Analysis of Zappos and Holocracy Self Management Organizations

Question: Discuss about the Analysis of Zappos and Holocracy. Answer: Analysis: Holacracy is based on the self management of the organizations. With the help of the holocracy, the agility of the organization is improved as well its transparency and accountability (Robertson, 2015). The traditional approach to the management of the organization is ignored under this system and a new method is followed under this system which connects one peer to another. Under the holocracy system, the organization distributes the power in the hands of the employees equally and encourages everyone to take up the leadership (Denning, 2014). Zappos which has been bought by Amazon back in the year 2009 is the largest company that established holocracy with 1500 employees and there are no managers for the organization but only teams of employees running the organization. The main objective of Hseih, the CEO of the company was not just to make the organization of a holocratic pattern, but was to make a culture within the organization which will help Zappos fully self managed. There we re a variety of procedures and tools used in order to make the organization self organized. This type of organizations which are self managed and works without the objective of the management are also known as teal organization. The main objective of the teal organizations is to reduce the groups of service provider in the organization and creating a business centred group which is self organized as well as self managed. When the change was taking place inside Zappos, many employees were unhappy with the change and for that reason, Hseih provided them with Teal Offer which is the name of the package that is provided under the holocracy system. Only 1 in 5 employees took the offer and stayed in the organization and that accounts to only 18% of the employees that took the offer from the CEO. After the practice of holocracy started in the organization, the employees of Zappos decided everything starting form he menu of the lunch to the strategy that will be used for marketing of the organization. Without stating that 18% of the employees have taken the Teal Offer the headlines could have been that 82% of the employees who were offered with Teal packages rejected the offer researches on this topic also suggests that the employees who left are either they didnt like the concept of taking responsibility or they didnt like the complex concept of holocracy (Greenfield, 2015). During the past years, before holocracy was implemented in Zappos, there were various roles that the managers in the organization had to take care of and they are the role of budgeting, managing people, training and developing employees and so on. But after Zappos implemented the concept of Hsieh implemented holocracy, management of people had no sense in the organization and also each employee had to take care of everything and every employee had the power to deal with each management decision. Application: There are many Zappos employees who left due to the introduction of holocracy approach in the organization and the revenue increase to 30% in the year 2015 is just a result of it. Software called Glass Frog is used by the organization under the holocracy approach which helps the employees to track the efficiency of the strategic decisions made by the organization (Gouveia, 2016). The biggest problem with the holocracy is that it aims to finish the organizational top-down order and wants to make the organization work without a manager but the employees had to attend meetings which are a must for them and there is no escape from that system. The main reason of the failed holocracy in Zappos is that the employees working in Zappos is unclear of their roles and dont even know what is their part of the duty to perform (Gelles, 2015). With the implementation of the holocracy, the employees were left in a state of confusion rather than they were free for decision making. The employees were confused with the fact that who will be making the decision and also what they are supposed to perform under the new holocracy system. The employees were also confused about the compensation they will receive from Zappos and this turned the whole system into mess and ultimately Zappos failed to achieve holocracy approach. For this reason, with the employees leaving the organization and the employee turnover rate being high, the revenue on the part of the organization has improved, but the efficiency of management by the employees failed to click according to the plan of Hsieh, the CEO of Zappos (Van De Kamp, 2014). It is a fact that when no employees knows who is in charge of decision making, who is in charge of the action, the organization ultimately collapses. Though Zappos is not at the verge of getting closed, but the weakening of the position proves that holocarcy is a failure in Zappos. Viability: As holocracy is a failure and is not a system that can work in the organization with the employees unclear of their position and unclear of their roles in the organization, what couldve really worked in Zappos is the flat organization structure. There should be someone in the organization with the duty to make the decision and above all there should be each department with one manager in the organization (Zheng et al., 2010). All the departments can work under the CEO of the company in Zappos and the managers should be responsible for each decision that he makes with the organization and he should also have the power to direct the employees. The employees from each department in Zapoos should report to their respective managers and should take orders for them in order to perform the job. Also mangers should have the responsibility to divide the job equally among the employees of the organization (Bowditch et al., 2007). Various departments should be divided inside the organization an d the orders should come from the mangers inside Zappos so that they are taken by the employees effectively and performed in order to produce results and in this way, Zappos will be able to eliminate the confusion that was created under the holocracy system. Fallout: The flat organization structure will solve all the problems in Zappos that has arrived due o the complex holocracy system and it can help to form a single hierarchy level inside the organization with each department manager who will be in charge of making the decisions and eliminating the confusion of the employees regarding the decision making. Under the holocracy system, Zappos employees are concerned regarding the decision making and the duties they are responsible to perform, but the flat organization structure with the help of departmental managers can reduce this confusion and the mangers can divide the work equally among the employees and can also take decisions regarding what needs to be performed by the employees. Also, the employees should report to the managers of Zappos in order to get orders from them. While the CEO wanted to remove hierarchical structure from Zappos, flat organization structure is the best idea to be implemented in the organization as it implements the lowest level of hierarchy in the organization with the employees working under one manager for each department and also the time is not wasted in following a long chain of command. Also the speed at which the employees are able to communicate with the managers of the organization is very fast (Jones, 2010). And thus it removes the wastage of time in the organization. So, it can be said that due to a failure of holocracy on the part of Zappos, the practice of flat organization structure is the best way with the help of which Zappos can regain their revenue in the market and also will be able to reduce employee turnover. References: Bowditch, J. L., Buono, A. F., Stewart, M. M. (2007). A primer on organizational behavior. Wiley. Denning, S. (2014). Making Sense Of Zappos And Holacracy. Forbes blog, Jan, 15. Gelles, D. (2015). At Zappos, pushing shoes and a vision. New York Times, 136. Gouveia, L. B. (2016). Holacracy as an alternative to organisations governance. Greenfield, R. (2015). Zappos CEO Tony Hsieh: Adopt Holacracy or Leave. Fast Company. Jones, G. R. (2010). Organizational theory, design, and change. Robertson, B. J. (2015). Holacracy: The new management system for a rapidly changing world. Macmillan. Van De Kamp, P. (2014). HolacracyA radical approach to organizational design. 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