When “Bosses” Get the Boot

Is the online retailer Zappos brilliant or crazy?

Soon, the company will no longer have what people think of as bosses. Zappos “will eliminate traditional managers, do away with the typical corporate hierarchy and get rid of job titles, at least internally,” as Jena McGregor reported recently in the Washington Post. The new structure will be what’s been called a “holacracy,” a term developed by management consultant Brian Robertson.

“A holacracy aims to organize a company around the work that needs to be done instead of around the people who do it,” McGregor explained. “As a result, employees do not have job titles. They are typically assigned to several roles that have explicit expectations. Rather than working on a single team, employees are usually part of multiple circles that each perform certain functions.”

This doesn’t mean that there will be no management. “While a holacracy may get rid of traditional managers (those who both manage others’ work and hold the keys to their career success), there is still structure and employees’ work is still watched,” McGregor pointed out. “Poor performers, Robertson says, stand out when they don’t have enough ‘roles’ to fill their time, or when a group of employees charged with monitoring the company’s culture decide they’re not a good fit.”

As with so many things, the details of how this works matter a lot. Peter Drucker stressed that any enterprise that isn’t organized in some way to maximize joint performance—that is, managed—is doomed. “Management and managers are the specific need of all institutions, from the smallest to the largest,” he wrote in Management: Tasks, Responsibilities, Practices. “None of our institutions could function without managers.”

Yet Drucker would certainly have applauded the spirit of Zappos’s efforts—and many of the particulars, too (just as he would have with another example of “self-management” that we’ve explored, Morning Star Co.). As he noted, bosses may be managers, but many managers are not bosses, nor should they be. “The first criterion in identifying those people within an organization who have management responsibility is not command over people,” Drucker wrote. “It is responsibility for contribution. Function rather than power has to be the distinctive criterion and the organizing principles.”

Moreover, in an “information-based organization,” there is too much cross-functional collaboration to allow for anything like a traditional command structure. In The New Realities, Drucker predicted that the organization of tomorrow would likely resemble “the hospital, the university, the symphony orchestra” in structure, and it would “be knowledge-based, and composed largely of specialists who direct and discipline their own performance from colleagues and customers.”

There would still be controls and systems of management, of course, but not in the form of traditional bosses. “Traditional departments will serve as guardians of standards, as centers for training and for the assignment of specialists,” Drucker wrote.  But “the work itself will largely be done by task-focused teams.”

What do you think of Zappos’s boss-free “holacracy”? And would you like to work in a company that is organized this way?