Abstract

This case discusses about US-based online shoe and clothing retail giant Zappos and its culture. Tony Hsieh, the CEO, wanted to bring in autonomy, clarity and agility within the company. Thus he implemented a less-hierarchical system called Holacracy in 2013. Holacracy eliminated workplace hierarchy- no job titles and no bosses, it introduced a series of ‘circles’ which were sometimes overlapping. The new approach produced bit of mess in the company and confusion amongst the workers. The results were quite contradictory to what was expected. Further, when Hsieh felt that the company had not made enough progress towards transition, he decided to take a “rip the bandaid” approach to accelerate the process. He sent out a company-wide memo as an ultimatum to employees either to adopt holacracy or quit with severance pay. After the offer to quit was made, the company witnessed exodus of employees. Days after the severance package was announced, nearly 14 percent of Zappos employees accepted the offer to quit. By January 2016, Zappos reported that 18 percent of its workforce had taken buyouts in the previous 10 months. However, Hsieh defended his move and continued with the transition. The case concludes with a discussion on whether Zappos would be able tobecome a self-governed organization or not.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze the importance of change in a company and forces that stimulates change.
• Critically examine resistance to change among employees and possible outcomes of resistance.
• Investigate ways of bringing smooth transition in organization during change.

Keywords

Zappos , Culture Development, Change in Culture, Transition, Resistance , Repercussion, Holacracy, Organizational Change, Organizational Culture