out that the only takers would be the best workers, who can easily find work elsewhere, and they'd be left with the ones who can't.
This reminds me quite a bit of a blog post from The Wetware Crisis on what he deemed The Dead Sea Effect ( http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-d... )
While not a forced evaporation which you describe, its the 'the best people can get jobs elsewhere' and 'the less capable people entrench themselves as experts on critical systems to where they can't afford to be let go'.
Holacracy and other ultra-flat org structures always share two features:
- It consolidates power in the people at the top (the people who do not participate in the flatness of the new structure)
- as social animal, humans will always naturally self-organize into de-facto hierarchies that may or may not be aligned with the needs of the organization
Prediction, the 14% that took the buyout are probably the ones that couldn't fit into the new clique driven de-facto structure and were kissing years of promotable work goodbye. These folks will likely be successful wherever they go. Meaning that the people left behind have either cemented a position in the new structure through force of personality (not competency) or are not otherwise employable elsewhere and will suffer as the assholes fight it out on the bridge.
Here's an employee review
http://www.glassdoor.com/Reviews/Employee-Review-The-Zappos-...
It's like places saying they're okay with flex time but you get poor reviews by butts-in-the-seat managers regardless to your actual performance.
This is why I'm simply riding the clock at my current job. It's sucked the life out of me. Change is on its way fortunately.
http://www.glassdoor.com/Reviews/Valve-Corporation-Reviews-E...
Here's some choice quotes:
"While it's true that Valve has no official job titles or promotions, compensation varies greatly among employees and many teams have an obvious pecking order. There is no formal management structure, but it's clear that some people have substantially more control over project direction and the work of others."
"Because teams are intended to be self-forming, it's rare that enough people will want to assume risk to all collectively embark on a new project. It's too safe and too profitable to just contribute to something that's already successful. Even though failure is supposed to be tolerated and even encouraged so that employees will try new ideas and experiments, there is little evidence of this. After a few rounds of bonuses, folks learn quickly what is rewarded, and what is not."
"The idealistic paradise is ultimately undone by a flawed review system. The lack of managers means that a peer review system is necessary, and Valve is very proud of theirs. But their review model is best described as a "popularity contest masquerading as data""
"Those who get stock options do extremely well, and the others do not. It’s an unacknowledged two-class system."
"The rational response to this uncertainty is to find a patron – somebody who can guarantee you a good review if you do their bidding. These patrons (the knights) guarantee themselves good reviews by doing the bidding of a higher-level patron (a baron), and the barons pledge fealty to the board members. This unofficial structure necessarily evolved and you opt out of it at your peril. The irony of a hierarchical structure spontaneously forming in Gabe Newell’s company after he has spoken so strongly about the problems of “command-and-control type hierarchical systems” is delicious. As was noted in “The Tyranny of Structurelessness”, “structurelessness becomes a way of masking power”, and this masked power is more insidious than formal power."
"So, I quit in order to get better compensation, an acknowledged hierarchy, and appreciation for my work."
"This organization has a purposely opaque, hierarchical, secretive, and very rigid management structure."
"Some projects can go on literally for 5+ years wandering around pointlessly without shipping, with little to no direction, and no accountability. This company is terrible at writing and shipping large scale software"
"The random mass firings of 2013 tanked moral, and the stream of talent leaving the company during 2014 didn't help."
"The yearly review process lacks feedback, transparency, and coverage. This company has no formal HR, so good luck if you need to give genuine feedback about troublesome coworkers."
"The lack of solid structure in management reduces the company to schoolyard politics where bullies and loudmouths reign." (Title: "It's like being in high school again")
"The culture at Valve is a bit like a cult. There's a party line and if you veer from that, it is discouraged with one-liners rather than discussion."
"The incentives are setup so the people who place themselves around upper management the most and are the loudest about what they're doing (that jives with what upper management likes) will be compensated several times more than those who don't."
> "The random mass firings of 2013 tanked moral, and the stream of talent leaving the company during 2014 didn't help."
I think this one is talking about the departure of Michael Abrash (and several others) to Occulus.
- de-facto hierarchy takes its place (at valve it seems that there are several overlapping hierarchies, all of which are toxic)
- highly centralized power at the top results in the de-facto highest people jockying for favor and acting as gatekeepers
- innovation stops
- complex projects take forever
- risk taking gets turned into position jostling
- unclear structure leads to unclear reviews
- nobody to resolve disputes
- secrets and rumors dominate information flows
- these problems remain unacknowledged
Look at reviews for other large flat organizations and you'll see the same issues echoed over and over again. Anybody who's worked for a reasonably sized "flat" org will recognize all of these problems as persistent and near universal.
Zappos will be no different. It's just a terrible way to organize labor.
I wouldn't be surprised if the average was 10-20% and a vast majority of these people are taking advantage of what they see as a good deal irregardless of their feelings on holacracy as a management style.
Here's an article from 2008.
tl;dr is "If you quit today, we will pay you for the amount of time you’ve worked, plus we will offer you a $1,000 bonus."
Paying you for the amount of time you worked is a legal obligation. So really you are talking about can you find an equivalent or better job in the amount of time you would have earned $1,000 if you stayed. Even in the lowest of paying legal jobs in the US, it does not take that long to earn $1,000 relative to securing a job. Not to mention that new job is not guaranteed to fit into your current living situation and other factors that cause the inertia for staying with a current job to be quite large. Seems a bit like a gimmick to me.
Even if your anticipated time between jobs is 1-2 months, you can still confidently quit by the deadline and end up with six weeks paid vacation and a six weeks bonus.
Extend things to 1-2 months and that probably drops to 20% or so which is very good odds.
However, the difference between a 'competitive' offer and a 'good' one at a company you want to work for is huge. If your spending between 1/3 and 2/3 of your waking hours at work you need to make them count.
It's a sales job, with you as the product.
I. Hate. Doing it.
So while a lot of people could go out and get a better, higher-paying job, there is a potential barrier and significant activation energy for that reaction. Doing my regular job plus the self-sales job is absolutely exhausting.
When my current job is already almost good enough to keep, I have little incentive to go sift through piles of recruiter spam and speculative postings to find the actual jobs, retype every last detail of my resume into yet another stupid custom candidate tracker web-app, suffer through the bozo filter and the pop quiz of the tech screen, fly or drive wherever, and spend one of my vacation days playing along with some stupidly involved interview process, only to see a curtain of silence descend forever.
For $30k, and an extra 40 hours per week in which to do it, I would certainly put up with the tech hiring circus for a couple of months.
Technically you'd come out positive if you found something that's at least more than (what you make) - 30k, but then you have to consider raises and such.
If you consciously attempt to hire true believers, then you will get two kinds of employees: true believers, and people who lie about true believers.
That set of employees is probably pretty small compared to the larger set of qualified employees without such a restriction. You write off a huge pool of talent.
Just because you're a mercenary doesn't mean you won't bring your all to the task at hand.
Also, consider the employee relationship from the other direction. No corporation is going to hire an employee because the corporation is a true believer in the employee's mission. That relationship is a strictly mercenary one: Can you do for us what we need you to do for us?
Full disclosure: I'm old.
The ones that are confident they could land another better job by the quit date.
It's not enough to be possible to get any job. The offer only makes sense if you are certain you will trade up.
And it does not have to be a better job, it could be even one that pays less. If the person needed cash fast, this is one way of getting it. They could spread those losses over a year. It's still better than a payday loan.
It's not even so much about the vacation being paid but having certainty. I haven't changed jobs a lot but the last time was pretty typical: get an offer and then "when can you start?" I ended up taking a 2-3 week vacation arranged on about 3 weeks notice.
If I'm happy, I'm not quitting even though I could easily get another job. It's not always about the money.
Zappos is located in Vegas, which is a bit of an oddball market and somewhere between these poles I would think.
I suppose I've just had good managers when I've had them, which is of course going to make things work out well for me.
(From an earlier discussion at https://news.ycombinator.com/item?id=9250527)
[1] http://www.develop-online.net/news/valve-s-perfect-hiring-hi...
In my experience, it is a horrible system in which to exist. It's highly ignorant of psychology and behavior theory almost intentionally, and it creates far more drama and politics than any organizational system I've ever seen. It's not a good thing.
Were her comments before or after she was fired? I'm not sure that if it was after, we can necessarily count on it being objective. I've heard plenty of people make comments that aren't exactly the most accurate after they've been fired.
Even if it were before, would you "necessarily count on it being objective"? It seems like an impossibly high standard, given how many people make comments that aren't exactly accurate before they've been fired.
That's certainly fair. I'm not making a comment one way or the other - I don't know her, I don't know the story, and I have no knowledge that leads me to believe one way or the other.
I just naturally am a bit more skeptical of comments made about companies from employees who were fired. People at a company can certainly make untrue comments, and people who were fired can certainly make true ones.
It's just that, in my experience, there's a higher chance of negative bias in someone who was let go from a company.
For anyone who finds this plausible, it might be enlightening to contemplate (1) the first "hacker koan" at http://en.wikipedia.org/wiki/Hacker_koan and (2) this classic XKCD cartoonhttps://xkcd.com/592/ .
Honestly, my experience has been that structure is one of the key things that makes teams effective (not structure as in "rigid meetings/etc", but structure in the sense of "understanding what their role is and where they fit in")
This doesn't strictly require managers, of course, but self-organization rarely works out that well either as the org gets larger (you have the same problems, they are just hidden and nobody is accountable) :)
People don't work without structure, ad hoc structures develop. The conjecture is that this is a good thing, that these ad hoc structures are more natural, and you will have natural leaders take lead where appropriate and this will be more effective.
But the issue is structure deals with quirks in human behavior. It deals with the emotional side of it, it deals with the cliquish, tribal nature of our default social behavior. You can put a highly productive, less social person into a position, give him a set of tasks to do, evaluate him fairly and see him produce. In doing this, you need an objective manager, you need a fair structure, and it works.
Without those things, the less social, highly productive person is easily sidelined. The person who takes leadership isn't given that position, they don't lead because they have been shown that they can motivate people to do great things, because nobody gives them that position. The people who get into leadership positions are those people who can convince other people to work with them on a personal level instead of on an organizational level. The really smart, less social person doesn't even get brought in to participate, and little power struggles happen between factions of people who want to be the person who directs the project, despite the fact that none of the people looking to do it might even be very good at doing it at all.
The real problem with traditional management structures is that it often breaks down to this sort of system to start with. Where the people building the systems aren't very good at it, and where they invite their buddies to be management because management pays the best, and they want to help their buddies out. It's because you have poor systems, and because you have the wrong people managing.
The issue with this is that rather than potentially falling short and missing the mark, they start with the worst of it.
This is exactly right. The traditional organization already falls prey to politics and games due to lack of good structure, not due to the idea of structure itself.
You will get a system regardless of whether you intentionally create one or not. It's far better to get the one you intend and can develop, than an uncontrollable chaos.
Well, that's your experience, and you're entitled to it. I'm finding the opposite. Though describing holacracy as a "lack of structure" seems like a pretty serious mis-statement. Holacracy is extremely structured - way more, and way more explicitly, than most organisations.
It's kind of like the classic traditional observation that "agile is basically no processes". Yeah, if you use agile as an excuse to throw out process, you might equate the two. But actually agile (at least at its beginnings) involved a lot more process and rigour than traditional waterfall development. Agile is not an absence of process. Holacracy is not an absence of structure.
I guess humans will be humans - which means they will misinterpret, distort, exaggerate, etc, especially when exposed to newness.
I have little comment about what holacracy is like to work in, because I haven't worked in one. But I started a business that now operates by principles fairly closely related to those underlying holacracy (though the implementation is fairly different). We have less structure than holacracy, however... and yet what I'm seeing is that quite the opposite of your statement, it is bringing out the best in people.
Then again, I've not implemented a fake holacracy for all the wrong reasons. We're still in the relatively early days of this sort of culture. There are many more ways to get this wrong than right. Unless the people making this happen are truly committed to creating an open culture, and are doing it for the right reasons (i.e. this is the way they want the business to operate because it's good - not "well, this seems like a good tool to get people to be motivated without paying them nyeh nyeh nyeh dr evil laughter"... unless it's done right, it will probably be a horrible distortion of what it's meant to be. Kind of like what you describe.
I think you should consider the possibility that the allegedly holacratic organisation you worked in just got it really badly wrong.
I agree that the organization I worked in got it really badly wrong, but I also saw how the structure that was being followed (and there is a structure) sort of enabled that. It was a small organization and there were many other things going on that I think caused issues—so perhaps it's not 100% attributable to holocracy, and wasn't perhaps the best situation for it to be effective because of that.
I'll admit it was anecdotal. But I don't trust a process that, when followed fairly closely, had what appeared to be many holes in its organizational model that were suboptimal.
I don't think they are against people assuming responsibility or managing work, they just want to be more dynamic about it.
It sounds way more like Valve wanted to do something that was a radical departure from anything they'd ever done before (hardware), the intrinsic structure of Valve meant that it was difficult if not impossible to set hardware up to succeed (peer-evaluated hiring, bonus tied to value of work), and then Valve realized it wasn't working and decided to make a clean break instead of drag it out. So then Valve immediately says "OK guys we couldn't make this work within Valve but we will back you up 100% if you want to go make this work external to Valve."
is a lie. It all depends on who you know and are friends with. Read on how Valve handled Jeri Ellsworth and her hardware team, they were all fired with no notice by Gabe himself.
I believe this is the beginning of the "death spiral" described by PG in his "What happened to YAHOO" essay.
And a lot of the great ones may want to hang on just for the fun of it.
(Someone who endorses this structure) explain to me in one sentence with fewer than 20 words how a 'lead link' is not the same role as a 'manager'.
Seems like an arbitrary restriction to put on something that's probably complex.
No one wants to get halfway through an article claiming the former and ending up being the latter. If Zappos has a unique take on how to replace middle management, let's all hear it.
>If Zappos has a unique take on how to replace middle management, let's all hear it.
I think their idea is in this book, mentioned in the article, that they asked all zappos employees to read: http://www.reinventingorganizations.com/
Maybe not in physics, but in politics and business it does - those fields like to seem more complex than they are so they fake it, which is much more difficult to do with simple language.
"From each according to his ability, to each according to his need". Simple terms. Does it lead to a workable political system?
"Three-strikes law". Simple idea. Does it lead to good social policy?
"Zero tolerance." Another simple idea. Does it lead to good social policy?
"White man's burden." Does it justify the American colonization of the Philippines and other countries?
"Curse and mark of Cain" as used by many religious groups to explain the lower social standing of those with black skin. Valid idea?
"Free silver at a ratio of 16 to 1" - one of the famous slogans of the Populist movement in the US in the late 1800s. Easy to say. Good economic policy?
Or do you prefer "Bad money drives out good" - Gresham's Law - as your economic policy?
Otherwise the advice reduces to "don't trust long explanations". But if 1% of long explanations are valid and 2% of short ones are valid, then the statement is both true, and worthless as a way to detect validity.
It's not a guaranteed indicator, but the chances are better that a good elevator pitch is good because it describes something good.
We had this as a stepping stone at GrantTree, in our previous implementation of holarchy (note: that's not the same as holacracy, it's just one subset of holacracy that deals with how to organise work without organising people) but since then, we got rid of that managerial aspect (and also of the word "lead", which is needlessly managerial).
The links at GrantTree now do just one thing: they represent the circle they're a link of in the meetings of the supercircle.
This is just one role among many for the person, and it has absolutely zero managerial authority. It's an administrative and communications role. We're still in the early days of it, but the intention is that the person in that role will be rotated out every 3 months or so, to make sure the role doesn't turn into a manager role inadvertently (but at the moment there's no sign that it will).
(very sketchy, but it's the best I could come up with under the constraints)
"The determinant of a matrix is an (oriented) volume of the parallelepiped whose edges are its columns."
Also, there is a parallel to lead link called rep link who is appointed by the lead link's circle to check against bad decisions/behavior by the lead link.
Edit: I forgot to add that anyone who perceives a person is not receiving support for their responsibility can raise a tension. It's not just the manager's and the employee's job.
How does circle member recognise that they need support? What indicators/who provides feedback?
My (limited) experience as a manager was mainly about nurture/support/challenge of colleagues. We could not allow them to fail/fail to 'ask' for support because of implications for clients (we did not sell people shoes).
That said, I think one of the bets holocracy makes is that a group of people with a better understanding of their responsibilities and who receive quicker, clearer feedback will naturally be more proactive about problems. A circle is pretty unlikely to assign themselves the kinds of restrictive processing and reporting that are traditionally used to control interaction with clients in organizations that don't have perfectly reliable people. But in the short term, the control method would probably have more consistent results and that is not acceptable to every organization.
Who provides the feedback? Based on what credentials? Explain why that person not a manager.
In addition to that, some roles may have responsibilities to provide particular support and feedback. For example, in a team of developers, a developer who has a code reviewer role may have the responsibility of providing feedback on others' code.
Other kinds of feedback-providing responsibilities could be proofreading, listening to sales calls, QA on manufactured items, feedback on negotiations, etc. Anyone could be assigned these roles/responsibilities.
Traditional managers usually see these responsibilities as their job and other employees don't easily get involved in the manager-employee feedback relationship.
Interesting but 'deficit model' approach. No mentoring available for performance that does not cause what you define to be a 'tension' but that could be improved with little effort. I'm thinking of double-loop learning (Argyris) as opposed to single-loop learning which I interpret as covering proof reading/QA/Sales call monitoring.
So, instead of having direct authority to micromanage, they only have indirect possibility of micromanaging and there are explicit checks built in to prevent it.
But he also stresses running the company like a family aka cult. One of the advantages of moving to Vegas from SF was the employees were forced to spend more time together. He even said Zappos is his tribe. I wonder how these experiments would fare at a larger company.
Of course, he isn't actually building a cult, but I find the similarities of indoctrination very interesting.
Whether the techniques and the end-goal are good or bad is left as an exercise to history :)
Otherwise, what separates a subsidiary from just being another team? I assume the difference is that a subsidiary can be legally considered to be a company on its own altogether, but I'm not a lawyer. If it is though, then assuming companies need a CEO, Zappos still needs one.
> To get their severance, employees had to be in good standing with the company. They were also asked to indicate by email that they had read the management book "Reinventing Organizations" and disagreed with its manager-free vision or else state that they were not reading it.
Crazy.
I wonder how many more employees would have left if Zappos was based in a region where workers have greater mobility.
I can't wait to read that book.
Be careful what you wish for. A company without management is like a boat without a captain. You might appear to be fine for some time, but eventually you'll be hopelessly adrift at sea.
They shouldn't hate the players, but the game.
A company without management may drift around aimlessly in Brownian motion, but at least it does not order "ahead flank" onto the rocks.
There once was a manager,
Who had a little curl,
Right in the middle of her forehead.
And when she was good,
She was very, very good,
But when she was bad, there were layoffs.If everyone doesn't work together, with a hard time constraint, to achieve the shared vision they believe in it seems really hard to do amazing things at any sort of market dominating speed.
I accept those bets happily.
[1] http://holacracy.org/how-it-works
Has anybody operated under Holacracy and speak to it?
But then, we're a small company, with an already (nearly) flat structure, and already built around largely self-determining teams. So what Holacracy offered above what we already had was rigid structure, and cumbersome terminology.
It also has a weird religious vibe in that the Holacracy franchise holders who we turned to for input on our implementation of it refused to work with us unless we adhered to the defined process 100%. No modifying it to suit our company.
The formal governance meeting process caused a severe backlash when rigidly adhered to because it only allowed one "reaction round"[1], so if someone else's reaction caused a new viewpoint to arise in your mind, but you had already spoken, too bad. Our facilitator who had attended the training rigidly enforced this process, and several people, myself included, felt silenced.
So yeah, as we weren't a traditionally pyramid structured company to begin with, we had very little to gain from it - we tried it because we had started with 5 employees and no governance beyond "let's ask the boss", and we had grown to a point where we needed to get _some_ governance in place, because while intra-team decisions were fine and dandy, how we made decisions affecting everyone was really unclear.
So in the end, we dropped it. We have kept some of the ideas we found useful, for example the separation between governance and tactical meetings, and the idea of the 'lead link' or their equivalent being opposed by the 'rep link' equivalent, in our case, it's our proxy product owners (PPO) and their eternal opponents are our scrum masters. It's a healthy tension between what the business wants and what the team wants.
The other valuable thing we've kept was the objection and objection testing process - if someone has an idea, objecting just because you don't like it is not considered valid. You need to be able to present a coherent argument as to how the proposal, if adopted, would harm the company. It means that the "Bah humbug" curmudgeons can't stall innovation. Basically it boils down to "Would it hurt us to try this?" as a test for a new idea.
So now our governance consists of a small group of 'executives' for want of a better word, and what we call "The General Circle". The "executives" is our boss and two 2ICs (to increase our bus factor to keep our business team happy) one with an HR and finance focus, the other with a businss analysis / product development focus. This group's primary focus is the relationship with our business team, but it also handles the aspects of running a company that require handling an employee's confidential information, like pay reviews and HR issues.
But every other cross-company decision is made by the General Circle, a group consisting of the PPO and scrum master from each team, plus our finance and HR specialists. These discussions are totally open to anyone else who wants to attend, and our financial performance is tabled as a matter of course, with more detailed numbers and budgets available for the curious. PPOs are theoretically appointed by the General Circle (our existing PPOs were in their roles before this governance guff, so no new ones have needed to be appointed yet), while Scrum Masters are selected by the team however they like. I think all our teams rotate it every six months or so.
Oh, and we also like the election process from Holacracy - write down a person's name on a piece of paper, with your name on it, and then in the discussion, you say why. After everyone has explained their reasoning, people can then change their votes if they heard a good point that persuaded them.
[1]: http://wiki.holacracy.org/index.php?title=Governance_Meeting...
If Zappos won't have managers at all then: Who will decide how much employees will be payed, and based on what data? Who will decide exactly what customers need and exactly what will be actually done and what won't be done or deferred? Who will decide who will be hired who will be fired? Who will decide in situations when one project requires something or someone from another? The list goes on...
If someone (or multiple people) does this then he is not very different from managers in my company and I bet they never even heard about Holacracy or Valve, Zappos and GE experiments in management.
The Sun also has an article about Hsieh's Downtown Project: http://lasvegassun.com/news/2015/may/05/hsieh-outs-downtown-...
Beside, in any large enough company, I think offer of fat severance is likely to be taken up by 5% or more of its employees at any point in time who were thinking about leaving anyway.
Management-less company needs to hire employees with specific cultural and social mindset. So this needs to happen at the birth time. Trying to do this at later date can feel like circumcision at 18.
[1] https://open.bufferapp.com/early-reflections-buffers-switch-...
Whether the new policy will work out in the long term remains to be seen. I believe I read that Google tried a flat hierarchy for a few months and found that it did not work quite how they wanted.
Also, what will Tony Hsieh be doing in the new managerless structure?
Writing more 5,000 word emails?
"In 2002 they experimented with a completely flat organization, eliminating engineering managers in an effort to break down barriers to rapid idea development and to replicate the collegial environment they’d enjoyed in graduate school. That experiment lasted only a few months: They relented when too many people went directly to Page with questions about expense reports, interpersonal conflicts, and other nitty-gritty issues."
[0] https://hbr.org/2013/12/how-google-sold-its-engineers-on-man...
Once you grow beyond a certain size, you have to have people who function as communication hubs to deal with the n^2 connections between employees. The hubs end up consolidating power, and then you have management. There are probably ways to limit this, rotating managerial duties and such, but it's much harder than just adopting a hierarchical structure.
In a nutshell, the holacracy system will have "circles" of individuals which act as semi-autonomous groups to achieve results. Each circle might function democratically. Semco is a more traditional company with a workplace democracy overlay on top. This piece goes into more detail: http://jonathangifford.com/maverick-ricardo-semler-10-key-de...
EDIT: And oh yeah, both Zappos and Semco are privately held. The linked article discusses this in the comments, but in recent years we've had more illustrative examples of how profit incentive sucks character and morals from a company, e.g. Cook shouting down an investor questioning the need for green initiatives, or Schultz telling investors they could sell if they don't like his support for same-sex relationships. These two held on, but countless others surely sacrificed their values at the altar of shareholder value. In short, I'm not holding my breath that we'll see workplace democracy or holacracy at a public company anytime soon.
My primary concern would be about the scale of the company: self-organizing over a thousand people is going to have some rough patches.
It is not inconceivable that anyone who wanted to leave the company between now and the end of the year took this.
Plus as an employee I'd be more inspired working with an actual leader, rather than a faceless bureaucracy. We got big co's for that.
It is weird that Zappos create a hype by suggesting that they are "radically inventing" something. That's really bullshit.
I don't understand people that are really enthusiastic about Zappos.
Incidentally, when the startup I work for reached a size where most companies would have started hiring managers, we reached a consensus as a company to give the holocracy thing a try. It's been working very well for us, but we're still < 100 people, so we'll see if it sticks as we grow. Me, I might bail if we turn into a big boring manager having company.
On the one hand, I can see this being the ultimate meritocracy. Perhaps the person cleaning toilets is actually a marketing genius? On the other hand, it could be like an episode of Hell's Kitchen where nobody is in charge and the whole operation goes to shit.
A company of that size is an interesting proving ground and if this succeeds, good.
glad this happened first
...right
is this just a bigger gap between the real power holders and "the rest"?