Zappos Company
Nick Swinmurn started Zappos Company in the year 1999 to sell shoes online. Nick swinmurn approached venture capitalists, namely Alfred Lin and Tony Hsieh, to request finances and advice. Hsieh joined Nick Swinmurn in running the company as a co-CEO in the year 2000. Swinmurn, the founder of the company, left the company in the year 2006. In 2012, Hsieh attended a conference organized by Robertson. The theme of the conference was conscious capitalism. A topic on the self-management of employees caught the attention of Hsieh, the CEO of Zappos company. The holacracy philosophy based on the employees’ self-management made the CEO of Zappos company develop the goal of converting Zappos to a teal company. The Zappos traditional organizational structure had a lot manyations that led to slow growth rate, dissatisfaction of employees, barrier to innovation and creativity by employees and general failure of the company. The traditional organizational structure also led to tensions by the employees. From the start of the company Hsieh had the desire of ensuring that employee satisfaction was achieved in the running of the company. Hsieh argues that employee satisfaction is an essential tool for success of any business. Zappos traditional organizational design was horizontally oriented with it being informal and flatter. The organizational design was used to increase the employees’ capacity to handle customers well. Although the organizational structure was helpful for company success up to 2013, Hsieh argued that it limited the employees’ performance capacity hence the need to adapt to holacracy. The desire to see employees offer more to the company resulted to the adaptation of holacracy since the traditional hierarchical and bureaucratic structure limited the performance of employees in the company. The fast shift to holacracy system so many employees leave the company as Hsieh never had consultative meeting with the managers or employees. Statistics show that 14% of the 1500 employees took the three months’ severance pay by Hsieh and then left the company.
Adapting to the new structure based on the holacracy philosophy was the best solution for Hsieh to see the employees’ performance capacity increase. Hsieh needed to do a consultative meeting with the managers and employees so as to explain the employees the benefit of changing to holacracy system. Doing a consultative meeting with the employees would lead a positive response by the employees that would see the employees remain in the company even after the change. The recruiting cost incurred by Hsieh after 14% of the employees left would have not been experienced if the employees would remain in the company. Proper testing of the holacracy system would ensure that it succeeds in the company as it would measure the level of efficiency before putting in place the necessary requirements for the adoption of the system. Adequate research about the holacracy system in business would also be of help to the company as it would analyze the potential threats and opportunities in the surrounding environment that would affect the holacracy system performance. The hieracracy and bureaucracy developed by the traditional structure would be replaced by self- management traits of employees. The traditional organizational structure gave the hierarchical managers powers that resulted to tensions among employees .Holacracy philosophy advocates for the removal of powers of managers and transfers the authority of the managers to the employees in their teams. The holacracy system of governing and organization removed the titles of managers. The Zappos new structure based on holacracy constitution would increase the capacity of decision making by employees in their teams.The new structure based on holacracy structure was in form of formed circles in the organization.The higher work cicles in the organization are incharge of the lower circles.The lower circles are expected to perform according to the set standards by the higher circles.The circles goal is to solve the tensions of employees in an organization.The employees are expected to strictly follow the set procedures in their daily routine and use the language set in the holacracy constitution.The employee performance in the Zappos is expected to increase as the emplooyes have freedom to move to circles that need their expertise skills,knowledge and their skills.Increased innovations in the organization would also be seen.However the employees satisfaction was not achived
To improve the teams’ performance and individual employee’s performance there is need of adopting the holacracy system in Zappos company.The holacracy system will ensure that all employees speak in their tactical meeting hence promoting sound decision making in the organization.However,for success of holacracy system in the business,consultations need to have been done in avance before the adaption.To prevent the employees from leaving the company in a near future when a a change is being made,Hsieh need to consult the employees and managers ant then come up with sound decisions as a company.The feedback from the employees and managers is vital for success of the company.The decision that Hsieh made was an individual decision but not the company’s decision. The responsibility of a CEO of a company is to protect the company’s image and employees image. In the future the CEO should not make a decision as an individual on the behalf of the company as it can have negative effects on the company.
References
Kumar, V., & Mukherjee, S. (2018). Holacracy–the future of organizing? The case of Zappos. Human Resource Management International Digest.
Yugendhar, A., & Ali, S. M. (2017). Evaluation of implementing holacracy, a comprehensive study on zappos. International Journal of Engineering and Management Research (IJEMR), 7(5), 163-171.
Thomas, R. J., & Silverstone, Y. (2015). Empowering employees at Zappos.
Van De Kamp, P. (2014). Holacracy–A radical approach to organizational design. Elements of the Software Development Process-Influences on Project Success and Failure. University of Amsterdam, 13-26.