#HRevent16 – The Zappos way: holacracy and happiness
Some reflections on a keynote by Hollie Delaney, head of People Operations at Zappos, at the HR Directors Business Summit.
If I had to pick just one one word that divides the HR community, I would probably go for ‘Holacracy’. For the people I spend my time with, the viewpoint ranges from people who believe that Zappos is the model for everything and holacracy is the answer….. through to people who will refer to the ‘the H word’ as they can’t bring themselves to utter the word holacracy, dismissing it as hippie nonsense.
If I’m being honest, I was sitting somewhere between the two. I think Zappos are an amazing organisation; I love what they do, and I’ve been privileged to hear Tony Hseih speak. On the other hand, I don’t think the Zappos way is right for every organisation and whilst I really believe in trusting and empowering people, I’ve always been wary of holacracy (probably influenced by my 20-year career in large corporates) as it sounds like a recipe for chaos.
So, it is was with great interest that I settled down to listen to Hollie Delaney, head of people operations at Zappos, talk about ‘The Zappos way: holacracy and happiness’ at the HR Directors Business Summit.
Zappos was founded by Nick Swinmurn who couldn’t find the shoes that he wanted to buy, so he started looking for an investor and then founded Zappos to meet an unmet market need. Tony Hseih had recently sold his own business (having apparently stopped enjoying things when the company grew to 200 employees) and he invested in Zappos.
As Zappos grew, they introduced their core values as Tony Hseih didn’t want to experience what he had experienced in his previous business. They ran an exercise to identify their values, asking all employees what they wanted to see from the people sitting next to them. They initially identified 39 values, and whittled them down to the 10 values that Zappos are known for today:
- Deliver WOW Through Service
- Embrace and Drive Change
- Create Fun and A Little Weirdness
- Be Adventurous, Creative, and Open-Minded
- Pursue Growth and Learning
- Build Open and Honest Relationships With Communication
- Build a Positive Team and Family Spirit
- Do More With Less
- Be Passionate and Determined
- Be Humble
As they grew in size to the point where the founders could no longer be involved in every recruitment interview, the values took on an even more important role, and Tony Hseih has spoken of how he was determined that the values didn’t end up being a meaningless plaque on a wall; “We wanted to make sure that didn’t happen with our core values. We wanted a list of committable core values that we were willing to hire and fire on. If we weren’t willing to do that, then they weren’t really “values.’.”
Zappos are fully committed to making sure that the values are committed to:
- recruitment interviews are 50% based on culture fit
- all new hires (regardless of their job role) go through an initial 4 week training focusing on culture and service
- they have ‘the offer’ at the end of the induction where people can get paid to quit (as they recognise that the Zappos culture isn’t for everybody, and they want to have joint responsibility for culture fit)
- and they hire slowly and fire quickly (which might initially sound a bit harsh, but they want to get people out quickly if they don’t fit).
Hollie said that culture is everybody’s job, as no one person at Zappos can carry the culture. Their annual reviews take the form of a 360 review against the 10 core values which is used to identify where people have growth opportunities (and they will often identify a role model for the value they wish to develop and then go and learn from them). HR keep out of the way in judging job performance as functions are better able to do that themselves. Zappos trust people to do the right things, empowering employees to make the right decisions (even giving away things for free if they believe that is the right thing to do).
Zappos are now in the process of rolling our self-management across the organisation, and Holacracy is the tool they are using to enable that. Hollie talked about how hierarchical command and control structures can really stifle innovation; when somebody at the ‘bottom’ of the organisation has a great idea, it can be really difficult to get it implemented if their boss doesn’t support the idea and going ‘above their heads’ really tends to upset people.
I was already loving the talk at this point, but then it stepped up a notch for me as Hollie started describing Holacracy as ‘a system’, with guiding principles:
- Organisational structure; organise the work, not the people. Everybody owns the work that they have a role for.
- Governance process; things are organised into work ‘circles’ rathe than teams and the governance process is where the structure of the organisation gets worked on. Everybody, regardless of role, can make suggestions and it is here where tensions drive positive change.
- Operations; these are tactical meetings for circles are about getting the real work done in the organisation.
Zappos were approached by an organisation called HolacracyOne [1. HolacracyOne are an organisation providing software and consultancy to support holacracy] who provide both the system and software to support it, and they ran a 2-day workshop to help Zappos explore the concept. Hollie said that they weren’t convinced at first, but decided to try it and made HR the pilot. Hollie’s personal experiences of this were fascinating as she talked about how she went into the pilot optimistically, but then started to hate it. She wasn’t sure what her job was and said that sometimes she was unsure as to whether she would have a job in the future. Katie Jacobs has written an interesting article on this in HR Magazine. But as the pilot progressed, things changed and she spent less time on ‘managing’ and could spend time doing some really exciting things that had never made it as a priority before. Hollie also talked about how the leadership element of her role became much better; rather than being the boss and pushing things on people, people started to come to her for her experience and knowledge.
Hollie gave a couple of challenging examples; firstly, when she came into work and found animals everywhere! She then found out what was happening; people in HR (who would have previously reported to Hollie and would have previously brought this to her as an idea) had heard of a local zoo that needed $250k in order to stay open, so they had got involved. Hollie didn’t know about what was going on, but a circle within one of her circles said ‘we’ve got it, it is fine’. They brought animals from the zoo – camels, owls, monkeys, otters, etc. – on to campus and sold tickets. They saved the zoo. Secondly, rather than participate on the traditional discounting on ‘black friday’, two people in marketing decided to support pet adoption at a national level, making a massive positive impact.
Hollie also talked about the importance of people really getting to know each other so they can work as a team, and the importance of real team building, and of happy hours for people to build the relationships.
Hollie closed with the advice, ‘“trust your employees and trust your customers and have fun at work!).
It was a great talk. The Zappos story is an inspiring one and Hollie’s description of holacracy interested me in doing some more exploring. I’m sure it isn’t for everybody, but I think it can be hugely impactful for the right organisation, and it is worth HR folks taking a closer look to make an informed decision as to whether it should be a part of their OD toolkit. And it is a system, which reassures me! I’m not totally converted – I believe very few things are the answer to everything – but I’ve shifted!