Zappos Employees Leave Company in Droves

I quit!

In 2013, the online shoe-empire Zappos began a transition from the typical manager-employee corporate culture to a structure known as Holacracy, where self-management and self-organizing rule. By March of this year, Zappos had fully eliminated management roles and job titles.

Many were not pleased with the change.

Nearly 14% of the company – that’s 210 out of its 1,503 employees – left Zappos after CEO Tony Hsieh offered a severance package to any employee not on board with these drastic changes. Those concerned that their lack of title could hurt potential job prospects in the future jumped ship, and all within a matter of weeks.

Last month Hsieh sent out a company-wide memo detailing his plans, his worries and his thoughts on correcting the misconceptions so many employees were having about this new Holacratic approach. While his goal was to assuage their fears and get them on board, he was forthcoming in how these fears were holding back Zappos from where he envisioned they would be.

Per the memo:

While we’ve made decent progress on understanding the workings of the system of Holacracy and capturing work/accountabilities in Glass Frog, we haven’t made fast enough progress towards self-management, self-organization, and more efficient structures to run our business… After many conversations and a lot of feedback about where we are today versus our desired state of self-organization, self-management, increased autonomy, and increased efficiency, we are going to take a “rip the bandaid” approach to accelerate progress…

Hsieh ended the email offering a three month severance and COBRA package to anyone unwilling to move forward with the new plan. All employees with more than four years with the company were offered one month of severance per year worked, along with three months of COBRA benefits. Qualified employees had to:

  • Be in good standing
  • Read “Reinventing Organizations” by April 15, followed by watching a talk with the author
  • Give notice to leave before April 30.


What do you think? Let us know in the comments section below!


About DevonJ140
I am currently an Accounting Director living in New York City. I love reading and learning more about business, finance, tech, and current events.

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