210 Zappos employees – 14% of the staff – take buyouts after CEO ultimatum

I work at a company that was in bad shape during the financial crisis. A temporary CEO was put in charge. Ultimately, a number of companies were merged to create one company that could survive. In the end, one of the CEO&#x27;s of the merged companies became the CEO of the final company. His first act as CEO was to offer everyone in the company a tenure-based package to leave the company. I don&#x27;t know the full numbers, but nearly everyone in the IT department took the deal. And I am aware of many people in other departments who took the deal as well. Rumors were that between 30 and 40 percent of staff took the deal. Once this happened, the company got rid of that CEO and had to then offer alternative packages to people to stay. Basically the same amount you would have received if you left, but paid out to you over a few years to guarantee you&#x27;d stay.<p>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.

I&#x27;m not sure how to gauge this. I think Holacracy may be one of the dumber pseudo-science management theories that&#x27;s ever come out. If it works for Zappos I&#x27;ll eat my hat I guess, but I have a feeling that all we&#x27;ll hear about it is that &quot;it&#x27;s working great!&quot; as the ship goes down in flames.<p>Holacracy and other ultra-flat org structures always share two features:<p>- It consolidates power in the people at the top (the people who do not participate in the flatness of the new structure)<p>- as social animal, humans will <i>always</i> naturally self-organize into de-facto hierarchies that may or may not be aligned with the needs of the organization<p>Prediction, the 14% that took the buyout are probably the ones that couldn&#x27;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.<p>Here&#x27;s an employee review<p><a href="http:&#x2F;&#x2F;www.glassdoor.com&#x2F;Reviews&#x2F;Employee-Review-The-Zappos-Family-RVW6462350.htm" rel="nofollow">http:&#x2F;&#x2F;www.glassdoor.com&#x2F;Reviews&#x2F;Employee-Review-The-Zappos-...</a>

Thought experiment: ignore the holacracy angle and offer everyone in <i>any</i> company 3-months severance if they quit by a certain date. What percentage would quit?<p>I wouldn&#x27;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.

This sounds a lot like the flat structure they have at Valve, except at Valve they have had that since Day 1 and everyone is used to it. I can&#x27;t imagine the headaches and the absolute confusion that would result from trying to take a traditional management tree and flatten it. It seems like by its very nature the kinds of people you hired when you had tiered management might not be able to easily transition to a flat management, nor would they want to. Having worked in both environments, I can see that there&#x27;s advantages and disadvantages to each, but I personally prefer having a manager to bounce things off of and to (for lack of a better term) shield me from any unpleasant office politics.<p>I suppose I&#x27;ve just had good managers when I&#x27;ve had them, which is of course going to make things work out well for me.

My experience working for one of &quot;the big 3&quot; automakers is that the very best employees take the buyout offer, confident that they can find a better job for better pay elsewhere. Years after the employee buyout programs began in the auto industry, they were requesting buyout packages of their own to save the company as a whole.<p>I believe this is the beginning of the &quot;death spiral&quot; described by PG in his &quot;What happened to YAHOO&quot; essay.

Every time this comes up, I have one simple question that I have yet to have answered to any degree of satisfaction.<p>(Someone who endorses this structure) explain to me in one sentence with fewer than 20 words how a &#x27;lead link&#x27; is not the same role as a &#x27;manager&#x27;.

I just finished Tony&#x27;s book &quot;Delivering Happiness&quot;. I admire how positive and optimistic he is. And I even agree with forcing self improvement on the employees.<p>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.

Strange it isn&#x27;t former CEO as you wouldn&#x27;t have a CEO in a flat company. Seems hypocritical to me, but maybe it isn&#x27;t and I don&#x27;t get the distinction.

Offering money for employees to leave is an interesting strategy. I worry about unintended consequences, though. One consequence is that the very best people (who have easy times finding jobs or striking out on their own) will be much more likely to leave than less competent people who may feel they would have a harder time on the open job market.

&gt; Hsieh sent a nearly 5,000-word company-wide memo...<p>&gt; 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 &quot;Reinventing Organizations&quot; and disagreed with its manager-free vision or else state that they were not reading it.<p>Crazy.<p>I wonder how many more employees would have left if Zappos was based in a region where workers have greater mobility.

Previous discussion about their move to Holacracy [1]: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=9431090" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=9431090</a><p>[1] <a href="http:&#x2F;&#x2F;holacracy.org&#x2F;how-it-works" rel="nofollow">http:&#x2F;&#x2F;holacracy.org&#x2F;how-it-works</a><p>Has anybody operated under Holacracy and speak to it?

If it is something like on GE airplane engine plant in Durham I can understand this. But they do have managers, only less than usual.<p>If Zappos won&#x27;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&#x27;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...<p>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.

Are warehouse workers considered to be &#x27;Zappos employees&#x27;? Will they also be managing themselves?

Original source: <a href="http:&#x2F;&#x2F;lasvegassun.com&#x2F;news&#x2F;2015&#x2F;may&#x2F;05&#x2F;200-accept-buyouts-zappos-after-companys-managemen&#x2F;" rel="nofollow">http:&#x2F;&#x2F;lasvegassun.com&#x2F;news&#x2F;2015&#x2F;may&#x2F;05&#x2F;200-accept-buyouts-z...</a><p>The <i>Sun</i> also has an article about Hsieh&#x27;s Downtown Project: <a href="http:&#x2F;&#x2F;lasvegassun.com&#x2F;news&#x2F;2015&#x2F;may&#x2F;05&#x2F;hsieh-outs-downtown-projects-successes-talks-about&#x2F;" rel="nofollow">http:&#x2F;&#x2F;lasvegassun.com&#x2F;news&#x2F;2015&#x2F;may&#x2F;05&#x2F;hsieh-outs-downtown-...</a>

I thought that &#x27;holacracy&#x27; was a made up word from Silicon Valley (the TV show) where they have a fictional company called Hooli, but apparently it&#x27;s a real thing.

Lot of people seems to be thinking that these 14% are leaving because they miss having a manager. Employees who take buyout in this situation are usually the ones in people manager roles. Many of them might also believe that they probably would not do as great in &quot;individual contributor&quot; roles as they did in management role. Some of these may be good managers and some may be just great politics player. However rarely would be the individual contributor who would want to take ultimate step of leaving because of the fear of not having a manager. If Zappos had 1:5 managers to people ratio then 14% makes sense using this theory.<p>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.<p>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.

Buffer&#x27;s recently switched to self-management as well. Their early reflections[1] on switching is a good read.<p>[1] <a href="https:&#x2F;&#x2F;open.bufferapp.com&#x2F;early-reflections-buffers-switch-working-without-managers&#x2F;" rel="nofollow">https:&#x2F;&#x2F;open.bufferapp.com&#x2F;early-reflections-buffers-switch-...</a>

So 14% read Lord of the Flies instead and decided to get the hell of the island.

So just the managers and supervisors left then?

Seems a bit low - I&#x27;m thinking more people would have taken the buyout but aren&#x27;t very confident in the job market right now.

Does anyone know how this relates to Ricardo Semler&#x27;s efforts with Semco?<p>(<a href="http:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Ricardo_Semler" rel="nofollow">http:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Ricardo_Semler</a>)

I applaud him for experimenting and trying unconventional ways of doing business.

I look forward to seeing what happens. It&#x27;s perfectly natural for people to feel apprehension about a major change like this, and offering 3 months salary as an incentive is quite generous.<p>My primary concern would be about the scale of the company: self-organizing over a thousand people is going to have some rough patches.

Absolutely the nicest way to say &quot;join my cult or get out&quot; that I&#x27;ve ever heard of.

Given 3-5 year tenure of a typical employee at a typical tech company, this is less than expected attrition at a company.<p>It is not inconceivable that anyone who wanted to leave the company between now and the end of the year took this.

Say what you want about the particular policy, but I&#x27;m glad Tony has the opportunity and authority to implement it. &quot;Management by committee&quot; is the best way of reverting to a non-spectacular mean. It&#x27;s much better to have companies that have variance, i.e. larger organizations actually define a direction and do it, thereby taking risk.<p>Plus as an employee I&#x27;d be more inspired working with an actual leader, rather than a faceless bureaucracy. We got big co&#x27;s for that.

Exactly the same things happen in very traditional companies but they give it an other name. People are becoming &quot;redundant&quot; because of organizational changes. It can be operational changes like outsourcing a department or strategically like changing the span of control.<p>It is weird that Zappos create a hype by suggesting that they are &quot;radically inventing&quot; something. That&#x27;s really bullshit.<p>I don&#x27;t understand people that are really enthusiastic about Zappos.

I&#x27;m curious as to why? It sounds like an exciting experiment!<p>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&#x27;s been working very well for us, but we&#x27;re still &lt; 100 people, so we&#x27;ll see if it sticks as we grow. Me, I might bail if we turn into a big boring manager having company.

&quot;I don&#x27;t clean toilets anymore, I&#x27;m in charge of strategic marketing now. I&#x27;ll be taking this office&quot;<p>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&#x27;s Kitchen where nobody is in charge and the whole operation goes to shit.

I don’t have the tiniest hair of a dog in this race. But, I like the idea of a company trying radical things. It’s very easy to declare radical change. A 14% voluntary acceptance of a severance package (I would be more impressed if it was 6 months) is a sign of actually going for radical, I think.<p>A company of that size is an interesting proving ground and if this succeeds, good.

Has anyone read the book they reference, and do you want to give us a synopsis? I&#x27;m hoping it answers some of the practical questions surrounding how this Holacracy would actually work.<p><a href="http:&#x2F;&#x2F;www.reinventingorganizations.com&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.reinventingorganizations.com&#x2F;</a>

well, Zappos had just been on the list of places I was considering applying to<p>glad this happened first

I wonder how many of these 210 people were managers that were still there. &quot;Getting rid of managerial roles&quot; would certainly imply that any that were around might be expected to leave the company.

&gt;John Bunch, technical adviser at Zappos and leader of the Holacracy transition<p>...right

I just hope there&#x27;s a budding writer at Zappo&#x27;s who can fill in the details on day to day life in a holacracy. I keep trying to wrap my head around it and coming up blank.

I wonder what percentage of the 14% are existing managers that perhaps can&#x27;t or don&#x27;t want to move on to different roles?

I love the idea, but can a company that big really survive without management? Didn&#x27;t Google backtrack on a similar idea?

Isn&#x27;t this just what companies like to call &quot;a voluntary layoff?&quot;

so was the ladder to power and ownership at zappos just knocked down?<p>is this just a bigger gap between the real power holders and &quot;the rest&quot;?

Called it.

I stopped buying shoes from Zappos because I don&#x27;t like their selection of shoes any longer. Not because I thought their management structure needed a drastic, messy public overhaul. I dunno, it just seems silly and fanciful to me but then again I&#x27;m not Tony Hsieh.