8.7: Thriving in the Digital Enterprise: Taskbots and Robotic Process Automati... Holacracy's rather intricate system of roles and rules is beyond the scope of this discussion, but Hsieh's decision to adopt it is a fascinating case study in challenging the conventional thinking about management and organizational design. Hsieh acknowledges that the manager-less approach is not for everyone. People who need a lot of direction or don't want to be responsible for directing their own work aren't likely to be comfortable with it, nor are people who like the power and prestige that comes with being a manager. He and Robertson are also open about the fact that a transition as profound as getting rid of management is likely to be tumultuous, and a company could take from several months to several years to settle into the new way of thinking and working. Author Frederic Laloux, who left the prestigious management consulting firm McKinsey & Company to evangelize the concept of self-management, was intrigued by the possibility of a company as large as Zappos making this transition. His assessment was blunt: "I expect quite a bit of confusion and chaos." It's not surprising, then, that Zappos experienced some resistance and confusion after Hsieh began rolling out the new system across the company. Some managers were reluctant to surrender authority, some employees were no longer sure how to get things done, and anger and fear occasionally boiled over during meetings about the new scheme. Over time, more and more employees gradually bought into it, but the slow pace of the transition frustrated Hsieh, and he eventually issued an ultimatum: Either get on board with the new system or find a new opportunity outside of Zappos. True to the company's considerate treatment of employees, though, he offered anyone who wanted to leave a generous severance package. Roughly 18 percent of the company's workers and managers took him up on the offer. A loss of that many employees would be cause for concern under usual circumstances, but Hsieh's take is that whatever number of employees quit was the right number, because that left Zappos with a workforce fully committed to the new model. (Of course, this doesn't account for employees who didn't take the buyout because they were unwilling or unable to leave for other reasons.) 8.7: Thriving in the Digital Enterprise: Taskbots and Robotic Process Automati... Holacracy remains an experiment in progress at Zappos, and the coming years will continue to provide more evidence of its success or failure. One intriguing and, so far, disappointing measure is the company's fall in Fortune magazine's 100 Best Companies to Work For ranking, which is based on employee surveys and "culture audits by an outside firm. Before the transition, Zappos had ranked as high as 6th, rubbing shoulders with some of the most elite companies in the United States. However, its ranking plummeted after the change, dropping to 38th in 2014 (the year of Hsieh's ultimatum), then 86th in 2015. In 2016 it fell off the list entirely and was still off the list as of 2018. A nonscientific perusal of insider rankings on Glassdoor and Indeed suggests a clear split between employees who love or at least like the new manager-less approach and those who strongly don't. The average scores are reasonably high, though, so the fans outnumber the naysayers. Hsieh remains committed to Holacracy and backs up his enthusiasm with internal surveys of employee happiness and other measures. (Amazon doesn't report Zappos's annual revenue, so it's unclear what financial impact the transformation has had on the company.) Aside from whatever verdict Hsieh's experiment might eventually deliver on Holacracy specifically, the more intriguing general question is how well a fairly large company can get by without managers or a formal organization structure. Companies will be struggling with questions of authority and organization for as long as companies exist, so the results of the Zappos experiment should be interesting for years to come. Critical Thinking Questions 8-1. A wealthy individual such as Hsieh and a Zappos employee just getting by on his or her hourly wage are likely to have profoundly different views about work and the meaning of a job. Does someone in Hsieh's position have an ethical responsibility to protect his employees' livelihoods even if they don't agree with his management philosophy-particularly if that philosophy changed after some people uprooted their families to join the company? Why or why not? 8-2. What effect would a culture of self-management be likely to have on any company's recruiting efforts? How would it influence the type and quality of candidates who apply? How important is a public ranking such as Fortune's 100 Best Companies to 8-3. Work For? Explain your