
Why Are So Many Zappos Employees Leaving? - pmcpinto
http://www.theatlantic.com/business/archive/2016/01/zappos-holacracy-hierarchy/424173/?single_page=true
======
jaysonelliot
It seems like the reporter from The Atlantic came up with a hypothesis and set
out to write an article to "prove" it. I don't see any reporting, as in
speaking to current or former Zappos employees, learning what Holocracy is, or
investigating its long-term effects. In other words, this is just an opinion
piece.

Extrapolating a general condemnation of an entire business system like
Holocracy from a single data point is bad journalism, to say the least.
Casually lumping all "flat" structures together and cherry-picking research to
support a hypothesis (hierarchies work!) is lazy, and does the reader a
disservice.

I'd be very interested in some actual reporting to see how things are going at
Zappos. It's possible that Holocracy is not turning out well. It's also
possible that the turnover was exactly what they needed, and a positive new
model of work is emerging. Unfortunately, this article didn't do any
reporting, so it's unable to serve as anything more than a traffic-generating
question mark.

------
marknutter
I assume this keeps popping up on Hacker News because of schadenfreude, but
I'm going to say something controversial (and from a completely uninformed
viewpoint), and that's "good riddance". Of all the managers I've ever had,
maybe 1 or 2 of them have been any good at it. And by good at it, I mean they
made me better at my job. All the other managers I've ever dealt with
succeeded primarily in making my job harder to do.

Good managers are glorified butlers. Their job is to do everything and
anything they can to accommodate those whom they manage, and recognize that
because they aren't actually creating anything, they defer to those who can
and do whatever they can to help them do it. If they came from a creator
position, then their main challenge is to not forget what it was like to be a
creator and advocate for them as though they still are.

One of the major problems with the whole concept of managers is that they are
typically higher than the creators in the corporate hierarchy, and often get
corrupted by that. They are proud to be managers because it's a promotion in
most organizations, but they have to deal with the uncomfortable fact that
they no longer actually _make_ anything (or never did to begin with). Thus,
they try to find other ways to make themselves feel valuable, and that often
involves inventing extra work for the creators to do.

If I ran a company, managers would be butlers. Their compensation would be
directly tied to the level of happiness of the creators they are serving. I
might even let the creators they serve set their salaries. I currently have a
manager whose salary I would set higher than my own because he completely
embodies this type of management style. If anybody on the team needs anything,
he does it with a smile. He is our advocate, our cheerleader, our mediator,
our friend, and our faithful servant. It's not a coincidence he's gotten
employee of the year (based on embodying corporate values) two years in a row.

I really appreciate what Zappos is doing here and I sincerely hope it works
out. The worst thing that could happen is they lose their resolve and give up
on it. That would be a very unfortunate signal to the rest of corporate
America that the status quo is working just fine, and it would make me very
sad indeed.

~~~
Angostura
> If I ran a company, managers would be butlers. Their compensation would be
> directly tied to the level of happiness of the creators they are serving.

Let's take the simplest case of this.

You're a one man business, developing software perhaps. You're doing well,
you're successful and you take on someone to help you out.

Are you now their butler? Does that person set your salary?

If not, at what size of organisation does manager-as-butler kick in?

~~~
mbrameld
That's not the same case at all, though. The business owner may "manage" the
new employee, but that role is completely different from the role of a manager
in the context of this discussion.

~~~
Angostura
So you've said that it doesn't hold true for a 2 person company. At what size
of company would you make the organisational shift then? 3, 20, 50? At the
point where there is one person between the founder and the lowliest employee?

------
poof131
Holocracy is a single manager’s delusion that everyone can report to him or
her. As far as I can tell Zappos still has a CEO.

I also think the divide people are commenting about between manager and
creator is a red flag for a bad organization. If you are managing programers
you should still be writing code a few layers up (same for other creators or
operators). The “I’m a people person” argument doesn’t hold by itself. The
Commanding Officers of the fighter squadrons I served in flew a lot and also
managed 300-700 people. Certainly managers (or ‘leaders’) need to spend time
on higher level issues and looking after the team, but they should still be
able to operate / create enough to understand what is going on and lead people
in the execution of the job. Sure, when the captain or admiral went flying it
was more of a token gesture, but when you have a carrier and 5k people to look
after or an entire battle group, well at that point keeping all the balls
moving is challenging enough.

But a small to mid size team—if you can’t operate why should operators follow
you? While certain management skills are transferable, just because you lead a
team of programmers doesn’t mean you can lead a team of SEALs or vice versa.
Operational experience and ability to execute are important and an MBA isn’t a
substitute. Presidents of sales are still involved in selling. Why is it on
the technical side where people seem to either stop executing and manage or
just be a ‘creator’. Like I said, now that I’m a programmer, this is a red
flag for me. Although, to be fair so is the other extreme, the super coding
leader with 40 people reporting to him and no time to talk to anyone. One-on-
ones every other year! Leadership by negligence.

------
codingdave
People do not like change, in general. So when a company completely changes
the way it operates, and at the same time offers a buyout to anyone who
doesn't like the changes, I'd be asking the question the other way - what are
they doing that they kept more than 80% of people in that scenario?

~~~
late2part
It's worth noting that Hsieh's momentum is a bit hurt right now. His efforts
to revitalize old Vegas don't seem to be working, and this 21st Century Motor
experiment seems rough as well.

------
InclinedPlane
There's a fantasy in the corporate world, and Zappos is a perfect example of
it. The fantasy is the idea of the "family" company, of the non-mercenary
employee, of the company full of wholly intrinsically motivated people who
just want to work together and make something great and that's the reason they
get up in the morning and go to work.

There's some truth to that at every company, but ultimately money and
ownership matters. And it's delusional to think that employees do, or should,
feel unbridled affection for their employers. The only way that ever makes any
sense in big companies is when every employee is not only hugely empowered but
also has a substantially stake in the company.

Using "revolutionary" new forms of management like "flat" or "holocracy" or
what-have-you aren't going to magically transform a company into something
entirely different. At the end of the day there are people who can fire anyone
and people who can't, there are people who live in mansions and drive luxury
cars and people who don't. The only way to have an actual co-op is to, you
guessed it, legally be a co-op. You can't just play make pretend.

~~~
toyg
Oh, you can alright. Stock-options in startups, for example, are little more
than pretend, considering the actual chances you'll see any money from them.

In the end, to be honest, I'd rather have pretend-decision-sharing than
pretend-ownership, i.e. businesses that are egalitarian on paper but not in
reality. Europe is full of "service co-ops" where people are members in theory
but simple employees in practice, orgs built just to game taxes or minimum-
wage regulations. That's the worst.

------
blantonl
I think one important issue is how these managers, who's roles and titles were
diminished with this holacracy approach, will sell themselves as managers in
future roles outside of Zappos.

These days no one really envisions working for the same company for 30 years.
It will be tough for leaders within Zappos to show on paper their leadership
progression.

I think the idea of holacracy has legs, but I haven't seen any other
implementation that would lend credence so far.

~~~
late2part
I think a lot of companies like Google/Facebook/Crowdstrike/Uber will
appreciate someone who was successful in an environment like Zappos' holocracy
experiment.

~~~
jessedhillon
How did Crowdstrike manage to be mentioned among the likes of those other
three?

------
ebbv
When the holocracy was first introduced early last year and it resulted in
more employees than predicted immediately leaving, Hsieh apologists said "It's
ok, Zappos will be stronger for it." But over the course of the year, people
keep leaving, and people keep making excuses.

I think we have enough proof that the flat management structure doesn't work
as well as a traditional hierarchy for a company of Zappos' size and in its
industry. But I guess some people won't believe it until the company actually
goes down the toilet or backtracks.

~~~
codeonfire
Is the company unable to function? Can I not go to zappos.com and buy
something? Zappos just reduced their payroll expense by tens of millions of
dollars probably due to deadweight attrition. So I think they will be doing
much better.

~~~
ebbv
As I said:

> But I guess some people won't believe it until the company actually goes
> down the toilet or backtracks.

You fall under that category. The criteria that Zappos website has to actually
go down in order for it to have been a bad decision is a pretty bad way to
make a judgment call. If you ran a company that way you'd never fix a bad
decision until it was too late.

------
mwsherman
Others have said this well but I’ll emphasize that the article doesn’t present
the case that it’s failed or failing – there is a ways to go to find that out.
If their service starts to suffer, then we have a signal, perhaps.

This may turn out selecting for the right people. I’ve learned as a manager in
a growing company that a _lot_ of people really like traditional hierarchy,
and for understandable reasons. I’ve learned to respect and work with that.
It’s not my way, per se, but I get it.

------
spilk
In this no-managers/no-hierarchy model, how does one increase their salary?

~~~
sageikosa
Reputation? Which, in itself, will lead to a new unaccountable hierarchy of
mutual back-scratchers...

~~~
TulliusCicero
This is exactly the problem with excessively 'flat' organizational structures
that seek to do away with hierarchy. You can't get rid of social power, you
can only change how it's distributed.

Spreading it out more equitably among all employees _sounds_ good until you
realize that it makes decision making even more opaque: when everyone is
responsible, nobody is.

------
bovermyer
The more pressing question is, why does this keep popping up on the HN front
page every couple days for the last week?

------
codeonfire
Probably all the managers are leaving. They can't do non-manager jobs
emotionally or logically. Microsoft moved some managers to individual
contributor roles a few years ago and people were openly crying about it. They
wouldn't have power over people any more and can't deal with it because that's
all they know/want. This is a great opportunity for Zappos to backfill with
makers and doers and realize what they set out to accomplish.

~~~
mabbo
I think you've got a very poor picture of what management is about- perhaps
you've had a string of very bad ones. Power isn't the benefit of the role
unless you're a sociopath or an asshole.

Managing people is a complex problem that requires a specific set of skills
which take time and practice to get right. I've known (and reported to)
incredible managers who not only got us to achieve more than our team would
have otherwise, but made us enjoy our jobs more in the process. I've also had
managers who've lacked in that skillset, and had the exact opposite effect.
And it was never because they were assholes or sociopaths- they just didn't
have the skills they needed for the job.

I may take on the management role someday, not because of some dream of
lording over people and giving orders (that part actually turns me off) but
because it's a new domain of complex problems.

~~~
codeonfire
>perhaps you've had a string of very bad ones.

The "no true manager" argument is always brought out when I say something
critical of the management profession.

>Power isn't the benefit of the role unless you're a sociopath or an asshole.

I agree. Guess who inevitably fills management jobs at medium to large
companies.

~~~
mabbo
> The "no true manager" argument is always brought out

That's a fair point- I won't say there aren't any _bad_ managers- there are
sociopaths attracted to the field. But I don't think you've met any of the
good ones either. I'm sorry to hear that.

> Guess who inevitably fills management jobs at medium to large companies.

The sociopath-style manager will only have short-term gains compared to the
managers who've acquired the skill set for the domain. One's people will be
unhappy and quit; the other's will stay and encourage friends to join. After a
few years of this, when upper management want to promote to a manager-of-
managers, the long-term results will speak for themselves.

That's how I _lost_ my best manager- he succeeded so widely that he was
promoted up another level (where he continued to do very well).

My advice to you is to consider how _you_ would behave as a manager. How would
you run a team of ICs such that they'd be happy, productive, and meeting all
goals? It's not about whether you'd want to or not, it's how you'd approach
the problem.

~~~
codeonfire
> the long-term results will speak for themselves.

No they won't because corporate management creates perverse policies of
continuous turnover and stack ranking for this exact reason. Losing all your
people many times over in a short time is just portrayed as a sign of a good
manager culling the herd.

~~~
mabbo
Well, my experience has been different than yours. Perhaps you haven't worked
at a company that values good leadership.

------
repeek
What is/was the goal with the shift to holacracy? Was Zappos stagnating? What
efficiencies did they expect to realize?

------
nyan4
$2000? That's it? Not surprising that "Less than 2% of all prospective
employees end up accepting the offer."

~~~
jknightco
Keep in mind that Zappos is based in Las Vegas, and that the vast majority of
their employees are support staff likely making under $30K a year. If $2K is
almost as much as you make in a month you might consider taking the payout and
finding a new job if you're not happy with the culture.

~~~
overcast
I feel like people making only $30K a year, aren't the type of people to just
jump ship because the "culture" has changed. They generally want to keep
scraping by.

~~~
cthalupa
You're mixing up the buyout option that is a result of the switch to holocracy
and the 2k option to quit you get when you first start.

------
pcote
I don't blame these people for leaving. Self-governance is hard. Most kids are
taught to obey their authority-figure teachers. They eventually grow up to
obey their authority-figure bosses. So when a company like Zappos goes flat
like this, it flies in the face of over two decades of training for managers
and subordinates alike.

That being said, the new setup is great for people who are used to that level
of independence. Were you a freelancer? In an early stage startup? Came from
schooling where you were in charge of your education? If that's you, the new
Zappos is a natural fit. It also puts you in a tiny (lucky) minority of the
potential candidates who are.

~~~
oh_sigh
Pretending that Zappos has self governance is laughable. All they have is
governance that lacks transparency

------
morgante
I'm not sure why this seems surprising at all. In fact, it seems like exactly
the intended result: the company is getting rid of managers. That doesn't say
anything about how employees are faring in the new model.

This is like posting an article asking "why are so few people smoking in
restaurants?" right after a no smoking rule was introduced in restaurants.

Unfortunately, I do think they will run into some adverse selection issues.
The best employees are also the ones who can easily find a new replacement job
and collect a free 3-month exit bonus. Not to mention that many top performers
probably rose into management and are facing the possibility of a pay cut.

------
melted
Because the worst thing you can do for morale is move the cheese. People
probably were building up their reputations, review histories, etc, angling
for a promo which would net them more responsibility and money, and now Tony
comes along and moves the fucking cheese. Moreover, moves it so well that no
understands where it is anymore and how to get some. That, in a nutshell, is
why people are leaving.

------
josscrowcroft
"Flattening workplace hierarchies ... so-called “flat” workplaces ...
flattening hierarchies runs the risk of ... flattening workplace hierarchy is
not only ... Workers found hierarchical companies were more predictable ...
hierarchical structures in the workplace ... Hierarchies work."

Holacracy does not equal an absence of hierarchy or "flat" workplace.

------
saretired
Can't judge whether holocracy has improved Zappos' financial results--and what
else actually matters?--since Amazon doesn't break out Zappos separately. But
I find it easy to believe that Zappos was ordered to reduce expenses; salaries
are the easiest place to start cutting, but obviously if cut too much or
recklessly results can suffer over time.

------
bkirkby
former Zappos engineering manager here. still with the company, just not a
manager any more.

this latest round of news stories all stem from the offer that was given in
may being extended to a select group who were deemed critical to finishing the
"supercloud" migration. that extension ended in january, so another "exodus"
occurred as a new round of people took the offer. since the project was a tech
project, this new round was almost 100% from tech.

the ones who accepted this latest round were heavily tilted toward managers.
mostly product or project managers with a healthy smattering of engineering
managers. out of all the engineering managers (~15), there are only 2-3 of us
left. we are the ones who took on active roles in writing software and making
an impact by doing rather than commanding ([https://medium.com/zappos-
engineering/elastic-beanstalk-vs-a...](https://medium.com/zappos-
engineering/elastic-beanstalk-vs-apig-part-1-in-an-aws-
showdown-92afc6273491)).

fwiw, from my perspective, the story is far from over. i feel like it is only
now that we can really progress the hard work of self-organization. the
extended offer was holding us back. it's tough to move forward with
distributed authority when you know that a good portion of your peers are not
interested in that distributed authority.

i guess the message i'm trying to get across now is that for those of us here
and moving forward, it's far from a "finished" project. it's certainly not a
"failed" experiment yet. it feels like it's just starting.

and we are starting to see some of the benefits of people self-organizing. one
example is that for the last couple of years we've tried to contribute to open
source. i'm not entirely sure why we weren't able to do so except to point at
bureaucracy and traditional management putting up roadblocks. if your manager
doesn't see how you working on open source is going to help them out, then you
have much less incentive to contribute to open source.

in a self-organized system, with the directive being "figure out what the best
use of your time is for the purpose of the company," when an individual senses
that contributing to open source benefits the company, then they can do it.
since the tearing down of the traditional management hierarchy, we've had an
open source project released and are deep into releasing a second.

it's hard to say this never would have been possible under the traditional
hierarchy, but it is accurate to say that it didn't happen after two years of
trying and then happened within months with self-organization.

------
Animats
Covered 9 days ago.[1] That time it was a NYT article.

[1]
[https://news.ycombinator.com/item?id=10905091](https://news.ycombinator.com/item?id=10905091)

------
leeny
Anyone have visibility into which teams had the most attrition?

------
joshmn
People leave managers before they leave companies.

------
perseusprime11
This is what happens when your management goes down a rabbit hole called Teal
organization instead of evolving over time.

------
zanewill9
This was a fascinating (and daring) experiment. Sad it ended up like this.

~~~
static_noise
It doesn't end here, though.

A high turnaround was to be expected. The interesting part would be if things
stabilize again.

