Get All Access for $5/mo

Looks Like Zappos' Self-Management System Isn't for Everyone Nearly 14 percent of the company's workforce accepted buyouts following its move to 'Holacracy' in 2013.

By Richard Feloni

This story originally appeared on Business Insider

Zappos, the Amazon-owned online retailer, confirmed with the Las Vegas Sun that 210 of its 1,503 employees — nearly 14% of the company — took a buyout deal after CEO Tony Hsieh announced the company was completely ridding itself of manager roles and job titles.

The company, well known for its experiments involving corporate culture, has been transitioning to a self-management organizational structure known as Holacracy since 2013. Entering this year, about 85% of the company had made the transition.

Hsieh sent a nearly 5,000-word company-wide memo in late March that explained that any employee who was not satisfied with the transformation by April 30 could leave with three months' severance. The memo was leaked by Quartz and later published by Zappos on its Insights blog.

"Having one foot in one world while having the other foot in the other world has slowed down our transformation towards self-management and self-organization," Hsieh wrote.

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 "Reinventing Organizations" and disagreed with its manager-free vision or else state that they were not reading it. According to the book's author, Frederic Laloux, about 600 to 700 employees downloaded a free e-book version that was linked in Hsieh's email.

John Bunch, technical adviser at Zappos and leader of the Holacracy transition, pointed out to Business Insider shortly before the April 30 deadline that the memo's severance-package offer raised many questions among employees about what the company's future looked like and that those questions still existed.

Richard Feloni is a strategy reporter at Business Insider. Richard joined BI in Oct. 2013 and covered the ad industry up through the Super Bowl. He previously reported in Brooklyn and wrote for alt-weeklys and newspapers in Boston, his hometown. He has also freelanced videos for The Wall Street Journal. Richard is an alumnus of Boston College and the Columbia University Graduate School of Journalism.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Starting a Business

How to Find the Right Programmers: A Brief Guideline for Startup Founders

For startup founders under a plethora of challenges like timing, investors and changing market demand, it is extremely hard to hire programmers who can deliver.

Growing a Business

The Top 5 AI Tools That Can Revolutionize Your Workflow and Boost Productivity

Discover the top 5 AI tools for marketing and content creation that every marketer needs to know.

Business News

How to Build a Successful Startup, According to an Investor Who Made Early Bets on Twitter, Lyft, and Twitch

He's found a few patterns after nearly two decades of investing in startups.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Science & Technology

No More ChatGPT? Here's Why Small Language Models Are Stealing the AI Spotlight

Entrepreneurs can leverage this growing tech to create innovative, efficient and targeted AI solutions.