What is holacracy and why does it work for Zappos?

Zappos made news by announcing it was getting rid of bosses, and moving to a self-managing structure called Holacracy. Is it innovative or anarchy?

zappos no managers
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Zappos made headlines in 2013 when it announced plans to transition to holacracy -- a management-free corporate structure. One of the biggest motivating factors behind Zappos' decision to restructure isn't that different from what plenty of other well-established companies are seeking: cultivating a startup culture.

Realistically, startups are known for long and grueling hours, high failure rates, low starting pay and small teams -- but they're also known for unique benefits, committed and enthusiastic employees and strong collaboration between teams. And that's what Zappos hopes holacracy will bring to its company by breaking down barriers and fostering a strong sense of inclusion and communication.

What is holacracy?

Holacracy isn't a term invented by Zappos, rather, it's a movement bent on reshaping corporate America. It's about self-organizing, so instead of waiting around for a boss to tell you what to do, you take the reigns as an employee -- or as a team -- and jump right into projects and collaboration.

Over the course of a couple of years, Zappos has slowly weaned the entire company off the traditional concept of bosses. Departments now function as groups, or circles, of people working towards the same goal, rather than miniature hierarchies within the overall hierarchy of the corporation. The focus isn't so much on titles and position within the company, but the corporate goals and how to achieve success.

And when it comes to defining holacracy much of it falls on the shoulders of the employees. "We've given all 1,300 employees the opportunity to make structural changes to their job and their team to help move the business forward," says Jordan Sams, from Zappos' Holacracy Implementation Team. They are the ones required to adjust and define their new roles within the overall structure, since the entire concept centers around being proactive, rather than reactive in your job.

Defining your own job day in and day out might sound stressful for some, but Sams says a lot of good has come out of the change. It's opened up lines of communication between teams and made employees feel more connected to the company, which makes them more invested in their careers. The thinking is that the more empowered employees feel in their own careers, the more they will want to see the business grow and succeed. Holacracy has also made it easier for workers to gain new skills, follow their passions outside of their own role and even transition roles. Sams knows firsthand how useful this new structure can be in helping shape and mold your own career. When he started on the customer loyalty team at Zappos he eventually became the lead, but after a while he found that there wasn't as much room for growth. Enter the new holacracy structure, and Sams has found that he is able to pick up work in other departments within the company. Therefore, he feels as though he is constantly growing his skills and reaching his full potential, rather than remaining stagnant in one role.

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The Role Marketplace

Holacracy also helped teams at Zappos become more organized and proactive in finding the right people to help with major projects by opening up work to employees outside their team on what they refer to as, the Role Marketplace. The Role Martketplace is basically an internal job board with specific tasks and jobs that other departments need completed along with the percentage of time they estimate it will take out of a person's schedule. That way if one team needs something completed that they feel will take 5 percent of someone's time, they can go ahead and list it and wait to see if anyone bites. Rather than having to go through the ranks and get approvals for hiring or outsourcing, they can quickly locate the talent within Zappos' ranks.

It's intended to help people peruse their passions within the workday, by expanding their work outside their primary job. Sams likens it to your college major, where you typically take the majority of courses in your main discipline, but there is always room to take a few classes in other areas, ones that you may be particularly passionate about.

The Role Marketplace can also help with employees seeking raises or those who might want to transition departments down the line, by helping employees earn badges. "Badges are a way for us to determine who can fill those roles. A lot of times a lead link will have a role available that they want to open up to the entire company," says Sams.

For every job posted on the Role Marketplace, there are certain qualifications that limit who can take on the role or side project. These badges equate to skills, so theoretically, you could set your sights on a specific job, figure out the requirements, and earn those badges to make for an easier transfer. Badges make it easy for others to identify your skills so that you can show you're qualified to take on a new project or role within the organization.

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