Agile Organization

What We Can Learn from the Zappos Struggle with Holacracy

Online retailer Zappos has been known for its high employee satisfaction levels—until recently. The shift to holacracy has met with more volatile reactions than perhaps anticipated. Aimee Groth examines the struggle in an article for Quartz.


For those who need a refresher, holacracy is a system of organizational governance where layers of management are virtually nonexistent; instead, employees self-organize into teams or “circles” to accomplish work. Groth argues that this organizational style encourages humans to behave like an efficient computer operating system, allocating themselves to tasks as needed and detaching afterward. Groth however also argues that humans are not rational, that they are driven by emotion first, and that they are not suited to mimic machine behaviors. As a result, issues like this one arise:

As Zappos onboarded its employees to the system over the past four years, one of the biggest complaints, far and away, was around the rigid meeting format, which provides the guardrails for the system. Tactical meetings, as described by the Holacracy Constitution, tightly govern how and when employees can speak up. The meetings, which typically are held once a week, open with a check-in round and then dive into checklists and metrics. The Constitution is clear that there is “no discussion” during the check-in and closing rounds. In other words, there is no natural, back-and-forth conversation that begets camaraderie, respect, trust, and connection. No small talk.

Another nerve-racking endeavor undertaken by Zappos CEO Tony Hsieh has been the gamification of work. “Badges” now beget points that must be allocated to certain job roles, and points also determine salary. People who do not allocate their points enough either must reevaluate their role in the company or leave. Needless to say, having one’s livelihood depend on game rules is unappealing to many, and turnover since 2015 has been significant.

It seems the answer to perfectly blending the human and machine experience does not lie in holacracy, and backlash among former supporters is growing. If Zappos is to ultimately succeed with holacracy, it will probably be a highly altered form of it that regains the human element. You can view the original article here:

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