Zappos, the online shoe retailer, is pioneering a radical new approach to business structure known as holacracy. This system eliminates traditional management hierarchies, replacing them with self-governing teams or ‘circles’. Employees have multiple roles within these circles, with each role having a specific purpose and set of accountabilities. The idea is to empower individuals, promoting autonomy, agility and innovation.

Despite its potential benefits, holacracy has been met with criticism and resistance. Some employees find the system confusing and time-consuming, with an abundance of meetings and complex decision-making processes. Moreover, there’s a concern that holacracy may not scale well as the company grows.

Zappos’ CEO, Tony Hsieh, remains committed to holacracy, viewing it as a long-term investment that will ultimately create a more adaptable and resilient organisation. He acknowledges the challenges, but believes that the transition period is the most difficult part.

In 2015, Hsieh offered employees three months’ severance pay if they chose to leave rather than adapt to the new system. Approximately 18% of the workforce took the offer, indicating a significant level of discomfort with the change. Despite this, Zappos continues to push forward with holacracy, aiming to become a fully self-organising entity.

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