The Mandate of Holacracy at Zappos

(Published on: March 04, 2014)

In case you have not heard, Zappos is rolling out a defined authority distribution scheme called “holacracy”.

The way everyone works will change. Every single employee will be forced to comply with a set of rules they had no part in creating.

Under this new set of rules, the people who work at Zappos must submit to (and are in fact compelled to participate in) the company-wide change. There is no “opt-out” possible, except to quit.

The change is a change in the way authority is distributed. This change is effecting every single employee. There is no escape.

Tony Hsieh is the CEO of Zappos. He wrote the book DELIVERING HAPPINESS. In that book, in the Appendix (page 233) he describes a “Happiness Framework” which states that people need to feel control and belonging (“connectedness”) to feel good and be happy. I totally agree.

And that’s why, unlike so many others, I am predicting some very major problems with the widely celebrated rollout of this new process change at Zappos…unless something changes quick.

Mandating a process change is a recipe for disaster. As a management consultant who makes a living helping organizations improve, I have seen it firsthand, working with lots of executive and teams inside nearly 100 organizations since 2007. My book THE CULTURE GAME tells many of these stories, and concludes: engagement is the name of the game.

Engagement drives everything, and mandates kill engagement. End of story.

The mandate reduces feelings of control, as the new way of working is forced on you without any regard to what you want, what you think, or what you feel.

This creates disengagement.

Next, the mandate comes from “on high”, from “higher ups”, and the decision is one you have no part in whatsoever.  Not participating in the decision generates very reduced feelings of belonging. No one wants to play a game that they have no part in creating. Good games have opt-in participation. Mandates don’t.

This mandate from authority creates disengagement and eventually, the very negative feeling of resentment.

These feelings of disengagement and resentment work against the process change. The people that stay on are unenthusiastic…they murmur, and drag their feet. Instead of engaged, enthusiastic people, the result is disengaged, unenthusiastic, resentful people.

Many of these people will be unable to name their feelings at first; they just know that something ain’t right.

Mandating process change is a bad idea because it makes people unhappy when their feelings of perceived control and a perceived sense of belonging are greatly diminished.

The other problem is the fact that the people working there are selected for “culture fit” with the 10 Core Values of Zappos. How does this new system of organizing support those 10 core values? This remains a very open question… and one that many employees are probably already asking.

Maybe it will work perfectly. A more likely scenario is:

  • Many employees feeling a low sense of control and belonging will eventually seek new jobs,
  • Zappos will hire new people to replace them, and
  • The entire org will be in a state of dissonance with substantial employee turnover for some time to come.

It does not have to be this way, and there is a very simple solution to this very big problem.

Here it is:


About the Author: I am Daniel Mezick. I am a management consultant and expert on culture and employee engagement.  I am the author of THE CULTURE GAME and other books. Reach me here, at 203 915 7248 or email: dan [at] newtechusa [dot] net.

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