Exclusive: HR challenges behind Zappos’ Holacracy model

John Bunch, Advisor to CEO and Holacracy Implementation Lead at Zappos, said a lot of the processes the US shoe and online retail giant utilises to operate have had to change.

When your organisation decides to implement a revolutionary workplace structure such as holacracy, you can be certain that change is the name of the game.

These changes are even more pronounced from an HR perspective, especially when it encompasses the entire workforce of the company.

This was what John Bunch, Advisor to CEO and Holacracy Implementation Lead at Zappos, espoused to HRM Asia, in an exclusive interview at the sidelines of the recent HR Summit 2016.

“When you make such a large change to the way you operate, a lot of the systems that you use to operate and that work also have to change,” he explained.

“When we think about performance evaluation, compensation, recruitment; how do we do those things in an organisation that operates very differently than how most organisations operate? That’s been a challenge, but also a very big opportunity for us to evolve who we are as a business.”

According to Bunch, Zappos’ biggest challenge has been helping its employees understand that holacracy aligns with its core values.

“Our core values are really at the heart of who we are as a company. It’s really helping employees to see that holacracy is a system that deepens our commitment to those core values and explaining to them how does it really look like,” he explained.

For those who are unfamiliar with holacracy, it’s about doing away with hierarchies and working across different groups called “circles”.

“One of the big things is that in a traditional hierarchy, you’re in one specific team doing one specific job function,” Bunch elaborated.

“In holacracy, you might work across different groups and in holacracy, we call them circles and across different circles, and working on a lot of unique and different tasks throughout your day.”

Hence, Bunch said an employee at Zappos might be spending two hours doing a particular task, followed by five hours of doing something else and then doing something completely different in one hour.

“It really keeps you on your toes and keeps things interesting,” he cited.

Bunch also emphasised that the organisation is striving “to run on a different system of self-management.”

“Self-management is a little bit harder to describe but what we’re really trying to do is to allow each individual to operate independently,” he said.

“What we’re trying to with holacracy is to let each person to be a sensor for change in our organisation and to be able to process that change themselves. In traditional companies, it’s based on traditional hierarchy where every decision has to be run up the ladder.”

In addition, Bunch highlighted that holacracy is a system that fully empowers employees as it entails staff understanding how to make changes by themselves.

Bunch disclosed that it took Zappos about a year to fully launch into a holacratic framework, and that the organisation has been fully operating with holacracy for a year-and-a-half now.

“There’s a learning curve that is associated with holacracy. It will take some time before employees really understand what this is all about and why we are doing it,” he said.

“We continue to evolve in systems such as compensation, performance evaluation and prioritisation so that we can really deepen our level of practice in holacracy and use it to evolve into the future of what Zappos will become,” he added.

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