Indian employees at a call centre provide service support to international customers, in the southern city of Bangalore March 17, 2004. The hiring frenzy at call centres in India is the flip side of daily tales pouring out of the US and Britain, where thousands of software and back-office jobs are being cut as companies take advantage of cheap communications offshore to drive down costs. India is the undisputed leader of emerging markets to which developed economies are outsourcing high-technology jobs, IT consultancy firm Gartner said in a report released on Wednesday. The $3.6 billion industry in India is seen rocketing to 13.8 billion by 2007 with the number of jobs quadrupling to 1 million. Picture taken March 17, 2004. REUTERS/Sherwin Crasto  SC/

Indian employees at a call centre provide service support to international customers, in the southern city of Bangalore March 17, 2004. The hiring frenzy at call centres in India is the flip side of daily tales pouring out of the US and Britain, ... where thousands of software and back-office jobs are being cut as companies take advantage of cheap communications offshore to drive down costs. India is the undisputed leader of emerging markets to which developed economies are outsourcing high-technology jobs, IT consultancy firm Gartner said in a report released on Wednesday. The $3.6 billion industry in India is seen rocketing to 13.8 billion by 2007 with the number of jobs quadrupling to 1 million. Picture taken March 17, 2004. REUTERS/Sherwin Crasto SC/ (Reuters)

Do We Need Bosses? Like it or Not, Yes

By Business Leaders FOXBusiness

There’s a saying making the rounds on social media that “A bad job with a good boss is better than a good job with a bad boss.” I’m not sure I agree with that statement but I know a lot of people who do. In any case, a large group of Zappos employees actually think no job is better than a job with no boss, good or bad.

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According to the Las Vegas Sun, 210 employees – nearly 14% of the online retailer’s total workforce – have recently opted to accept a severance offer and leave the company rather than stick around under CEO Tony Hsieh’s new organizational structure based on a controversial system with no titles or managers known as Holacracy.

If the employees hadn’t been required to wade through an excruciatingly long companywide email from Hsieh and jump through all sorts of hoops to take the deal – including watching a nearly two-hour video and reading Reinventing Organizations by Frederic Laloux – I suspect the exodus might have been much worse.

I don’t blame those who left one bit. Hsieh had been trying to transition Zappos to the Holacracy-based model since 2013 and finally decided on a “rip off the band-aid” approach to get it done. The problem is that neither Holacracy nor Laloux’s approach to a self-governing organization is the panacea it’s been made out to be.

Holacracy is a management system developed by Brian Robertson, a 35-year-old self-taught programmer with little business or management experience beyond running a relatively small Philadelphia-based software services company. But he is very savvy, I’ll grant him that.

The alternative management structure is trademarked, owned and marketed by HolacracyOne, an LLC that Robertson cofounded with management consultant Tom Thomison in 2007. The pair and their partners charge companies between $50,000 and $500,000 to implement the system, according to Fast Company.

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Considering that Holacracy is supposed to be non-hierarchical and self-organizing, it appears to be anything but. For one thing, you would need a team of lawyers to make sense of the Holacracy Constitution, so the company’s website offers a “Plain English” version that is 18,884 words (or about 50 book pages long). Nevertheless, the organizational system it describes appears to be extremely hierarchical and remarkably complex with a specialized lexicon all its own.

There’s also a Resource Library full of developer kits, apps and content dictating everything from compensation and habits to nutrition and partnerships. There’s even a cloud-based tool called GlassFrog that governs meetings, rules, boundaries, decision-making, synchronization, checklists, projects, metrics, roles and responsibilities.

Wait, there’s more. There are webinars, workshops, training events, coaching and facilitator certifications, licensing programs, and a Community of Practice you can join for $19.95 a month to gain access to energized discussions, practice support forums and a membership directory.

That doesn’t sound even remotely like a self-organizing, self-managing system to me. What it does sound like is a grandiose contrivance with all the bureaucracy and administrative minutiae of the federal government combined with the rigid structure of a collectivist cult. It also sounds like Robertson and company will make a fortune selling it as a new, democratized version of the corporation.  

What Holacracy really does is solve a nonexistent problem. It replaces today’s organizational structures that are designed by each company in any way they see fit with an entirely rigid and overbearing structure designed from top to bottom by its creators.

In an interview with Quartz’ Aimee Groth last year, Robertson said, “Holarchies are a different way of structuring an entity. They’re the fundamental building block of reality. Evolution requires a code, a DNA, that can be varied in search of a better code. The [Holacracy Constitution] serves as that DNA, and until it was encoded that way, it couldn’t truly be evolved through an evolutionary design process.”

If that sounds like Greek to you, let me explain. Robertson thinks he’s created an organizational system that’s analogous to the way organisms evolve in nature. There’s actually some sense to that endeavor, improbable and grandiose as it is. Not surprisingly, he’s fallen eons short of the mark.

The truth is, flat, leaderless structures can work for certain types of small groups, but, once you to attempt to scale them into larger organizations, they behave as collectives, which tend toward groupthink, chaos, and poor decision-making. I’m afraid that’s exactly the direction Zappos is heading in.

What do you think?

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