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Last spring, the giant online shoe retailer Zappos changed how it did business. Zappos got rid of managers, replacing them with a system of self-governance by all employees. Anybody who didn't like it could take a buyout. Fourteen percent of employees did. The rest tried life without a boss, and NPR's Yuki Noguchi asked them what it looks like.
YUKI NOGUCHI, BYLINE: Jacqui Gonzalez stands beside desks festooned with streamers and toys in Zappos's customer service operation, which, in many ways, is the heart of the company.
JACQUI GONZALEZ: We are a customer service business who just happens to sell shoes.
NOGUCHI: Prior to giving tours of the Las Vegas headquarters, Gonzalez worked in customer service, where she was allowed to make her own decisions about replacing shoes or even when to send thank you flowers to customers.
GONZALEZ: We don't have to put someone on hold and ask permission. We don't have a manager that you need to be transferred to. How refreshing is that?
NOGUCHI: Zappos operates as a holacracy, a term coined by political writer Arthur Koestler. Its central tenets include individual autonomy and self-governance. In a holacracy, employees aren't told how to work. Instead, they belong to voluntary groups called circles, or peers who help vet new ideas or problems. Everyone has equal say, and employees are evaluated and rewarded by peers, instead of by a boss.
Zappos, which is owned by Amazon, started shifting its system two years ago. It's too early to measure the impact, but employees say the goal is to maintain a small-firm culture even as it grows. Customer-service worker Shaea Labus contrasts it with her previous job as a store manager, where she set sales goals for employees. At Zappos, she says people set their own agenda, then identify and solve the problems they encounter in their jobs.
SHAEA LABUS: Instead of analyzing it from the top down, we just start where the work is. Like, is this feasible for them to do this?
NOGUCHI: Holacracy may sound like a recipe for chaos. But in fact, meetings are highly structured. Anyone can add items to the agenda, which is documented using online software so everyone can monitor every decision. There are meeting leaders, known as lead links. But that person's role is essentially limited to directing meetings according to a set of rules. To the uninitiated, the lingo and format can be bewildering.
UNIDENTIFIED WOMAN: Do we have any more agenda items before we move on?
NOGUCHI: I dropped in on the arts and entertainment circle meeting, which plans events for employees - a high priority in a company that prides itself on its espirit de corps. One member opens with a discussion of a new Zappos stage.
UNIDENTIFIED MAN: So I'm talking with some other circles about doing, like, a morning show, like a morning announcement every morning, like Zappos news.
NOGUCHI: The update is noted in the online system. Then discussion moves to plans for a Halloween parade and a parody dance video. Holacratic governance is the brainchild of Brian Robertson, a serial entrepreneur who sought better ways of running his companies. He likens the system to cell biology.
BRIAN ROBERTSON: You don't have a boss cell telling the other cells what to do. Every cell has its own self-organizing process. And yet, they're kind of grouped together into an organ that integrates them and itself acts as a whole entity.
NOGUCHI: Robertson says about 300 organizations are using or piloting holacracy. He says it makes organizations nimble and adaptable. But, he admits, it can be a difficult adjustment, especially for organizations accustomed to a top-down hierarchy.
ROBERTSON: There's something almost safe and comforting, even when we don't like it, about being in a system where there's somebody else whose job it is to protect us, take care of us, nurture us. And when they don't do that well, we get to be angry with them and (laughter) blame them and hide behind them.
NOGUCHI: John Bunch oversees holacracy at Zappos and admits it was hard to let go of his managerial impulse.
JOHN BUNCH: I found myself at times wanting to command and control things to be a specific way. But I realize that's not what we're doing here.
NOGUCHI: Bunch says although holacracy stresses individual autonomy, it's actually the group's interests that advance.
BUNCH: Really what we're trying to do is turn each employee into a mini-entrepreneur who has the ability to sense ideas and something about it.
NOGUCHI: And the hope is that will keep the whole company on its toes. Yuki Noguchi, NPR News, Las Vegas.
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