Zappos’ recent shift to “holacracy” hasn’t been easy. One expert says associations can pull it off—if it’s handled with care.
Nobody said holacracy would be easy. But maybe that’s because people don’t talk much about holacracy.
If you’ve heard of the term, that’s likely because you’re following the story of Zappos, which is transitioning to a self-management structure. The online shoe retailer—and especially its CEO, Tony Hsieh—has been synonymous with an innovative management culture that gives its employees plenty of freedom. (Associations Now was on top of that back in 2009.) But holacracy, the company’s particular version of self-management, hasn’t gone over well: Nearly 14 percent of its approximately 1,500 employees decided to take a buyout with three months’ severance rather than stick around.
Most association cultures are not ready for this.
Opinions vary as to why so many staffers balked. Me, I can’t imagine it helped that Hsieh all but force-fed employees a 5,000-word memo on the virtues of holacracy, with the added demand that they read a book on the topic or send an email saying if they hadn’t. (Leadership tip: Employees hate bad management structures, but they hate homework assignments about management structures even more.)
But Hsieh’s heavy-handed holacracy rollout isn’t the entire problem. Self-management is nothing new, after all: Variations on the concept have been part of the leadership literature for decades, after all, from Peter Drucker in the ’50s to Gary Hamel in the ’90s to Results-Only Work Environments today. But regardless of what they’re called or who’s promoting them, they’ve typically had a hard time gaining traction. One reason, Rick Wartzman wrote for Forbes in 2012, is that the people at the top of the ladder see more egalitarian structures as a threat. “My deep sense,” he writes, “is that the biggest barrier is this: The less hierarchy at a company, the more that certain people will be forced to give up their perks and privileges.”
Another possible reason is that they require a sizable shift in the culture of an organization. “Having been involved in many large-scale change initiatives it is no surprise to me there is a mass averse reaction,” says Seth Kahan, a management expert who’s researched associations. “Major change is often misunderstood by workers and other key stakeholders.”
Associations may be more mission-focused and have flatter hierarchies, but Kahan is skeptical that those facts would make it any easier for them to implement a holacracy. “Most association cultures are not ready for this,” he says. “But for a CEO running an innovative association where stellar customer service and ownership of business goals are systemic and prospering, this is a legitimate option. In most associations, this will require an endorsement by the board of directors. This may not be a herculean obstacle for that kind of and leading edge association, which likely has extraordinary board relations.”
Kahan isn’t exactly saying don’t even think about it, but he comes pretty close. But there’s a useful lesson in that list of high hurdles he offers—customer service, business goals, board support. Questions about what the association wants to accomplish, how it works with its members and customers, and how much strategic thinking the board does ought to take precedence over any rewrite of your management structure. Holacracy is a promising concept, but it can also be a band-aid placed over serious bleeding.
If you do decide to consider a self-management structure, though, Kahan has a few tips for a rollout less dramatic than Zappos’:
- Communicate: “Explain why the decision is being made. Don’t underestimate your stakeholder’s ability to grasp your reasoning. Speak to them like the well-educated and interested adults they are.”
- Train: “Tell people what they need to do differently, how the change will impact them and advise them on exactly what they need to do and expect differently as a result.”
- Support: “Be there to help them through the transition, answer their questions, respond quickly and effectively when they have any kind of challenge adjusting their behavior, hold their hands and be by their side while they make the shift. Be an ally in realizing the benefits.”
Has your association implemented a self-management structure? What works and what challenges have you faced? Share your experiences in the comments.