Pando

Delivering Hopelessness: 38% of Zappos' key tech team has quit thanks to Holacracy

By Paul Bradley Carr , written on January 19, 2016

From The Disruption Desk

Well whodda thunk it?

Yesterday, Zappos COO, Arun Rajan, shared the results of the company’s experiment with Holacracy, a system of management that works by getting rid of all managers. It’s been almost a year since CEO Tony Hsieh (a Pando investor) offered paid layoffs to any employee who decided they couldn’t work under the new boss-less regime.

So, how’s it going so far?

According to the Rajan, 18% of employees have volunteered to quit.

Eighteen. Percent.

And no matter how bad you think that number is, it’s actually far worse. Remember, in most part these aren’t high skilled Valley tech workers who can easily find another gig. These are customer service and moderately skilled workers based in Las Vegas, Nevada, the state with the fourth highest rates of unemployment in the country. And what jobs are available in the city are largely in the gaming and hospitality industries: meaning weird hours, drunk customers -- the works. Quitting a job at Zappos in Vegas isn't like quitting a job in San Francisco. 

And yet almost 20% of Zappos employees would rather take their chances elsewhere than work under a management theory that is supposed to make them happier. It might be more accurate to say that 20% of Zappos employees thought they could get another job, and 100% of those decided to take it.

The statistic is embarrassing for Hsieh who has enjoyed a nice secondary career as a motivational speaker: Travelling the world giving talks about “Delivering Happiness.” But it’s potentially lethal for Zappos, the company, as it continues to integrate with its parent, Amazon.

The “we’ll pay you to quit” offer was originally withheld from the company’s tech and engineering staff. Those techies are key to the company’s shift from in-house infrastructure to Amazon’s “Super Cloud” -- a process that has caused Zappos.com to remain frozen -- technologically speaking -- for almost two years. The idea was that by preventing the tech team from quitting, Zappos would complete its move to Super Cloud by mid-to-late 2015. They missed the deadline, but the company relented and extended the buy out offer to tech employees anyway. A frankly ridiculous 38% took it. An already overwhelmed team has now been slashed by over a third.  

It surely can’t be long now before Amazon loses patience with Hsieh’s disastrous, and egotistical, experiment. I wrote a long explanation of why Holacracy is terrible for Zappos workers last year. Normally I enjoy being proved right, but given the hundreds of employees whose lives have been turned upside down by the faddish whim of a centi-millionaire, it’s hard to feel anything other than depressed.