Can You Have a Productive Company Without a CEO?

DSC_5747Ditching the CEO is probably every employees’ dream, but what happens when the CEO does it himself? A fascinating article in the Wall Street Journal, ‘At Zappos, Banishing the Bosses Brings Confusion’, demonstrates that the theory of Holocracy, or self management, may not work well in practice.

Zappos, an American clothing and footwear company that’s now a subsidiary of Amazon, recently introduced Holocracy to its 1500 employees. The theory has been gathering traction over the last 10 years, and over 300 companies have now implemented various horizontal management structures. Holocracy is attractive to large organisations because a vertical structure often leads to bureaucracy and delays, largely due to the necessity of getting sign off from so many levels.


The article, however, suggests that there are problems with the radial new approach. More than 200 employees have recently left the organisation due to dissatisfaction and others are unhappy, particularly former managers who now have no career ladder to follow. Moreover, the system is said to be very confusing, as the article explains: “Employees say the new system has been confusing and time-consuming, especially at first, sometimes requiring five extra hours of meetings a week as workers unshackled from their former bosses organize themselves into “circles” and learn the vocabulary of Holacracy….Circle members decide their roles and responsibilities in a series of governance meetings” and track progress in “tactical” meetings. So far, Zappos employees have formed more than 300 circles in customer service, social media, Holacracy implementation and other areas.”

The benefits of Holacracy are said to be greatest for those with an entrepreneurial spirit, who work best under a libertarian environment. There is still, however, the problem of a lack of decision-making authority, and the fact that staff can feel uneasy with an absence of authority.

signature-motivate-your-staffZappos say that the process will take 2 to 5 years to implement, and it’s likely that there will be many further bumps along the road. I, and much of the business world, will be watching with great interest. I for one remain sceptical about Holocracy, not because I don’t think my employees would do a brilliant job whatever the structure, but because I believe in the power of leadership. A good leader can not only motivate employees but also look after them, given that they have the authority to develop employees’ skills, expand their horizons and help them in times of need.

Perhaps there is, however, something we can learn from Holocracy. To sum this up in a simple phrase: people need a leader, not a boss. Treat your staff with respect, listen to their ideas and give them freedom to think for themselves and act independently, and you’ll find they’re much happier, and much more productive, than they would be if you were handing down constant orders and micro-managing them. It might be hard to let go of some of your management systems, but have faith in your people in it will bring great rewards.