Does Going “Bossless” Create an Accountability Vacuum?

By Rod Collins

 

In December 2013, Zappos created quite a buzz in the business community when they announced that, by the end of 2014, they would go “bossless” and adopt an egalitarian organizational model called holacracy. In their new organization, there will be no titles, no managers, and no hierarchy. Instead their organization will be transformed into a network of approximately 400 self-managed teams where people can assume various roles based upon the changing needs of their particular projects.

While Zappos is not the first company to go bossless—W. L. Gore and Associates, the makers of Gore-Tex, has been bossless since it inception in 1958—it’s the first company to draw broad attention to an alternative management model that, while highly successful, has nevertheless remained hidden in plain sight for literally decades.

In a recent article in the Gallup Business Journal, Elizabeth Kampf questions the wisdom of Zappos’ decision by speculating that employee engagement—which correlates highly with positive business outcomes—is likely to suffer in the absence of traditional managers. Kampf’s doubts about holacracy are based upon Gallup’s extensive body of research, which identifies managers as the essential variable in employee engagement. Kampf postulates that the elimination of managers at Zappos could lead to an accountability vacuum that would be detrimental to employee engagement, and in turn, future business outcomes. Kampf suggests that, rather than eliminating their managers, Zappos’ best move might be to replace bad managers with great ones.

Kampf’s suggestion, however, might be shortsighted because, while Gallup’s research is indeed extensive, it may nevertheless be limited. By her own admission, Kampf acknowledges that Gallup hasn’t studied the holacracy model. In all likelihood, Gallup’s research presents a picture of what works and what doesn’t work in the typical hierarchical organization. Because hierarchies, by design, are populated by an array of supervisors—all of whom have the positional authority to kill good ideas and keep bad ideas alive—it is not surprising that Gallup recently reported only 30 percent of U.S. workers and 13 percent of workers worldwide are engaged at work. It’s clear that traditional organizations have an engagement problem.

Kampf also notes that Gallup’s research shows that great managers are rare. In other words, in the typical organization, great managers are the exception rather than the rule. This brings to mind the saying attributed to W. Edwards Deming that when most of the people engage in the wrong behavior most of the time, the problem is the system not the people. Perhaps great managers are people who have learned how to work around a bad system. If that’s the case, great managers will always remain rare, and suggesting to companies that the pathway to better managers is to recruit from this very limited pool doesn’t alleviate the larger employee engagement problem. If the prevalent management system consistently spawns bad managers, perhaps a better solution is a better system.

Kampf incorrectly states that, with more than 3,000 employees, Zappos is the largest company yet to embrace going bossless and implies that the online shoe retailer may be moving into uncharted territory. However, W. L. Gore and Associates, which today has over 10,000 employees in 30 countries around the world, has been a very successful self-managed company for over 56 years. Gore has made a profit in every year of its existence and is a permanent fixture on Fortune’s list of the “Best Companies To Work For.” Employee engagement is not a problem at Gore. Nor is there an accountability vacuum.

When Bill Gore decided in 1958 that he would build a company without managers, he knew it could only work if people were directly accountable for the company’s results. This meant that people had to have an incentive to do more rather than less work and the right work rather than the wrong work. His solution was to hold people accountable to their peers by creating a performance system where people evaluated and were evaluated by 20 colleagues. Based on Gore’s longstanding record of success, one could argue that accountability to many peers is more effective than accountability to single supervisors.

Zappos isn’t embracing holacracy because they have bad managers or an employee engagement problem. At number 38 on Fortune’s “Best Company To Work For” list, it’s clear that employee engagement is not an issue. Zappos is adopting holacracy as a natural part of its evolution. Since its founding, it has actively spurned traditional management practices and has placed a high value on building the outstanding culture for which it is well-known. Zappos is going bossless because it understands that if you want most of the people to engage in the right behavior most of the time, you build and continually improve a great system. 

 

Rod Collins  (@collinsrod) is Director of Innovation at Optimity Advisors and author of Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books, 2014).